Filed Pursuant To Rule 424(b)(5)
Registration No. 333-82806
Prospectus Supplement
February 5, 2003
(To Prospectus Dated February 25, 2002)
$225,000,000
Parker-Hannifin Corporation
4.875% Senior Notes Due 2013
---------------------------
We will pay interest on the notes on February 15th and August 15th of each
year, beginning on August 15, 2003. The notes will mature on February 15, 2013
unless redeemed prior to that date. We may, at our option, redeem the notes, in
whole or from time to time in part, prior to maturity at a price determined as
described in this prospectus supplement.
The notes are unsecured obligations of Parker and will rank equally in
right of payment with all of Parker's other unsecured and unsubordinated
indebtedness from time to time outstanding. The notes are effectively
subordinated to all of Parker's subsidiaries' liabilities.
The notes will not be listed on any securities exchange. Currently, there
is no public market for the notes.
---------------------------
PER NOTE TOTAL
-------- ------------
Public offering price....................................... 99.265% $223,346,250
Underwriting discount....................................... .650% $ 1,462,500
Proceeds, before expenses, to Parker (1).................... 98.615% $221,883,750
- ---------------
(1) Plus accrued interest from February 10, 2003, if settlement occurs after
that date.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS ACCURATE OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
We expect that delivery of the notes will be made to investors in
book-entry form only through the facilities of The Depository Trust Company on
or about February 10, 2003.
---------------------------
Sole Book-Running Manager
Banc of America Securities LLC
McDonald Investments Inc. Morgan Stanley
NO PERSON HAS BEEN AUTHORIZED BY US OR BY ANY UNDERWRITER OR DEALER TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN SO AUTHORIZED. NEITHER THIS PROSPECTUS SUPPLEMENT
NOR THE ACCOMPANYING PROSPECTUS CONSTITUTES AN OFFER TO SELL OR THE SOLICITATION
OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS
PROSPECTUS SUPPLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL
UNDER ANY CIRCUMSTANCES IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY
DATE SUBSEQUENT TO THE DATE HEREOF.
---------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
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About This Prospectus Supplement............................ S-2
Disclosure about Forward-Looking Statements................. S-2
Parker-Hannifin............................................. S-3
Use of Proceeds............................................. S-3
Ratio of Earnings to Fixed Charges.......................... S-3
Description of the Notes.................................... S-4
Certain U.S. Federal Income Tax Considerations.............. S-5
Underwriting................................................ S-8
Validity of the Notes....................................... S-9
PROSPECTUS
PAGE
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About This Prospectus....................................... 1
Parker-Hannifin Corporation................................. 1
Disclosure about Forward-Looking Statements................. 2
Where You Can Find More Information......................... 2
Information We Incorporate by Reference..................... 2
Use of Proceeds............................................. 3
Ratio of Earnings to Fixed Charges.......................... 4
Description of Debt Securities.............................. 4
Description of Capital Stock................................ 18
Description of Depositary Shares............................ 24
Description of Warrants..................................... 26
Description of Stock Purchase Contracts and Stock Purchase
Units..................................................... 28
Plan of Distribution........................................ 28
Legal Matters............................................... 30
Experts..................................................... 30
---------------------------
References in this prospectus supplement to "Parker-Hannifin," "Parker,"
"we," "us" and "our" are to Parker-Hannifin Corporation and its subsidiaries
unless otherwise specified or the context otherwise requires.
S-1
ABOUT THIS PROSPECTUS SUPPLEMENT
This prospectus supplement describes the terms of this offering of notes.
This prospectus supplement, or the information incorporated by reference in this
prospectus supplement, may add to, update or change the information in the
accompanying prospectus. If information in this prospectus supplement, or the
information incorporated by reference in this prospectus supplement, is
inconsistent with, updates or changes the information in the accompanying
prospectus, this prospectus supplement, or the information incorporated by
reference in this prospectus supplement, will apply and will supersede that
information in the accompanying prospectus. In addition, the information in this
prospectus supplement may add to, update or change the information incorporated
by reference and accordingly supersede that information.
You should read and consider all the information contained in this
prospectus supplement and the accompanying prospectus in making your investment
decision. You should also read and consider the information in the documents we
have referred you to in "Where You Can Find More Information" on page 2 of the
accompanying prospectus.
The distribution of this prospectus supplement and the accompanying
prospectus and the offering of the notes in certain jurisdictions may be
restricted by law. This prospectus supplement and the accompanying prospectus do
not constitute an offer, or an invitation on our behalf or on behalf of the
underwriters or any of them, to subscribe to or purchase, any of the notes, and
may not be used for or in connection with an offer or solicitation by anyone, in
any jurisdiction in which such an offer or solicitation is not authorized or to
any person to whom it is unlawful to make such an offer or solicitation. See
"Underwriting" in this prospectus supplement.
DISCLOSURE ABOUT FORWARD-LOOKING STATEMENTS
This prospectus supplement and the accompanying prospectus contains or
incorporates by reference statements that do not directly or exclusively relate
to historical facts. These types of statements are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. You
can typically identify forward-looking statements by the use of forward-looking
words, such as "may," "will," "could," "project," "believe," "anticipate,"
"expect," "estimate," "continue," "potential," "plan" and "forecast." Those
statements represent our intentions, plans, expectations, assumptions and
beliefs about future events and are subject to risks, uncertainties and other
factors. Many of those factors are outside our control and could cause actual
results to differ materially from the results expressed or implied by the
forward-looking statements. It is possible that our future performance and
earnings projections may differ materially from current expectations, depending
on economic conditions within both the industrial and aerospace markets, and our
ability to achieve anticipated benefits associated with announced realignment
activities and strategic initiatives to improve operating margins. Among other
factors which may affect future performance are:
o changes in business relationships with and purchases by or from major
customers or suppliers, including delays or cancellations in shipments;
o uncertainties surrounding timing, successful completion or integration of
acquisitions;
o threats associated with and efforts to combat terrorism;
o competitive market conditions and resulting effects on sales and pricing;
o increases in raw-material costs that cannot be recovered in product
pricing; and
o global economic factors, including currency exchange rates, difficulties
entering new markets and general economic conditions such as interest
rates.
These and other factors are discussed in our reports filed with the
Securities and Exchange Commission. In light of these risks, uncertainties and
assumptions, the forward-looking events referred to in this prospectus
supplement might not occur. We undertake no obligation to update or publicly
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.
S-2
PARKER-HANNIFIN
We are a leading worldwide full-line manufacturer of motion control
products, including fluid power systems, electromechanical controls and related
components. Fluid power involves the transfer and control of power through the
medium of liquid, gas or air, in hydraulic, pneumatic and vacuum applications.
Fluid power systems move and position materials, control machines, vehicles and
equipment and improve industrial efficiency and productivity. Components of a
simple fluid power system include a pump which generates pressure, valves which
control the fluid's flow, an actuator which translates the pressure in the fluid
into mechanical energy, a filter to insure proper fluid condition and numerous
hoses, couplings, fittings and seals. Electromechanical control involves the use
of electronic components and systems to control motion and precisely locate or
vary speed in automation applications. In addition to motion control products,
we are also a leading worldwide producer of fluid purification, fluid control,
process instrumentation, air conditioning, refrigeration, electromagnetic
shielding and thermal management products, and we design and manufacture
custom-engineered buildings. Also, through Wynn Oil Company and its subsidiaries
we develop, manufacture and market specialty chemical products and automotive
service equipment.
Our manufacturing, service, distribution and administrative facilities are
located in approximately 38 states and worldwide in approximately 43 foreign
countries. Our motion control technology is used in the products of our business
segments: Industrial; Aerospace; and Other. The products are sold as original
and replacement equipment through product and distribution centers worldwide. We
market our products through our direct-sales employees, independent
distributors, sales representatives and builder/dealers. Parker products are
supplied to approximately 435,000 customers in virtually every significant
manufacturing, transportation and processing industry.
USE OF PROCEEDS
The net proceeds from the sale of the notes offered hereby are estimated to
be approximately $221.9 million (after deducting underwriting commissions and
other offering expenses). We intend to use the net proceeds to repay a portion
of our outstanding commercial paper borrowings due at varying times from
February 10, 2003 to February 21, 2003 with interest rates ranging from 1.28% to
2.31%. These borrowings were used for general corporate purposes. See "Use of
Proceeds" in the accompanying prospectus.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratio of consolidated earnings to fixed
charges for the periods presented:
FOR THE FISCAL YEARS ENDED JUNE 30,
FOR THE SIX MONTHS ENDED -------------------------------------
DECEMBER 31, 2002 2002 2001 2000 1999 1998
- ------------------------ ----- ----- ----- ----- -----
4.25x 3.29x 6.19x 9.58x 7.14x 8.57x
S-3
DESCRIPTION OF THE NOTES
The notes offered by this prospectus supplement will be issued under an
Indenture, dated as of May 3, 1996, between the us and National City Bank, as
trustee, as supplemented from time to time. The Indenture is incorporated by
reference as an exhibit to the Registration Statement of which the accompanying
prospectus is a part. The following summary of specific provisions of the
Indenture and the notes, which are referred to in the accompanying prospectus as
our debt securities, supplements, and to the extent inconsistent therewith,
replaces, the summaries of provisions of our debt securities set forth in the
accompanying prospectus, to which reference is made. Such summary does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, all provisions of the Indenture, including the definitions in the
Indenture.
The notes offered by this prospectus supplement will be initially limited
to $225,000,000 in aggregate principal amount and will mature on February 15,
2013. Each note will bear interest at the rate of 4.875% per year, computed on
the basis of a 360-day year of twelve 30-day months, from February 10, 2003 or
from the most recent interest payment date to which interest has been paid or
provided for, payable semiannually on February 15 and August 15 of each year
commencing on August 15, 2003. Interest payable on any note which is punctually
paid or duly provided for on any interest payment date will be paid to the
person in whose name such note is registered at the close of business on
February 1, or August 1, respectively, preceding the interest payment date.
The notes are to be issued only in registered form without coupons in
denominations of $1,000 and any multiple of $1,000. The notes will not be
entitled to any sinking fund. The Indenture contains covenants limiting certain
liens and sale and leaseback transactions. In addition, the notes will be
subject to defeasance and covenant defeasance as described under the caption
"Description of Debt Securities - Legal Defeasance and Covenant Defeasance" in
the accompanying prospectus.
Under the Indenture, we may, without your consent, issue additional notes
having the same ranking and the same interest rate, maturity and other terms as
the notes. No additional notes may be issued if an event of default is
continuing with respect to the notes.
The notes are unsecured obligations of Parker and will rank equally in
right of payment with all of Parker's existing and future unsecured and
subordinated indebtedness. The notes are effectively subordinated to all of
Parker's subsidiaries' liabilities.
OPTIONAL REDEMPTION
We may, at our option, redeem some or all of the notes at any time, or from
time to time, by paying the "make-whole" redemptions price. The "make-whole"
redemption price will be equal to the greater of (a) 100% of the aggregate
principal amount of the notes being redeemed, plus accrued and unpaid interest
to the redemption date and (b) the sum of the remaining scheduled payments of
principal and interest in respect of the notes being redeemed from the
redemption date to maturity (not including any portion of the payments of
interest accrued as of the redemption date) discounted to their present value,
on a semiannual basis (assuming a 360-day year consisting of twelve 30-day
months), at the Treasury Rate plus 15 basis points, plus accrued and unpaid
interest to the redemption date.
"Treasury Rate" means, with respect to any redemption date, the rate per
year equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the notes to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of a comparable maturity to the
remaining term of such notes.
S-4
"Independent Investment Banker" means one of the Reference Treasury Dealers
appointed by the trustee after consultation with us.
"Comparable Treasury Price" means, with respect to any redemption date, (a)
the average of three Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest of five such Reference Treasury
Dealer Quotations, (b) if the trustee obtains four such Reference Treasury
Dealer Quotations, the average of two Reference Treasury Dealer Quotations for
such redemption date, after excluding the highest and lowest of four such
Reference Treasury Dealer Quotations, or (c) if the trustee obtains fewer than
four such Reference Treasury Quotations, the average of all such Reference
Treasury Dealer Quotations.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the trustee by such Reference Treasury Dealer at 3:30 p.m., New York
City time, on the third business day preceding such redemption date.
"Reference Treasury Dealer" means each of Banc of America Securities LLC
and Morgan Stanley & Co. Incorporated, or their respective affiliates, which are
primary U.S. Government securities dealers (each, a "Primary Treasury Dealer"),
and their respective successors, and two other Primary Treasury Dealers selected
by us; provided, however, that if any of the foregoing shall cease to be a
Primary Treasury Dealer, we shall substitute therefor another Primary Treasury
Dealer.
Notwithstanding the foregoing, we will pay any interest installment due on
an interest payment date that occurs on or prior to any redemption date to
holders as of the close of business on the record date immediately preceding
such interest payment date.
In the event that we are redeeming less than all of the notes, selection of
the notes for redemption will be made by the trustee by such method as the
trustee deems fair and appropriate. No partial redemption will reduce the
principal amount at maturity of a note not redeemed to less than $1,000. We will
mail notice of redemption by first-class mail, postage prepaid, at least 30 but
not more than 60 days before the redemption date to each holder of notes to be
redeemed at its registered address. On and after the redemption date, interest
will cease to accrue on notes or portions thereof called for redemption as long
as we have deposited with the paying agent funds in satisfaction of the
applicable redemption price.
BOOK-ENTRY PROCEDURES
Upon issuance, all notes will be represented by a fully registered global
note. The global note will be deposited with, or on behalf of, The Depository
Trust Company, as the depositary, and registered in the name of the depositary
or a nominee thereof. Unless and until it is exchanged in whole or in part for
notes in definitive form, the global note may not be transferred except as a
whole to the depositary, another nominee of the depositary, or a successor of
the depositary or its nominee. A further description of the depositary's
procedures with respect to the global note is set forth in the accompanying
prospectus under "Description of Debt Securities - Global Securities."
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the notes will be made by the underwriters in immediately
available funds. All payments of principal and interest on the global note will
be made by us in immediately available funds to National City Bank, as trustee
and then by the trustee to the depositary or its nominee, as the case may be, as
the registered holder thereof.
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
In the opinion of Jones Day, special tax counsel to Parker, the following
is an accurate summary of certain U.S. federal income tax considerations
relating to the purchase, ownership and disposition of the
S-5
notes. It is not a complete analysis of all the potential tax considerations
relating to the notes. This summary is based upon the provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), Treasury Regulations promulgated
under the Code, and currently effective administrative rulings and judicial
decisions. These authorities may be changed, perhaps with retroactive effect, so
as to result in U.S. federal income tax consequences different from those set
forth below. We have not sought any ruling from the Internal Revenue Service
(the "IRS") with respect to the statements made herein concerning the notes, and
we cannot assure you that the IRS will agree with such statements.
The following is a summary of the general U.S. federal income tax
consequences that will apply to you if you are a "U.S. Holder." "U.S. Holder"
means a beneficial owner of a note that is:
o a citizen or resident of the United States, as determined for U.S.
federal income tax purposes;
o a corporation (or other entity treated as a corporation for U.S. federal
income tax purposes) created or organized in or under the laws of the
United States or any political subdivision of the United States;
o an estate the income of which is subject to U.S. federal income taxation
regardless of its source; or
o a trust that (1) is subject to the supervision of a court within the
United States and the control of one or more U.S. persons or (2) has a
valid election in effect under applicable Treasury Regulations to be
treated as a U.S. person.
This summary assumes that the notes are held as capital assets and holders
purchase the notes upon their initial issuance pursuant to this prospectus
supplement at the notes' initial offering price. This summary does not address
the tax consequences arising under the laws of any foreign, state or local
jurisdiction. In addition, this discussion does not address all tax
considerations that may be applicable to holders' particular circumstances or to
holders that may be subject to special tax rules, such as, for example:
o holders subject to the alternative minimum tax;
o banks, insurance companies or other financial institutions;
o tax-exempt organizations;
o dealers in securities or commodities;
o traders in securities that elect to use a mark-to-market method of
accounting for their securities holdings;
o holders whose functional currency is not the U.S. dollar;
o persons that will hold the notes as a position in a hedging transaction,
straddle, conversion transaction or other risk reduction transaction;
o persons deemed to sell the notes under the constructive sale provisions
of the Code; or
o partnerships or other pass-through entities.
If a partnership holds notes, the tax treatment of a partner in the
partnership will generally depend upon the status of the partner and the
activities of the partnership. If you are a partner of a partnership holding our
notes, you should consult your tax advisor regarding the tax consequences of the
purchase, ownership and disposition of the notes.
THIS SUMMARY OF CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS IS FOR
GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. YOU ARE URGED TO CONSULT YOUR
TAX ADVISOR WITH RESPECT TO THE APPLICATION OF U.S. FEDERAL INCOME TAX LAWS TO
YOUR PARTICULAR SITUATION AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE U.S.
FEDERAL ESTATE OR GIFT TAX RULES OR UNDER THE LAWS OF ANY STATE, LOCAL, FOREIGN
OR OTHER TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.
PAYMENTS OF INTEREST
Stated interest on the notes will generally be taxable to you as ordinary
income at the time it is paid or accrued in accordance with your method of
accounting for U.S. federal income tax purposes.
S-6
DE MINIMIS ORIGINAL ISSUE DISCOUNT
The notes will not bear original issue discount ("OID") for U.S. federal
income tax purposes. However, the notes will bear de minimis original issue
discount ("de minimis OID") for such purposes, in an amount equal to the excess
of a note's stated principal amount over its issue price. The issue price of a
note is the first price at which a substantial amount of such issue of notes has
been sold (ignoring sales to bond houses, brokers, or similar persons or
organizations acting in the capacity of underwriters, dealers or wholesalers).
In general, a note bearing de minimis OID will not be treated as issued with OID
and a U.S. Holder (1) will not be required to recognize OID as interest income
over the term of the note under the OID tax rules, and (2) will recognize
capital gain with respect to the de minimis OID as stated principal payments on
the note are made. The amount of such gain with respect to each principal
payment will equal the product of the total amount of the note's de minimis OID
and a fraction, the numerator of which is the amount of the principal payment
and the denominator of which is the total stated principal amount of the note.
DISPOSITION OF NOTES
Upon the sale, exchange, redemption or other taxable disposition of a note,
you generally will recognize taxable gain or loss equal to the difference
between the amount realized on such disposition (except to the extent any amount
realized is attributable to accrued but unpaid interest, which is treated as
interest as described above) and your adjusted tax basis in the note. A U.S.
Holder's adjusted tax basis in a note generally will equal the cost of the note
to such holder.
Gain or loss recognized on the disposition of a note generally will be
capital gain or loss, and will be long-term capital gain or loss if, at the time
of such disposition, the U.S. Holder's holding period for the note is more than
12 months. The deductibility of capital losses by U.S. Holders is subject to
certain limitations.
INFORMATION REPORTING AND BACKUP WITHHOLDING
In general, information reporting requirements will apply to certain
payments of principal, premium (if any) and interest on and the proceeds of
certain sales of notes unless you are an exempt recipient. A backup withholding
tax (currently at a rate of 30%, but subject to periodic reductions through
2006) will apply to such payments if you fail to provide your taxpayer
identification number or certification of exempt status or have been notified by
the IRS. that payments to you are subject to backup withholding.
Any amounts withheld under the backup withholding rules will generally be
allowed as a refund or a credit against your U.S. federal income tax liability
provided that you furnish the required information to the IRS on a timely basis.
S-7
UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement, dated the date on the cover of this prospectus supplement, between us
and Banc of America Securities LLC as representative of the underwriters named
below (the "Underwriting Agreement"), the underwriters named below have
severally agreed to purchase, and we have agreed to sell to them, severally, the
respective principal amounts of notes set forth opposite their respective names
below:
Principal Amount
Underwriter of Notes
----------- ----------------
Banc of America Securities LLC.............................. $146,250,000
McDonald Investments Inc. .................................. 39,375,000
Morgan Stanley & Co. Incorporated........................... 39,375,000
------------
Total....................................................... $225,000,000
============
The Underwriting Agreement provides that the obligations of the several
underwriters to pay for and accept delivery of the notes are subject to receipt
of an opinion of counsel and to other conditions. The underwriters are obligated
to take and pay for all the notes if any are taken.
The underwriters propose initially to offer part of the notes directly to
the public at the public offering price set forth on the cover page hereof and
part to some dealers at a price that represents a concession not in excess of
0.400% of the principal amount of the notes. Any underwriter may allow, and such
dealers may reallow, a concession not in excess of 0.250% of the principal
amount of the notes to some other dealers. After the initial offering of the
notes, the offering price and other selling terms may from time to time be
varied by the underwriters.
We have agreed to indemnify the several underwriters against some
liabilities, including liabilities under the Securities Act of 1933 or to
contribute to payments the underwriters may be required to make in respect of
these liabilities.
We do not intend to apply for listing of the notes on a national securities
exchange but have been advised by the underwriters that they currently intend to
make a market in the notes as permitted by applicable laws and regulations. The
underwriters are not obligated, however, to make a market in the notes and any
such market-making may be discontinued at any time at the sole discretion of the
underwriters. Accordingly, no assurance can be given as to the liquidity or
development of, or trading markets for, the notes.
In connection with this offering, the underwriters are permitted to engage
in transactions that stabilize the market prices of the notes. Such transactions
consist of bids or purchases to peg, fix or maintain the price of the notes. If
an underwriter creates a short position in the notes in connection with the
offering, that is, if it sells more notes than are set forth in the table above,
the underwriter may reduce that short position by purchasing notes in the open
market. Purchases of a security to stabilize the price or to reduce a short
position could cause the price of the security to be higher than it might be in
the absence of those purchases.
The underwriters also may impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the underwriting
commission received by it because the other underwriters have repurchased notes
sold by or for the account of that underwriter in stabilizing or short covering
transactions.
Neither we nor any of the underwriters make any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the notes. In addition, neither we nor
any of the underwriters make any representation that the underwriters will
engage in these transactions or that these transactions, once commenced, will
not be discontinued without notice.
Banc of America Securities LLC, McDonald Investments Inc. and Morgan
Stanley & Co. Incorporated have provided and will in the future continue to
provide investment banking and other financial services for us and certain of
our affiliates in the ordinary course of business, for which they have received
and will receive customary compensation.
S-8
VALIDITY OF THE NOTES
The validity of the notes will be passed upon for us by Jones Day,
Cleveland, Ohio, and for the underwriters by Sullivan & Cromwell LLP, New York,
New York. On matters of Ohio law, Sullivan & Cromwell LLP will rely on Jones
Day.
S-9
PROSPECTUS
$1,000,000,000
(PARKER LOGO)
PARKER-HANNIFIN CORPORATION
DEBT SECURITIES
COMMON SHARES
SERIAL PREFERRED STOCK
DEPOSITARY SHARES
WARRANTS
STOCK PURCHASE CONTRACTS
STOCK PURCHASE UNITS
We will provide the specific terms of the securities in one or more
supplements to this prospectus. You should read this prospectus and the related
prospectus supplement carefully before you invest in our securities. This
prospectus may not be used to offer and sell our securities unless accompanied
by a prospectus supplement describing the method and terms of the offering of
those offered securities. We may sell the securities, or we may distribute them
through underwriters or dealers. In addition, the underwriters may overallot a
portion of the securities. Our common shares are listed on the New York Stock
Exchange under the symbol "PH." None of our other securities are listed on any
national securities exchange.
----------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
----------
THE DATE OF THIS PROSPECTUS IS FEBRUARY 25, 2002.
PAGE
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ABOUT THIS PROSPECTUS ......................................................1
PARKER-HANNIFIN CORPORATION ................................................1
DISCLOSURE ABOUT FORWARD-LOOKING STATEMENTS ................................2
WHERE YOU CAN FIND MORE INFORMATION ........................................2
INFORMATION WE INCORPORATE BY REFERENCE ....................................3
USE OF PROCEEDS ............................................................4
RATIO OF EARNINGS TO FIXED CHARGES .........................................4
DESCRIPTION OF DEBT SECURITIES .............................................4
DESCRIPTION OF CAPITAL STOCK ..............................................17
DESCRIPTION OF DEPOSITARY SHARES ..........................................22
DESCRIPTION OF WARRANTS ...................................................24
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS ..........26
PLAN OF DISTRIBUTION ......................................................27
LEGAL MATTERS .............................................................28
EXPERTS ...................................................................28
i
ABOUT THIS PROSPECTUS
This prospectus is part of a Registration Statement on Form S-3 that we
filed with the Securities and Exchange Commission using a shelf registration
process. Under this shelf process, we may sell any combination of the securities
described in this prospectus in one or more offerings up to a total dollar
amount of $1.0 billion or the equivalent amount denominated in foreign
currencies. This prospectus provides you with a general description of the
securities we may offer. Each time we sell securities, we will provide a
prospectus supplement that will contain specific information about the terms of
that offering, including a description of the risks relating to the offering.
This prospectus does not contain all of the information included in the
registration statement. For a more complete understanding of the offering of the
securities, you should refer to the registration statement, including its
exhibits. The prospectus supplement may also add, update or change information
contained in this prospectus. You should read both this prospectus and any
prospectus supplement together with additional information under the heading
"Where You Can Find More Information."
You should rely only on the information contained or incorporated by
reference in this prospectus and any prospectus supplement. We have not
authorized anyone to provide you with different information. We are not making
offers to sell the securities in any jurisdiction in which an offer or
solicitation is not authorized or in which the person making such offer or
solicitation is not qualified to do so or to anyone to whom it is unlawful to
make an offer or solicitation.
The information in this prospectus is accurate as of the date on the front
cover. You should not assume that the information contained in this prospectus
is accurate as of any other date.
References in this prospectus to the terms "we," "us" or "Parker" or other
similar terms mean Parker-Hannifin Corporation, unless we state otherwise or the
context indicates otherwise.
PARKER-HANNIFIN CORPORATION
Parker is a leading worldwide full-line manufacturer of motion control
products, including fluid power systems, electromechanical controls and related
components. Fluid power involves the transfer and control of power through the
medium of liquid, gas or air, in hydraulic, pneumatic and vacuum applications.
Fluid power systems move and position materials, control machines, vehicles and
equipment and improve industrial efficiency and productivity. Components of a
simple fluid power system include a pump or compressor which generates pressure,
valves which control the fluid's flow, an actuator which translates the pressure
in the fluid into mechanical energy, a filter to insure proper fluid condition
and numerous hoses, couplings, fittings and seals. Electromechanical control
involves the use of electronic components and systems to control motion and
precisely locate or vary speed in automation applications. In addition to motion
control products, we also are a leading worldwide producer of fluid
purification, fluid flow, process instrumentation, air conditioning,
refrigeration, and electromagnetic shielding and thermal management products and
we design and manufacture custom-engineered buildings. Also, through Wynn Oil
Company and its subsidiaries, we develop, manufacture and market specialty
chemical products and automotive service equipment and market vehicle service
contracts and product warranty programs.
Our manufacturing, service, distribution and administrative facilities are
located in 38 states, Puerto Rico and worldwide in 44 foreign countries. Our
motion control technology is used in products of our two principal business
segments, Industrial and Aerospace, and also in our third segment, Other. The
products are sold as original and replacement equipment through product and
distribution centers worldwide. We market our products through our direct-sales
employees, independent distributors, sale representatives and builder/dealers.
Our products are supplied to over 425,000 customers in virtually every
significant manufacturing, transportation and processing industry.
Parker was incorporated in Ohio in 1938. Its principal executive offices
are located at 6035 Parkland Boulevard, Cleveland, Ohio 44124-4141, telephone
(216) 896-3000.
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DISCLOSURE ABOUT FORWARD-LOOKING STATEMENTS
This prospectus contains or incorporates by reference statements that do
not directly or exclusively relate to historical facts. These types of
statements are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. You can typically identify forward-
looking statements by the use of forward-looking words, such as "may," "will,"
"could," "project," "believe," "anticipate," "expect," "estimate," "continue,"
"potential," "plan" and "forecast." Those statements represent our intentions,
plans, expectations, assumptions and beliefs about future events and are subject
to risks, uncertainties and other factors. Many of those factors are outside of
our control and could cause actual results to differ materially from the results
expressed or implied by the forward-looking statements. Those factors include:
o changes in business relationships with and purchases by or from major
customers or suppliers, including delays or cancellations in
shipments;
o ability of suppliers to provide materials as needed;
o uncertainties surrounding timing, successful completion or integration
of acquisitions;
o competitive market conditions and resulting effects on sales and
pricing;
o increases in raw-material and other production costs that cannot be
recovered in product pricing;
o threats associated with terrorism;
o difficulties in introducing new products and entering new markets; and
o uncertainties surrounding the global economy and global market
conditions, including any federal government policies to stimulate the
economy, interest rate levels and the potential devaluation of
currencies.
These and other factors are discussed in our reports filed with the SEC. In
light of these risks, uncertainties and assumptions, the forward-looking events
referred to in this prospectus might not occur. We undertake no obligation to
publicly update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the Securities
and Exchange Commission. Our SEC filings are available over the Internet at the
SEC's web site at www.sec.gov. You may also read and copy any document we file
with the SEC at the SEC's public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more
information on the public reference room and their copy charges. You may also
inspect our SEC reports and other information at the New York Stock Exchange, 20
Broad Street, New York, New York 10005, or at our web site at www.phstock.com.
We do not intend for information contained in our web site to be part of this
prospectus.
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INFORMATION WE INCORPORATE BY REFERENCE
The SEC allows us to incorporate by reference the information we file with
them, which means:
o incorporated documents are considered part of the prospectus;
o we can disclose important information to you by referring you to those
documents; and
o information that we file with the SEC will automatically update this
prospectus.
We incorporate by reference the documents listed below which we filed with
the SEC under the Securities Exchange Act of 1934:
o Annual Report on Form 10-K for the year ended June 30, 2001;
o Quarterly Reports on Form 10-Q for the quarters ended September 30,
2001 and December 31, 2001;
o Current Report on Form 8-K filed September 26, 2001;
o the description of our common shares contained in our Registration
Statement on Form 8-A filed with the SEC on September 8, 1967 and all
amendments and reports filed for the purpose of updating that
description; and
o the description of our common share purchase rights contained in our
Registration Statement on Form 8-A filed with the SEC on February 3,
1997, as amended February 5, 1997.
We also incorporate by reference each of the documents that we file with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of
this prospectus until the offering of the securities terminates.
You may request a copy of any of these filings (other than an exhibit to
those filings unless we have specifically incorporated that exhibit by reference
into the filing), at no cost, by telephoning or writing us at the following
address:
Secretary
Parker-Hannifin Corporation
6035 Parkland Blvd.
Cleveland, Ohio 44124-4141
Telephone Number: (216) 896-3000
3
USE OF PROCEEDS
Unless we inform you otherwise in the prospectus supplement, we
expect to use the net proceeds from the sale of securities for general
corporate purposes. These purposes may include, but are not limited to:
o reduction or refinancing of outstanding indebtedness or other
corporate obligations;
o acquisitions;
o capital expenditures; and
o working capital.
Pending any specific application, we may initially invest funds in
short-term marketable securities or apply them to the reduction of short-
term indebtedness.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratio of consolidated earnings to
fixed charges for the periods presented:
FOR THE
SIX MONTHS
ENDED FOR THE FISCAL YEARS ENDED JUNE 30,
DECEMBER 31, ------------------------------------------
2001 2001 2000 1999 1998 1997
------------- ------ ------ ------ ------ ------
3.97x 6.19x 9.58x 7.14x 8.57x 8.34x
The ratio has been computed by dividing earnings by fixed charges. For
purposes of computing the ratio:
o earnings consist of income from continuing operations before income
taxes and fixed charges (excluding capitalized interest); and
o fixed charges consist of (i) interest on indebtedness, whether
expensed or capitalized, and (ii) that portion of rental expense
Parker believes is representative of interest.
We did not have any serial preferred stock outstanding during the
periods presented above. There were no serial preferred stock dividends
paid or accrued during the periods presented above.
DESCRIPTION OF DEBT SECURITIES
This section describes the general terms and provisions of the debt
securities that we may issue separately, upon exercise of a debt warrant,
in connection with a stock purchase contract or as part of a stock purchase
unit from time to time in the form of one or more series of debt
securities. The applicable prospectus supplement will describe the specific
terms of the debt securities offered through that prospectus supplement as
well as any general terms described in this section that will not apply to
those debt securities.
Our unsecured senior debt securities will be issued under an
indenture, dated May 3, 1996, between us and National City Bank, as
trustee, or another indenture to be entered into by us and National City
Bank or another trustee. The unsecured subordinated debt securities will be
issued under a separate indenture to be entered into by us and National
City Bank or another trustee.
A copy of the May 3, 1996 senior debt indenture has been previously
filed with the SEC and is incorporated by reference as an exhibit to the
registration statement of which this prospectus is a part, and is
incorporated by reference into this prospectus. Another form of senior debt
indenture is filed as an exhibit to the registration statement of which
this prospectus is a part and is incorporated by reference into this
prospectus. A form of the
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subordinated debt indenture is filed as an exhibit to the registration statement
of which this prospectus is a part and is incorporated by reference into this
prospectus. You should refer to the applicable indenture for more specific
information. In addition, you should consult the applicable prospectus
supplement for particular terms of our debt securities.
The indentures will not limit the amount of debt securities that we may
issue and will permit us to issue securities from time to time in one or more
series. The debt securities will be unsecured obligations of Parker. We
currently conduct a portion of our operations through subsidiaries, and the
holders of debt securities (whether senior or subordinated debt securities) will
be effectively subordinated to the creditors of our subsidiaries. This means
that creditors of our subsidiaries will have a claim to the assets of our
subsidiaries that is superior to the claim of our creditors, including holders
of our debt securities.
Generally, we will pay the principal of, premium, if any, and interest on
our registered debt securities either at an office or agency that we maintain
for that purpose or, if we elect, we may pay interest by mailing a check to your
address as it appears on our register (or, at the election of the holder, by
wire transfer to an account designated by the holder). Except as may be provided
otherwise in the applicable prospectus supplement, no payment on a bearer
security will be made by mail to an address in the United States or by wire
transfer to an account in the United States. Except as may be provided otherwise
in the applicable prospectus supplement, we will issue our debt securities only
in fully registered form without coupons, generally in denominations of $1,000
or integral multiples of $1,000. We will not apply a service charge for a
transfer or exchange of our debt securities, but we may require that you pay the
amount of any applicable tax or other governmental charge.
The applicable prospectus supplement will describe the following terms of
any series of debt securities that we may offer:
o the title of the debt securities;
o whether they are senior debt securities or subordinated debt
securities;
o the total amount of the debt securities authorized and the amount
outstanding, if any;
o any limit on the aggregate principal amount of the debt securities
offered through that prospectus supplement;
o the identity of the person to whom we will pay interest if it is
anybody other than the person in whose name the security is
registered;
o when the principal of the debt securities will mature;
o the interest rate or the method for determining it, including any
procedures to vary or reset the interest rate;
o when interest will be payable, as well as the record dates for
determining to whom we will pay interest;
o where the principal of, premium, if any, and interest on the debt
securities will be paid;
o any obligation of ours to redeem, repurchase or repay the debt
securities under any mandatory or optional sinking funds or similar
arrangements and the terms of those arrangements;
o when the debt securities may be redeemed if they are redeemable, as
well as the redemption prices, and a description of the terms of
redemption;
o the denominations of the debt securities, if other than $1,000 or an
integral multiple of $1,000;
o the amount that we will pay the holder if the maturity of the debt
securities is accelerated, if other than the entire principal amount;
o the currency in which we will make payments to the holder and, if a
foreign currency, the manner of conversion from United States dollars;
5
o any index or formula we may use to determine the amount of payment of
principal of, premium, if any, and interest on the debt securities;
o whether the debt securities will be issued in electronic, global or
certificated form;
o if the debt securities will be issued only in the form of a global
note, the name of the depositary or its nominee and the circumstances
under which the global note may be transferred or exchanged to someone
other than the depositary or its nominee;
o the applicability of the legal defeasance and covenant defeasance
provisions in the applicable indenture;
o any additions or changes to events of default and, in the case of
subordinated debt securities, any additional events of default that
would result in acceleration of their maturity;
o any additions or changes to the covenants relating to permitted
consolidations, mergers or sales of assets or otherwise;
o the amount that will be deemed to be the principal amount of the debt
securities as of a particular date before maturity if the principal
amount payable at the stated maturity date will not be able to be
determined on that date;
o whether the debt securities will be convertible into or exchangeable
for any other securities and the terms and conditions upon which a
conversion or exchange may occur, including the initial conversion or
exchange price or rate, the conversion or exchange period and any
other additional provisions;
o the terms of any repurchase or remarketing rights of third parties;
and
o any other terms of the debt securities not inconsistent with the terms
of the applicable indenture.
Debt securities may bear interest at fixed or floating rates. We may issue
our debt securities at an original issue discount, bearing no interest or
bearing interest at a rate that, at the time of issuance, is below market rate,
to be sold at a substantial discount below their stated principal amount.
Generally speaking, if our debt securities are issued at an original issue
discount and there is an event of default or acceleration of their maturity,
holders will receive an amount less than their principal amount. Tax and other
special considerations applicable to any series of debt securities, including
original issue discount debt, will be described in the prospectus supplement in
which we offer those debt securities. In addition, certain United States federal
income tax or other considerations, if any, applicable to any debt securities
which are denominated in a currency or currency unit other than United States
dollars may be described in the applicable prospectus supplement.
We will comply with Section 14(e) under the Exchange Act and any other
tender offer rules under the Exchange Act that may then apply to any obligation
we may have to purchase debt securities at the option of the holders. Any such
obligation applicable to a series of debt securities will be described in the
related prospectus supplement.
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
Debt securities of a series may be subordinated to senior indebtedness to
the extent set forth in the prospectus supplement relating to the subordinated
debt securities. The definition of "senior indebtedness" will include, among
other things, senior debt securities and will be specifically set forth in that
prospectus supplement.
Subordinated debt securities of a particular series and any coupons
relating to those debt securities will be subordinate in right of payment, to
the extent and in the manner set forth in the subordinated debt indenture and
the prospectus supplement relating to those subordinated debt securities, to the
prior payment of all of our indebtedness that is designated as senior
indebtedness with respect to that series.
Upon any payment or distribution of our assets to creditors or upon a total
or partial liquidation or dissolution of Parker or in a bankruptcy,
receivership, or similar proceeding relating to Parker or our property,
6
holders of senior indebtedness will be entitled to receive payment in full in
cash before holders of subordinated debt securities will be entitled to receive
any payment of principal, premium, if any, or interest with respect to the
subordinated debt securities and, until the senior indebtedness is paid in full,
any distribution to which holders of subordinated debt securities would
otherwise be entitled will be made to the holders of senior indebtedness, except
that holders of subordinated debt securities may receive shares of stock and any
debt securities that are subordinated to senior indebtedness to at least the
same extent as the subordinated debt securities, all as described in the
applicable prospectus supplement.
Unless otherwise provided in an applicable prospectus supplement, we may
not make any payments of principal, premium, if any, or interest with respect to
subordinated debt securities, make any deposit for the purpose of defeasance of
the subordinated debt securities, or repurchase, redeem, or otherwise retire,
except, in the case of subordinated debt securities that provide for a mandatory
sinking fund, by our delivery of subordinated debt securities to the trustee in
satisfaction of our sinking fund obligation, any subordinated debt securities
if:
o any principal, premium, if any, or interest with respect to senior
indebtedness is not paid within any applicable grace period (including
at maturity); or
o any other default on senior indebtedness occurs and the maturity of
that senior indebtedness is accelerated in accordance with its terms,
unless, in either case, the default has been cured or waived and the
acceleration has been rescinded, the senior indebtedness has been paid in full
in cash, or we and the trustee receive written notice approving the payment from
the representatives of each issue of specified senior indebtedness as described
in the applicable prospectus supplement.
Unless otherwise provided in an applicable prospectus supplement, during
the continuance of any default (other than a default described in the preceding
paragraph) with respect to any senior indebtedness pursuant to which the
maturity of that senior indebtedness may be accelerated immediately without
further notice (except such notice as may be required to effect the
acceleration) or the expiration of any applicable grace periods, we may not pay
the subordinated debt securities for such periods after notice of the default
from the representative of specified senior indebtedness as shall be specified
in the applicable prospectus supplement.
By reason of this subordination, in the event of insolvency, our creditors
who are holders of senior indebtedness or holders of any indebtedness or serial
preferred stock of our subsidiaries, as well as certain of our general
creditors, may recover more, ratably, than the holders of the subordinated debt
securities.
EVENTS OF DEFAULT
Except as may be provided otherwise in a prospectus supplement, any of the
following events will constitute an event of default for a series of debt
securities under an indenture:
o failure to pay interest on our debt securities of that series (or any
payment with respect to the related coupons, if any) and continuation
of the default for thirty days past the applicable due date;
o failure to pay principal of, or premium, if any, on our debt
securities of that series when due (whether at maturity, upon
redemption, declaration of acceleration, required repurchase or
otherwise);
o failure to make any sinking fund payment on our debt securities of
that series when due;
o failure to perform any other covenant or agreement in the indenture,
other than a covenant included in the indenture solely for appropriate
benefit of a different series of our debt securities, which failure
continues for 60 days after the trustee or holders of 10% of the
outstanding principal amount of the debt securities of that series
have given written notice of the failure in the manner provided in the
indenture;
7
o acceleration of more than $10,000,000 of our or our restricted
subsidiaries' other indebtedness under the terms of the applicable
debt instrument if the acceleration is not rescinded or the
indebtedness is not paid within 10 days after the trustee or holders
of 10% of the outstanding principal amount of the debt securities of
that series have given written notice of the default in the manner
provided in the indenture;
o specified events relating to our bankruptcy, insolvency or
reorganization; and
o any other event of default provided with respect to debt securities of
that series.
An event of default with respect to one series of debt securities is not
necessarily an event of default for another series.
If there is an event of default with respect to a series of our debt
securities, which continues for the requisite amount of time, either the trustee
or holders of at least 25% of the aggregate principal amount of that series may
declare the principal amount of all of the debt securities of that series to be
due and payable immediately. If the securities were issued at an original issue
discount, less than the stated principal amount may become payable. After the
declaration of acceleration of the maturity of the debt securities of any
series, but before the trustee obtains a judgment or decree for payment of the
money due, the holders of at least a majority in aggregate principal amount of
the debt securities of that series may, on behalf of the holders of all debt
securities and any related coupons of that series, rescind and annul the
declaration of acceleration if we take specific evincing steps to cure the
breach, as specified in the applicable indenture. In addition, the holders of at
least a majority in aggregate principal amount of the debt securities of a
series may, on behalf of the holders of all debt securities and any related
coupons of that series, waive any past default with respect to the series and
its consequences, except defaults in the payment of principal, premium, if any,
or interest on the security or in respect of a covenant that cannot be modified
or amended without the consent of the holder of each outstanding security of the
affected series. Such a waiver causes the event of default to cease to exist and
be deemed to have been cured.
We are required to file annually with the trustee an officer's certificate
as to the absence of defaults under the terms of the indenture. The indenture
provides that if a default occurs with respect to debt securities of any series,
the trustee will give the holders of the relevant series notice of the default
when, as and to the extent provided by the Trust Indenture Act of 1939. However,
in the case of any default under any covenant with respect to the series, no
notice of default to holders will be given until at least thirty days after the
occurrence of the default.
Each indenture provides that the trustee will be under no obligation,
subject to the duty of the trustee during default to act with the required
standard of care, to exercise any of its rights or powers under the indenture at
the request or direction of any of the holders, unless these holders shall have
offered to the trustee reasonable security or indemnity. Subject to these
provisions for indemnification of the trustee, the holders of a majority of the
amount of the outstanding debt securities of any series will have the right to
direct the time, manner and place of conducting any proceeding for any remedy
available to the trustee, or exercising any trust or other power conferred on
the trustee, with respect to the debt securities of that series.
SATISFACTION AND DISCHARGE OF THE INDENTURES
An indenture will generally cease to be of any further effect with respect
to a series of debt securities if:
o we have delivered to the applicable trustee for cancellation all debt
securities of that series (with certain limited exceptions); or
o all debt securities and coupons of that series not previously
delivered to the trustee for cancellation:
-- have become due and payable;
-- will become due and payable at their stated maturity within one
year; or
8
-- are to be called for redemption within one year under
arrangements satisfactory to the trustee, and we have deposited
with the trustee as trust funds the entire amount sufficient to
pay at maturity or upon redemption all of those debt securities
and coupons.
For the trustee to execute proper instruments acknowledging the satisfaction and
discharge of an indenture in either case described above, we must also pay or
cause to be paid all other sums payable under the applicable indenture by us,
and deliver to the trustee an officer's certificate and an opinion of counsel
stating that all indenture conditions have been met.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Any series of our debt securities may be subject to the defeasance and
discharge provisions of the applicable indenture if so specified in the
applicable prospectus supplement. If those provisions are applicable, we may
elect either:
o legal defeasance--which will permit us to defease and be discharged
from, subject to limitations, all of our obligations with respect to
those debt securities; or
o covenant defeasance--which will permit us to be released from our
obligations to comply with covenants relating to those debt securities
as described in the applicable prospectus supplement, which may
include obligations concerning subordination of our subordinated debt
securities.
If we exercise our legal defeasance option with respect to a series of debt
securities, payment of those debt securities may not be accelerated because of
an event of default. If we exercise our covenant defeasance option with respect
to a series of debt securities, payment of those debt securities may not be
accelerated because of an event of default related to the specified covenants.
Unless otherwise provided in the applicable prospectus supplement, we may
invoke legal defeasance or covenant defeasance with respect to any series of our
debt securities only if:
o we irrevocably deposit with the trustee, in trust:
-- an amount in funds;
-- U.S. government obligations which, through the scheduled payment
of principal and interest in accordance with their terms, will
provide, not later than one day before the due date of any
payment, an amount in funds; or
-- any combination of funds or U.S. government obligations;
sufficient to pay upon maturity or redemption, as the case may be, the
principal of, premium, if any, and interest on those debt securities;
o we deliver to the trustee a certificate from a nationally recognized
firm of independent accountants expressing their opinion that the
combination of funds or U.S. government obligations will provide cash
at times and in amounts as will be sufficient to pay the principal,
premium, if any, and interest when due with respect to all the debt
securities of that series to maturity or redemption, as the case may
be;
o 90 days pass after the deposit described above is made and, during the
90-day period, no default relating to our bankruptcy, insolvency or
reorganization occurs that is continuing at the end of that period;
o no event of default has occurred and is continuing on the date of the
deposit described above after giving effect to the deposit;
o we deliver to the trustee an officer's certificate to the effect that
no debt security will be delisted as a result of the deposit described
above;
o the deposit will not cause the trustee to have a conflict of interest
under the Trust Indenture Act;
9
o the legal defeasance or covenant defeasance will not result in a
breach of or default under any other agreement to which we are party
or to which we are bound;
o the legal defeasance or covenant defeasance will not result in the
trust arising from the deposit described above constituting an
investment company under the Investment Company Act of 1940 unless
registered under the Investment Company Act or exempt;
o we deliver to the trustee an opinion of counsel addressing certain
federal income tax matters relating to the defeasance; and
o we deliver to the trustee an officer's certificate and an opinion of
counsel, each stating that all conditions precedent to the defeasance
and discharge of the debt securities of that series as contemplated by
the applicable indenture have been complied with.
MODIFICATION AND WAIVER
We may enter into supplemental indentures for the purpose of modifying or
amending an indenture with the consent of holders of at least 66 2/3% in
aggregate principal amount of each series of our outstanding debt securities
affected. However, unless otherwise provided in the applicable prospectus
supplement, the consent of all of the holders of our debt securities that are
affected by any modification or amendment is required for any of the following:
o to reduce the percentage in principal amount of debt securities of any
series whose holders must consent to an amendment or waiver;
o to reduce the rate of or extend the time for payment of interest on
any debt security or coupon or reduce the amount of any interest
payment to be made with respect to any debt security or coupon;
o to reduce the principal of or change the stated maturity of principal
of, or any installment of principal of, or interest on, any debt
security or reduce the amount of principal of any original issue
discount security that would be due and payable upon declaration of
acceleration of maturity;
o to reduce the premium payable upon the redemption of any debt security
or change the time at which any debt security may or shall be
redeemed;
o to modify the subordination provisions of our subordinated debt
securities in a manner adverse to holders;
o change the place or currency of payment of principal, or any premium
or interest on, any debt security;
o to impair the right to bring a lawsuit for the enforcement of any
payment on or after the stated maturity of any debt security (or in
the case of redemption, on or after the date fixed for redemption); or
o to modify any of the above provisions of an indenture, except to
increase the percentage in principal amount of debt securities of any
series whose holders must consent to an amendment or to provide that
certain other provisions of an indenture cannot be modified or waived
without the consent of the holder of each outstanding debt security
affected by the modification or waiver.
In addition, we and the trustee with respect to an indenture may enter into
supplemental indentures without the consent of the holders of debt securities
for one or more of the following purposes (in addition to any other purposes
specified in an applicable prospectus supplement):
o to evidence that another person has become our successor under the
provisions of the indenture and that the successor assumes our
covenants, agreements and obligations in the indenture and in the debt
securities;
o to surrender any of our rights or powers under the indenture, to add
to our covenants further covenants, restrictions, conditions or
provisions for the protection of the holders of all or any series of
debt
10
securities, and to make a default in any of these additional
covenants, restrictions, conditions or provisions a default or an
event of default under the indenture;
o to cure any ambiguity or to make corrections to the indenture, any
supplemental indenture, or any debt securities, or to make such other
provisions in regard to matters or questions arising under the
indenture that do not adversely affect the interests of any holders of
debt securities of any series;
o to add to or change any of the provisions of the indenture to provide
that bearer securities may be registrable as to principal, to change
or eliminate any restrictions on the payment of principal or premium
with respect to registered securities or of principal, premium or
interest with respect to bearer securities, or to permit registered
securities to be exchanged for bearer securities, so long as none of
these actions adversely affects the interests of the holders of debt
securities or any coupons of any series in any material respect;
o to permit the issuance of debt securities of any series in
uncertificated form;
o to secure the debt securities, subject to specified restrictions;
o to add to, change or eliminate any of the provisions of the indenture
with respect to one or more series of debt securities subject to
certain limitations;
o to evidence and provide for the acceptance of appointment by a
successor or separate trustee with respect to the debt securities of
one or more series and to add to or change any of the provisions of
the indenture as necessary to provide for the administration of the
indenture by more than one trustee; and
o to establish the form or terms of debt securities and coupons of any
series.
CERTAIN COVENANTS
Except as may be provided otherwise in the applicable prospectus
supplement, we will be bound by certain restrictions in connection with the
issuance of debt securities. Unless otherwise described in a prospectus
supplement relating to any debt securities, other than as described below under
"--Restrictions on Secured Debt," "--Restrictions on Sales and Leasebacks," and
"--Consolidation, Merger and Sale of Assets," the indentures do not contain any
provisions that would limit our ability to incur indebtedness or that would
afford holders of debt securities protection in the event of a sudden and
significant decline in our credit quality or a takeover, recapitalization or
highly leveraged or similar transaction involving us. Accordingly, we could in
the future enter into transactions that could increase the amount of
indebtedness outstanding at that time or otherwise affect our capital structure
or credit rating. You should refer to the prospectus supplement relating to a
particular series of debt securities for information about any deletions from,
modifications of or additions to, the events of default or covenants of ours
contained in an indenture, including any addition of a covenant or other
provision providing event risk or similar protection.
CERTAIN DEFINITIONS
Unless otherwise provided in the applicable prospectus supplement, the
following terms will mean as follows for purposes of covenants that may be
applicable to any particular series of debt securities.
"Attributable Debt" means the total net amount of rent required to be paid
during the remaining primary term of certain leases, discounted from the due
date at a rate per annum equal to the weighted average yield to maturity of the
debt securities calculated in accordance with generally accepted financial
practices.
"Consolidated Net Tangible Assets" means the aggregate amount of assets,
less applicable reserves and other properly deductible items, after deducting
(i) all liabilities other than deferred income taxes, Funded Debt and
shareholders' equity, and (ii) all goodwill and other intangibles of ours and
our consolidated Subsidiaries computed in accordance with generally accepted
accounting principles.
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"Debt" means loans and notes, bonds, debentures or other similar evidences
of indebtedness for money borrowed.
"Funded Debt" means (i) all indebtedness for money borrowed having a
maturity of more than 12 months from the date as of which the determination is
made or having a maturity of 12 months or less but by its terms being renewable
or extendible beyond 12 months from such date at the option of the borrower and
(ii) rental obligations payable more than 12 months from such date under leases
which are capitalized in accordance with generally accepted accounting
principles (such rental obligations to be included as Funded Debt at the amount
so capitalized at the date of such computation and to be included for the
purposes of the definition of Consolidated Net Tangible Assets both as an asset
and as Funded Debt at the respective amounts so capitalized).
"Principal Property" means any manufacturing or processing plant or
warehouse owned by us or any Restricted Subsidiary which is located within the
United States and the gross book value of which (including related land,
improvements, machinery and equipment without deduction of any depreciation
reserves) on the date as of which the determination is being made, exceeds 1% of
Consolidated Net Tangible Assets, with certain exceptions due to materiality to
our business or to the use or operation of this property as determined by our
board of directors.
"Restricted Subsidiary" means a Subsidiary of ours where substantially all
the property is located, or substantially all of the business is carried on,
within the United States and which owns a Principal Property.
"Subsidiary" means a corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by us and/or one or more of our
Subsidiaries.
RESTRICTIONS ON SECURED DEBT
Unless otherwise provided in the applicable prospectus supplement, we will
not, and we will not permit any Restricted Subsidiary to, incur, issue, assume
or guarantee any Debt secured by a pledge of, or mortgage or other lien on, any
Principal Property or any shares of capital stock of, or Debt of, any Restricted
Subsidiary (such pledges, mortgages and other liens being hereinafter called
"Mortgage" or "Mortgages"), without providing that the debt securities are
secured equally and ratably with (or, at our option, prior to) this secured
Debt.
Unless otherwise provided in the applicable prospectus supplement, this
obligation will not apply if, after giving effect to the secured Debt, the
aggregate amount of all this Debt so secured together with all Attributable Debt
of our and our Restricted Subsidiaries in respect of sale and leaseback
transactions (other than sale and leaseback transactions described in
"--Restrictions on Sales and Leasebacks") involving Principal Properties, would
not exceed 10% of our Consolidated Net Tangible Assets.
Unless otherwise provided in the applicable prospectus supplement, this
obligation will not apply to, and there will be excluded in computing secured
Debt for the purpose of the restriction, Debt secured by:
o Mortgages on property, stock or Debt of any corporation, partnership,
association or other entity existing at the time that corporation,
partnership, association or other entity becomes a Restricted
Subsidiary or obligor under the Indenture;
o Mortgages in favor of Parker or a Restricted Subsidiary;
o Mortgages in favor of a governmental body to secure progress, advance
or other payments pursuant to any contract or provision of any
statute;
o Mortgages on property, stock or Debt existing at the time of
acquisition thereof (including acquisition through merger or
consolidation) or to secure the payment of all or any part of the
purchase price, construction cost or development cost created or
assumed within 180 days after the acquisition or completion of
construction or development of this property, stock or Debt;
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o Debt secured by Mortgages securing industrial revenue or pollution
control bonds; and
o any extension, renewal or refinancing (or successive extensions,
renewals or refinancings), as a whole or in part, of any of the
foregoing, except that this extension, renewal or refinancing Mortgage
will be limited to all or a part of the same property, shares of stock
or Debt that secured the Mortgage extended, renewed or refinanced
(plus improvements on the property).
RESTRICTIONS ON SALES AND LEASEBACKS
Unless otherwise provided in the applicable prospectus supplement, neither
we nor any of our Restricted Subsidiaries may enter into any sale and leaseback
transaction involving any Principal Property, unless the aggregate amount of all
Attributable Debt of us and our Restricted Subsidiaries with respect to this
transaction plus all secured Debt would not exceed 10% of Consolidated Net
Tangible Assets.
Unless otherwise provided in the applicable prospectus supplement, this
obligation will not apply to, and there will be excluded in computing
Attributable Debt for purposes of this restriction, any sale and leaseback
transaction if:
o the sale or transfer of the Principal Property is made within 180 days
after the later of its acquisition or completion of construction;
o the lease secures or relates to industrial revenue or pollution
control bonds; or
o we or our Restricted Subsidiary, within 180 days after the sale is
completed, apply (i) to the retirement of the debt securities, other
Funded Debt of Parker ranking on parity with or senior to the debt
securities, or Funded Debt of a Restricted Subsidiary, or (ii) to the
purchase of other property which will constitute a Principal Property
having a value at least equal to the value of the Principal Property
leased, an amount equal to the greater of (A) the net proceeds of the
sale of the Principal Property leased, or (B) the fair market value of
the Principal Property leased.
In lieu of applying proceeds to the retirement of Funded Debt, the Company
may surrender debentures or notes, including the debt securities to the trustee
for retirement and cancellation, or we or any Restricted Subsidiary may receive
credit for the principal amount of Funded Debt voluntarily retired within 180
days after this sale.
This restriction will not apply to any sale and leaseback transaction
between Parker and a Restricted Subsidiary or between Restricted Subsidiaries or
involving the taking back of a lease for a period of three years or less.
CONSOLIDATION, MERGER AND SALE OF ASSETS
Unless otherwise provided in the applicable prospectus supplement, our
indentures prohibit us from consolidating with or merging into another business
entity, or transferring or leasing substantially all of our assets, unless:
o the surviving or acquiring entity is a United States corporation,
partnership or trust and it expressly assumes our obligations with
respect to our debt securities by executing a supplemental indenture;
o immediately after giving effect to the transaction, no default or
event of default would occur or be continuing; and
o we have delivered to the trustee an officer's certificate and an
opinion of counsel, each stating that the consolidation, merger, lease
or sale complies with the indenture.
The indenture further provides that no consolidation or merger of us with
or into any other corporation and no conveyance, transfer or lease of our
property substantially as an entirety to another person may be made if, as
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a result thereof, any Principal Property of ours or any of our Restricted
Subsidiaries or any shares of capital stock or Debt of a Restricted Subsidiary
would become subject to a Mortgage which is not expressly excluded from the
restrictions or permitted by the indentures, unless the debt securities are
secured equally and ratably with, or prior to, all indebtedness secured thereby.
CONVERSION OR EXCHANGE RIGHTS
If debt securities of any series are convertible or exchangeable, the
applicable prospectus supplement will specify:
o the type of securities into which they may be converted or exchanged;
o the conversion price or exchange ratio, or its method of calculation;
o whether conversion or exchange is mandatory or at the holder's
election;
o how and when the conversion price or exchange ratio may be adjusted;
and
o any other important terms concerning the conversion or exchange
rights.
GLOBAL SECURITIES
Our debt securities may be issued in the form of one or more global
securities that will be deposited with a depositary or its nominee identified in
the applicable prospectus supplement. If so, each global security will be issued
in the denomination of the aggregate principal amount of securities that it
represents. Unless and until it is exchanged in whole or in part for debt
securities that are in definitive registered form, a global security may not be
transferred or exchanged except as a whole to the depositary, another nominee of
the depositary, or a successor of the depositary or its nominee.
The specific material terms of the depositary arrangement with respect to
any portion of a series of our debt securities that will be represented by a
global security will be described in the applicable prospectus supplement. We
anticipate that the following provisions will apply to our depositary
arrangements.
Upon the issuance of any global security and its deposit with or on behalf
of the depositary, the depositary will credit, on its book-entry registration
and transfer system, the principal amounts of our debt securities represented by
the global security to the accounts of participating institutions that have
accounts with the depositary or its nominee. The underwriters or agents engaging
in the distribution of our debt securities, or we, if we are offering and
selling our debt securities directly, will designate the accounts to be
credited. Ownership of beneficial interests in a global security will be limited
to participating institutions or their clients. The depositary or its nominee
will keep records of the ownership and transfer of beneficial interests in a
global security by participating institutions. Participating institutions will
keep records of the ownership and transfer of beneficial interests by their
clients. The laws of some jurisdictions may require that purchasers of our
securities receive physical certificates, which may impair a holder's ability to
transfer its beneficial interests in global securities.
While the depositary or its nominee is the registered owner of a global
security, the depositary or its nominee will be considered the sole owner of all
of our debt securities represented by the global security for all purposes under
the indentures. Generally, if a holder owns beneficial interests in a global
security, that holder will not be entitled to have our debt securities
registered in that holder's own name, and that holder will not be entitled to
receive a certificate representing that holder's ownership. Accordingly, if a
holder owns a beneficial interest in a global security, the holder must rely on
the depositary and, if applicable, the participating institution of which that
holder is a client to exercise the rights of that holder under the applicable
indenture.
The depositary may grant proxies and otherwise authorize participating
institutions to take any action that a holder is entitled to take under an
indenture. We understand that, according to existing industry practices, if we
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request any action of holders, or any owner of a beneficial interest in a global
security wishes to give any notice or take any action, the depositary would
authorize the participating institutions to give the notice or take the action,
and the participating institutions would in turn authorize their clients to give
the notice or take the action.
Generally, we will make payments on our debt securities represented by a
global security directly to the depositary or its nominee. It is our
understanding that the depositary will then credit the accounts of participating
institutions, which will then distribute funds to their clients. We also expect
that payments by participating institutions to their clients will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of clients registered in "street names," and
will be the responsibility of the participating institutions. Neither we nor the
trustee, nor our respective agents, will have any responsibility, or bear any
liability, for any aspects of the records relating to or payments made on
account of beneficial interests in a global security, or for maintaining,
supervising or reviewing records relating to beneficial interests.
Generally, a global security may be exchanged for certificated debt
securities only in the following instances:
o the depositary notifies us that it is unwilling or unable to continue
as depositary for the relevant global security, or it has ceased to be
a registered clearing agency, if required to be registered by law;
o there shall have occurred and be continuing an event of default with
respect to the global security; or
o another event, described in the relevant prospectus supplement, has
occurred.
The following is based on information furnished to us:
Unless otherwise specified in the applicable prospectus supplement, The
Depository Trust Company ("DTC") will act as depositary for securities issued in
the form of global securities. Global securities will be issued only as fully
registered securities registered in the name of Cede & Co., which is DTC's
nominee. One or more fully-registered global securities will be issued for these
securities representing in the aggregate the total number of these securities,
and will be deposited with or on behalf of DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants deposit with it. DTC also facilitates the
settlement among its participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic computerized book-entry
changes in participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct participants include securities
brokers and dealers, banks, trust companies, clearing corporations and other
organizations. DTC is owned by a number of its direct participants and by the
New York Stock Exchange, the American Stock Exchange and the National
Association of Securities Dealers. Access to the DTC system is also available to
others, known as indirect participants, such as securities brokers and dealers,
banks and trust companies that clear through or maintain custodial relationships
with direct participants, either directly or indirectly. The rules applicable to
DTC and its participants are on file with the SEC.
Purchases of securities within the DTC system must be made by or through
direct participants, which will receive a credit for the securities on DTC's
records. The ownership interest of each actual purchaser of each security,
commonly referred to as the beneficial owner, is in turn to be recorded on the
direct and indirect participants' records. Beneficial owners will not receive
written confirmation from DTC of their purchases, but beneficial owners are
expected to receive written confirmations providing details of the transactions,
as well as periodic statements of their holdings, from the direct or indirect
participants through which the beneficial owners purchased securities. Transfers
of ownership interests in securities issued in the form of global securities are
accomplished by entries made on the books of participants acting on behalf of
beneficial owners. Beneficial
15
owners will not receive certificates representing their ownership interests in
these securities, except if use of the book-entry system for these securities is
discontinued.
DTC has no knowledge of the actual beneficial owners of the securities
issued in the form of global securities. DTC's records reflect only the identity
of the direct participants to whose accounts these securities are credited,
which may or may not be the beneficial owners. The participants will remain
responsible for keeping accounts of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants, and by direct
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.
Any redemption notices need to be sent to DTC. If less than all of the
securities of a series or class are being redeemed, DTC's practice is to
determine by lot the amount to be redeemed from each participant.
Although voting with respect to securities issued in the form of global
securities is limited to the holders of record, when a vote is required, DTC
will not itself consent or vote with respect to these securities. Under its
usual procedures, DTC would mail an omnibus proxy to the issuer of the
securities as soon as possible after the record date. The omnibus proxy assigns
Cede & Co.'s consenting or voting rights to those direct participants to whose
accounts these securities are credited on the record date, identified in a
listing attached to the omnibus proxy.
Payments in respect of securities issued in the form of global securities
will be made by the issuer of these securities to DTC. DTC's practice is to
credit direct participants' accounts on the relevant payment date in accordance
with their respective holdings shown on DTC's records unless DTC has reason to
believe that it will not receive payments on this payment date. Payments by
participants to beneficial owners will be governed by standing instructions and
customary practices and will be the responsibility of the participant and not of
DTC or us, subject to any statutory or regulatory requirements as may be in
effect from time to time. Payments to DTC are the responsibility of the issuer
of the applicable securities, disbursement of these payments to direct
participants is the responsibility of DTC, and disbursements of these payments
to the beneficial owners is the responsibility of direct and indirect
participants.
DTC may discontinue providing its services as depositary with respect to
any securities at any time by giving reasonable notice to the issuer of these
securities. If a successor depositary is not obtained, individual security
certificates representing these securities are required to be printed and
delivered. We, at our option, may decide to discontinue use of the system of
book-entry transfers through DTC or a successor depositary.
The information in this section concerning DTC and its book-entry system
has been obtained from sources that we believe to be accurate, but we assume no
responsibility for its accuracy. We have no responsibility for the performance
by DTC or its participants of their obligations as described in this prospectus
or under the rules and procedures governing their operations.
Debt securities may be issued as registered securities, which will be
registered as to principal and interest in the register maintained by the
registrar for those debt securities, or bearer securities, which will be
transferable only by delivery. If debt securities are issuable as bearer
securities, certain special limitations and considerations will apply, as set
forth in the applicable prospectus supplement.
OUR SENIOR DEBT TRUSTEE
The current trustee for our senior debt securities is National City Bank,
which performs services for us in the ordinary course of business. National City
Bank acts as a depositary for funds of, performs certain other
16
services for, and transacts other banking business with us and certain of our
subsidiaries in the normal course of its business. National City Bank is a
participating lender under our current credit facility. Duane E. Collins,
chairman of the board of directors of Parker, and John G. Breen, a director of
Parker, are also directors of National City Bank. We may engage additional or
substitute trustees with respect to particular series of our debt securities.
GOVERNING LAW
The indentures and the debt securities will be governed by the laws of the
State of New York.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 603,000,000 shares of stock,
including:
o 600,000,000,000 common shares, $0.50 par value per share, of which
117,159,213 shares were issued and outstanding as of December 31,
2001; and
o 3,000,000 shares of serial preferred stock, $0.50 par value per share,
of which no shares are currently issued or outstanding.
COMMON SHARES
This section describes the general terms of our common shares. For more
detailed information, you should refer to our amended articles of incorporation
and amended code of regulations, copies of which have been filed with the SEC.
These documents are also incorporated by reference into this prospectus.
Holders of our common shares are entitled to one vote per share with
respect to each matter submitted to a vote of our shareholders, subject to
voting rights of shares of our serial preferred stock, if any. Except as
provided in connection with our serial preferred stock or as otherwise may be
required by law or our amended articles of incorporation, our common shares are
the only capital stock entitled to vote in the election of directors.
Shareholders of Parker have cumulative voting rights in the election of
directors if any shareholder gives notice in writing to the president or a vice
president or the secretary of Parker not less than 48 hours before the time
fixed for holding the meeting that cumulative voting at this election is desired
and an announcement of the giving of this notice is made upon the convening of
the meeting by the chairman or the secretary or by or on behalf of the
shareholder giving the notice. In this event, each shareholder has the right to
cumulate votes and give one nominee the number of votes equal to the number of
directors to be elected multiplied by the number of votes to which the
shareholder is entitled, or to distribute votes on the same principle among two
or more nominees, as the shareholder sees fit.
Subject to the rights of holders of our serial preferred stock, if any,
holders of our common shares are entitled to receive dividends and distributions
lawfully declared by our board of directors. If we liquidate, dissolve or wind
up our business, whether voluntarily or involuntarily, holders of our common
shares will be entitled to receive any assets available for distribution to our
shareholders after we have paid or set apart for payment the amounts necessary
to satisfy any preferential or participating rights to which the holders of each
outstanding series of serial preferred stock are entitled by the express terms
of that series of serial preferred stock.
Our outstanding common shares are fully paid and nonassessable. Our common
shares do not have any preemptive, subscription or conversion rights. We may
issue additional authorized common shares as it is authorized by our board of
directors from time to time, without shareholder approval, except as may be
required by applicable stock exchange requirements. In addition, attached to
each of our common shares is one common share purchase right. See "--Rights
Agreement" below for a summary discussion of these rights.
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SERIAL PREFERRED STOCK
This section describes the general terms and provisions of our serial
preferred stock. The applicable prospectus supplement will describe the specific
terms of the shares of serial preferred stock offered through that prospectus
supplement, as well as any general terms described in this section that will not
apply to those shares of serial preferred stock. We will file a copy of the
amendment to our articles of incorporation that contains the terms of each new
series of serial preferred stock with the SEC each time we issue a new series of
serial preferred stock. This amendment will establish the number of shares
included in a designated series and fix the designation, powers, privileges,
preferences and rights of the shares of each series as well as any applicable
qualifications, limitations or restrictions. You should refer to the applicable
amended articles of incorporation before deciding to buy shares of our serial
preferred stock as described in the applicable prospectus supplement.
Our board of directors has been authorized to provide for the issuance of
shares of our serial preferred stock in multiple series without the approval of
shareholders. With respect to each series of our serial preferred stock, our
board of directors has the authority, consistent with our amended articles of
incorporation, to fix the following terms:
o the designation of the series distinguished by number, letter or
title;
o the number of shares within the series, which the board of directors
may increase or decrease;
o the dividend rate of the series;
o the dates of payment of dividends, and the dates from which dividends
are cumulative;
o the liquidation price for each share you own if we dissolve or
liquidate;
o whether the shares are redeemable, the redemption price and the terms
of redemption;
o the terms and amount of any sinking fund provided for the purchase or
redemption of shares of the series;
o whether the shares are convertible, the price or rate of conversion,
and the applicable terms and conditions; and
o any restrictions on issuance of shares in the same series or any other
series.
Dividends in respect of the serial preferred stock will be cumulative and
payable quarterly in cash. Holders of serial preferred stock are entitled to one
vote for each share of serial preferred stock on all matters presented to
shareholders and vote, in general, together with common shares as one class. In
the event of a default in the payment of dividends (whether or not declared) in
an aggregate amount equivalent to six quarterly dividends (whether or not
consecutive), the holders of serial preferred stock, voting as a separate class,
have the right to elect two additional directors on Parker's board of directors.
In addition, the holders of serial preferred stock have supermajority voting
rights in regard to changes to our amended articles of incorporation or amended
code of regulations adversely affecting the voting powers, rights or preferences
of this serial preferred stock.
Your rights with respect to your shares of the serial preferred stock will
be subordinate to the rights of our general creditors. Shares of our serial
preferred stock that we issue will be fully paid and nonassessable, and will not
be entitled to preemptive rights unless specified in the applicable prospectus
supplement.
The description of our board of director's powers with respect to serial
preferred stock and your rights as a serial preferred stock shareholder in this
section does not describe every aspect of these powers and rights. A copy of our
amended articles of incorporation has been incorporated by reference in the
registration statement of which this prospectus is a part. See "Where You Can
Find More Information" for information on how to obtain a copy.
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RIGHTS AGREEMENT
Attached to each of our common shares is one common share purchase right.
Each right entitles the registered holder to purchase from us one common share,
par value $.50, at a price of $150.00 per common share, subject to adjustment.
The rights expire on February 17, 2007, unless the final expiration date is
extended or unless the rights are earlier redeemed or exchanged by us.
The rights are represented by the certificates for our common shares, are
not exercisable, and are not separately transferable from the common shares,
until the earlier of:
o ten business days or any earlier or later date (this date, the
"flip-in date") (not to exceed 30 days) determined by the board of
directors, after our public announcement that a person or group,
called an "acquiring person," has become the beneficial owner of 15%
or more of our outstanding common shares; or
o ten business days, or a later date determined by the board of
directors, after the commencement of a tender or exchange offer that
would result in a person or group becoming an acquiring person.
Generally, in the event that a person or group becomes an acquiring person,
each right, other than the rights owned by the acquiring person, will entitle
the holder to receive, upon exercise of the right, common shares having a value
equal to two times the exercise price of the right. In the event that we are
acquired in a merger, consolidation or other business combination transaction or
more than 50% of our assets, cash flow or earning power is sold or transferred,
each right, other than the rights owned by an acquiring person, will entitle the
holder to receive, upon the exercise of the right, common shares of the
surviving corporation having a value equal to two times the exercise price of
the right.
At any time after the flip-in date, the board of directors may exchange the
rights, other than rights owned by the acquiring person, which would have become
void, in whole or in part, at an exchange ratio of one common share per right,
subject to adjustment.
The rights are redeemable in whole, but not in part, at $0.01 per right
until a flip-in date occurs. The ability to exercise the rights terminates at
the time that the board of directors elects to redeem or exchange the rights. At
no time will the rights have any voting rights.
The number of outstanding rights, the exercise price payable, and the
number of common shares issuable upon exercise of the rights are subject to
customary adjustments from time to time to prevent dilution.
The rights have certain anti-takeover effects. The rights may cause
substantial dilution to a person or group that attempts to acquire beneficial
ownership of more than 15% of our outstanding shares on terms not approved by
our board of directors. The rights should not interfere with any merger or other
business combination that our board of directors approves.
The description of the rights contained in this section does not describe
every aspect of the rights. The rights agreement dated January 31, 1997, as it
may be amended from time to time, between us and the rights agent, contains the
full legal text of the matters described in this section. A copy of the rights
agreement has been incorporated by reference in the registration statement of
which this prospectus forms a part. See "Where You Can Find More Information"
for information on how to obtain a copy.
LIMITATION ON DIRECTORS' LIABILITY
Under Section 1701.59(D) of the Ohio Revised Code, unless the articles or
the regulations of a corporation state by specific reference that this provision
of Ohio law does not apply, a director is liable for monetary damages for any
action or omission as a director only if it is proven by clear and convincing
evidence that this act or omission was undertaken either with deliberate intent
to cause injury to the corporation or with reckless
19
disregard for the best interests of the corporation. This provision, however,
does not affect the liability of directors under Section 1701.95 of the Ohio
Revised Code, which relates to:
o the payment of dividends or distributions, the making of distributions
of assets to shareholders or the purchase or redemption of the
corporation's shares, contrary to the law or our articles; the
distribution of assets to shareholders during the winding up of our
affairs by dissolution or otherwise, if creditors are not adequately
provided for; and
o the making of certain loans to officers, directors or shareholders,
other than in the usual course of business, without approval by a
majority of the disinterested directors of the corporation.
Section 1701.59(D) applies to our board of directors because our articles
and regulations do not specifically exclude its applicability. This may have the
effect of reducing the likelihood of derivative litigation against directors,
and may discourage or deter shareholders or management from bringing a lawsuit
against directors based on their actions or omissions, even though such a
lawsuit, if successful, might otherwise have benefited us and our shareholders.
OHIO ANTITAKEOVER LAW
Several provisions of Ohio Revised Code may make it more difficult to
acquire us by means of a tender offer, open market purchase, proxy fight or
otherwise. These provisions include Section 1701.831 (Control Share
Acquisitions) and Chapter 1704 (Business Combinations).
These statutory provisions are designed to encourage persons seeking to
acquire control of us to negotiate with our board of directors. We believe that,
as a general rule, our interests and the interests of our shareholders would be
served best if any change in control results from negotiations with our board of
directors based upon careful consideration of the proposed terms, such as the
price to be paid to shareholders, the form of consideration to be paid and the
anticipated tax effects of the transaction, among other factors.
These statutory provisions could have the effect of discouraging a
prospective acquirer from making a tender offer for our shares or otherwise
attempting to obtain control of us. To the extent that these provisions
discourage takeover attempts, they could deprive shareholders of opportunities
to realize takeover premiums for their shares. Moreover, these provisions could
discourage accumulations of large blocks of common shares, thus depriving
shareholders of any advantages which large accumulations of stock might provide.
Finally, these provisions could limit the ability of shareholders to approve a
transaction that they may deem to be in their best interests.
The Ohio Revised Code's Control Share Acquisition and Business Combination
provisions are set forth in summary below. This summary does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
all sections of the Ohio Revised Code.
CONTROL SHARE ACQUISITIONS
Section 1701.831 of the Ohio Revised Code provides that certain notice and
informational filings and special shareholder meeting and voting procedures must
be followed prior to consummation of a proposed "control share acquisition." The
Ohio Revised Code defines a "control share acquisition" as any acquisition of an
issuer's shares which would entitle the acquirer, immediately after that
acquisition, directly or indirectly, to exercise or direct the exercise of
voting power of the issuer in the election of directors within any one of the
following ranges of that voting power:
o one-fifth or more but less than one-third of that voting power;
o one-third or more but less than a majority of that voting power; or
o a majority or more of that voting power.
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Assuming compliance with the notice and information filings prescribed by
the statute, the proposed control share acquisition may be made only if, at a
special meeting of shareholders, the acquisition is approved by at least a
majority of the voting power of the issuer represented at the meeting and at
least a majority of the voting power remaining after excluding the combined
voting power of the "interested shares." "Interested shares" are the shares held
by the intended acquirer and the employee-directors and officers of the issuer,
as well as certain shares that were acquired after the date of the first public
disclosure of the acquisition but before the record date for the meeting of
shareholders and shares that were transferred, together with the voting power
thereof, after the record date for the meeting of shareholders.
BUSINESS COMBINATIONS
We are subject to Chapter 1704 of the Ohio Revised Code, which prohibits
certain business combinations and transactions between an "issuing public
corporation" and an "interested shareholder" for at least three years after the
interested shareholder attains 10% ownership of the issuing public corporation,
unless the board of directors of the issuing public corporation approves the
transaction prior to the interested shareholder attaining such 10% ownership. An
"issuing public corporation" is an Ohio corporation with 50 or more shareholders
that has its principal place of business, principal executive offices, or
substantial assets within the State of Ohio, and as to which no close
corporation agreement exists. An "interested shareholder" is a beneficial owner
of 10% or more of the shares of a corporation. Examples of transactions
regulated by Chapter 1704 include the disposition of assets, mergers and
consolidations, voluntary dissolutions and the transfer of shares.
Subsequent to the three-year period, a transaction subject to Chapter 1704
may take place provided that certain conditions are satisfied, including:
o prior to the interested shareholder's share acquisition date, the
board of directors of the issuing public corporation approved the
purchase of shares by the interested shareholder;
o the transaction is approved by the holders of shares with at least
66 2/3% of the voting power of the corporation (or a different
proportion set forth in the articles of incorporation), including at
least a majority of the outstanding shares after excluding shares
controlled by the interested shareholder; or
o the business combination results in shareholders, other than the
interested shareholder, receiving a fair price plus interest for their
shares.
SPECIAL CHARTER AND REGULATIONS PROVISIONS
Our amended articles of incorporation contain a "fair price" provision that
applies to certain business combination transactions involving any person or
group that beneficially owns at least 20% of the aggregate voting power of our
outstanding capital stock, referred to as an "interested party." The provision
requires the affirmative vote of the holders of at least 80% of our voting stock
to approve certain business combination transactions between the interested
party and us or our subsidiaries, including:
o any merger or consolidation;
o any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of our assets or the assets of a subsidiary having a fair
market value of at least $20,000,000;
o the adoption of any plan or proposal for our liquidation or
dissolution proposed by or on behalf of the interested party;
o the issuance or transfer by us or a subsidiary to an interested party
of any of our securities or the securities of a subsidiary having a
fair market value of $20,000,000 or more; or
o any recapitalization, reclassification, merger or consolidation
involving us that would have the effect of increasing the interested
party's voting power in us or a subsidiary.
21
The 80% voting requirement will not apply if:
o the business combination is approved by our continuing directors (as
defined in the amended articles of incorporation); or
o the business combination is a merger or consolidation and the
consideration to be received by the holders of each class of capital
stock is the highest of:
-- the highest per share price paid by the interested party for the
capital stock during the prior two years; or
-- the highest sales price reported on a national securities
exchange during the prior two years; or
-- in the case of serial preferred stock, the amount of the
liquidation preference plus annual compound interest from the
date the interested party became an interested party less the
aggregate amount of any cash dividends paid during the interest
period.
This provision could have the effect of delaying or preventing a change in
control in a transaction or series of transactions not satisfying the "fair
price" criteria.
The "fair price" provision may be amended only by the affirmative vote of
the holders of at least 80% of the aggregate voting power of our outstanding
capital stock, unless two-thirds of the continuing directors recommends such a
change.
The foregoing provisions of the amended articles of incorporation and the
code of regulations, together with the rights agreement and the provisions of
the Ohio antitakeover laws (Section 1701.831 and Chapter 1704 of the Ohio
Revised Code) could have the effect of delaying, deferring or preventing a
change in control or the removal of existing management, of deterring potential
acquirors from making an offer to our shareholders and of limiting any
opportunity to realize premiums over prevailing market prices for our common
shares in connection therewith. This could be the case notwithstanding that a
majority of our shareholders might benefit from this change in control or offer.
TRANSFER AGENT AND REGISTRAR
National City Bank serves as the registrar and transfer agent for the
common shares.
STOCK EXCHANGE LISTING
Our common shares are listed on the New York Stock Exchange. The trading
symbol for our common shares on this exchange is "PH."
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
We may offer fractional shares of serial preferred stock, rather than full
shares of serial preferred stock. If we do so, we may issue receipts for
depositary shares that each represent a fraction of a share of a particular
series of serial preferred stock. The prospectus supplement will indicate that
fraction. The shares of serial preferred stock represented by depositary shares
will be deposited under a depositary agreement between us and a bank or trust
company that meets certain requirements and is selected by us (the "Bank
Depositary"). Each owner of a depositary share will be entitled to all the
rights and preferences of the serial preferred stock represented by the
depositary share. The depositary shares will be evidenced by depositary receipts
issued pursuant to the depositary agreement. Depositary receipts will be
distributed to those persons purchasing the fractional shares of serial
preferred stock in accordance with the terms of the offering.
22
We have summarized some common provisions of a depositary agreement and the
related depositary receipts. The forms of the depositary agreement and the
depositary receipts relating to any particular issue of depositary shares will
be filed with the SEC each time we issue depositary shares, and you should read
those documents for provisions that may be important to you.
DIVIDENDS AND OTHER DISTRIBUTIONS
If we pay a cash distribution or dividend on a series of serial preferred
stock represented by depositary shares, the Bank Depositary will distribute
these dividends to the record holders of these depositary shares. If the
distributions are in property other than cash, the Bank Depositary will
distribute the property to the record holders of the depositary shares. However,
if the Bank Depositary determines that it is not feasible to make the
distribution of property, the Bank Depositary may, with our approval, sell this
property and distribute the net proceeds from this sale to the record holders of
the depositary shares.
REDEMPTION OF DEPOSITARY SHARES
If we redeem a series of serial preferred stock represented by depositary
shares, the Bank Depositary will redeem the depositary shares from the proceeds
received by the Bank Depositary in connection with the redemption. The
redemption price per depositary share will equal the applicable fraction of the
redemption price per share of the serial preferred stock. If fewer than all the
depositary shares are redeemed, the depositary shares to be redeemed will be
selected by lot or pro rata as the Bank Depositary may determine.
VOTING THE SERIAL PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the serial
preferred stock represented by depositary shares are entitled to vote, the Bank
Depositary will mail the notice to the record holders of the depositary shares
relating to this serial preferred stock. Each record holder of these depositary
shares on the record date (which will be the same date as the record date for
the serial preferred stock) may instruct the Bank Depositary as to how to vote
the serial preferred stock represented by this holder's depositary shares. The
Bank Depositary will endeavor, insofar as practicable, to vote the amount of the
serial preferred stock represented by such depositary shares in accordance with
these instructions, and we will take all action which the Bank Depositary deems
necessary in order to enable the Bank Depositary to do so. The Bank Depositary
will abstain from voting shares of the serial preferred stock to the extent it
does not receive specific instructions from the holders of depositary shares
representing this serial preferred stock.
AMENDMENT AND TERMINATION OF THE DEPOSITARY AGREEMENT
The form of depositary receipt evidencing the depositary shares and any
provision of the depositary agreement may be amended by agreement between the
Bank Depositary and us. However, any amendment that materially and adversely
alters the rights of the holders of depositary shares will not be effective
unless this amendment has been approved by the holders of at least a majority of
the depositary shares then outstanding. The depositary agreement may be
terminated by the Bank Depositary or us only if:
o all outstanding depositary shares have been redeemed; or
o there has been a final distribution in respect of the serial preferred
stock in connection with any liquidation, dissolution or winding up of
Parker and this distribution has been distributed to the holders of
depositary receipts.
CHARGES OF BANK DEPOSITARY
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. We will pay charges of
the Bank Depositary in connection with the initial deposit of the
23
serial preferred stock and any redemption of the serial preferred stock. Holders
of depositary receipts will pay other transfer and other taxes and governmental
charges and any other charges, including a fee for the withdrawal of shares of
serial preferred stock upon surrender of depositary receipts, as are expressly
provided in the depositary agreement to be for their accounts.
WITHDRAWAL OF SERIAL PREFERRED STOCK
Except as may be provided otherwise in the applicable prospectus
supplement, upon surrender of depositary receipts at the principal office of the
Bank Depositary, subject to the terms of the depositary agreement, the owner of
the depositary shares may demand delivery of the number of whole shares of
serial preferred stock and all money and other property, if any, represented by
those depositary shares. Fractional shares of serial preferred stock will not be
issued. If the depositary receipts delivered by the holder evidence a number of
depositary shares in excess of the number of depositary shares representing the
number of whole shares of serial preferred stock to be withdrawn, the Bank
Depositary will deliver to this holder at the same time a new depositary receipt
evidencing the excess number of depositary shares. Holders of serial preferred
stock thus withdrawn may not thereafter deposit those shares under the
depositary agreement or receive depositary receipts evidencing depositary shares
therefor.
MISCELLANEOUS
The Bank Depositary will forward to holders of depositary receipts all
reports and communications from us that are delivered to the Bank Depositary and
that we are required to furnish to the holders of serial preferred stock.
Neither the Bank Depositary nor we will be liable if we are prevented or
delayed by law or any circumstance beyond our control in performing our
obligations under the depositary agreement. The obligations of the Bank
Depositary and us under the depositary agreement will be limited to performance
in good faith of our duties thereunder, and we will not be obligated to
prosecute or defend any legal proceeding in respect of any depositary shares or
serial preferred stock unless satisfactory indemnity is furnished. We may rely
upon written advice of counsel or accountants, or upon information provided by
persons presenting serial preferred stock for deposit, holders of depositary
receipts or other persons believed to be competent and on documents believed to
be genuine.
RESIGNATION AND REMOVAL OF BANK DEPOSITARY
The Bank Depositary may resign at any time by delivering to us notice of
its election to do so, and we may at any time remove the Bank Depositary. Any
such resignation or removal will take effect upon the appointment of a successor
Bank Depositary and the successor's acceptance of this appointment. The
successor Bank Depositary must be appointed within 60 days after delivery of the
notice of resignation or removal and must be a bank or trust company meeting the
requirements of the depositary agreement.
DESCRIPTION OF WARRANTS
GENERAL DESCRIPTION OF WARRANTS
We may issue warrants for the purchase of debt securities, serial preferred
stock or common shares. Warrants may be issued independently or together with
other securities and may be attached to or separate from any offered securities.
Each series of warrants will be issued under a separate warrant agreement to be
entered into between us and a bank or trust company, as warrant agent. The
warrant agent will act solely as our agent in connection with the warrants and
will not have any obligation or relationship of agency or trust for or with any
holders or beneficial owners of warrants. A copy of the warrant agreement will
be filed with the SEC in connection with the offering of warrants.
24
DEBT WARRANTS
The prospectus supplement relating to a particular issue of warrants to
issue debt securities will describe the terms of those warrants, including the
following:
o the title of the warrants;
o the offering price for the warrants, if any;
o the aggregate number of the warrants;
o the designation and terms of the debt securities purchasable upon
exercise of the warrants;
o if applicable, the designation and terms of the debt securities that
the warrants are issued with and the number of warrants issued with
each debt security;
o if applicable, the date from and after which the warrants and any debt
securities issued with them will be separately transferable;
o the principal amount of debt securities that may be purchased upon
exercise of a warrant and the price at which the debt securities may
be purchased upon exercise;
o the dates on which the right to exercise the warrants will commence
and expire;
o if applicable, the minimum or maximum amount of the warrants that may
be exercised at any one time;
o whether the warrants represented by the warrant certificates or debt
securities that may be issued upon exercise of the warrants will be
issued in registered or bearer form;
o information relating to book-entry procedures, if any;
o the currency or currency units in which the offering price, if any,
and the exercise price are payable;
o if applicable, a discussion of material United States federal income
tax considerations;
o anti-dilution provisions of the warrants, if any;
o redemption or call provisions, if any, applicable to the warrants;
o any additional terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the warrants; and
o any other information we think is important about the warrants.
STOCK WARRANTS
The prospectus supplement relating to a particular issue of warrants to
issue common shares or serial preferred stock will describe the terms of the
common share warrants and serial preferred stock warrants, including the
following:
o the title of the warrants;
o the offering price for the warrants, if any;
o the aggregate number of the warrants;
o the designation and terms of the common shares or serial preferred
stock that may be purchased upon exercise of the warrants;
o if applicable, the designation and terms of the securities that the
warrants are issued with and the number of warrants issued with each
security;
o if applicable, the date from and after which the warrants and any
securities issued with the warrants will be separately transferable;
25
o the number of common shares or serial preferred stock that may be
purchased upon exercise of a warrant and the price at which the shares
may be purchased upon exercise;
o the dates on which the right to exercise the warrants commence and
expire;
o if applicable, the minimum or maximum amount of the warrants that may
be exercised at any one time;
o the currency or currency units in which the offering price, if any,
and the exercise price are payable;
o if applicable, a discussion of material United States federal income
tax considerations;
o anti-dilution provisions of the warrants, if any;
o redemption or call provisions, if any, applicable to the warrants;
o any additional terms of the warrants, including terms, procedures and
o limitations relating to the exchange and exercise of the warrants; and
any other information we think is important about the warrants.
EXERCISE OF WARRANTS
Each warrant will entitle the holder of the warrant to purchase at the
exercise price set forth in the applicable prospectus supplement the principal
amount of debt securities or common shares or shares of serial preferred stock
being offered. Holders may exercise warrants at any time up to the close of
business on the expiration date set forth in the applicable prospectus
supplement. After the close of business on the expiration date, unexercised
warrants are void. Holders may exercise warrants as set forth in the prospectus
supplement relating to the warrants being offered.
Until a holder exercises the warrants to purchase our debt securities,
serial preferred stock or common shares, the holder will not have any rights as
a holder of our debt securities, serial preferred stock or common shares, as the
case may be, by virtue of ownership of warrants.
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
We may issue stock purchase contracts, including contracts obligating
holders to purchase from us, and obligating us to sell to the holders, a
specified number of common shares or other securities at a future date or dates,
which we refer to in this prospectus as "stock purchase contracts." The price
per share of the securities and the number of shares of the securities may be
fixed at the time the stock purchase contracts are issued or may be determined
by reference to a specific formula set forth in the stock purchase contracts.
The stock purchase contracts may be issued separately or as part of units
consisting of a stock purchase contract and debt securities, preferred
securities, warrants or debt obligations of third parties, including United
States treasury securities, securing the holders' obligations to purchase the
securities under the stock purchase contracts, which we refer to herein as
"stock purchase units." The stock purchase contracts may require holders to
secure their obligations under the stock purchase contracts in a specified
manner. The stock purchase contracts also may require us to make periodic
payments to the holders of the stock purchase units or vice versa, and those
payments may be unsecured or refunded on some basis.
The applicable prospectus supplement will describe the terms of the stock
purchase contracts or stock purchase units. The description in the prospectus
supplement will not necessarily be complete, and reference will be made to the
stock purchase contracts, and, if applicable, collateral or depositary
arrangements, relating to the stock purchase contracts or stock purchase units,
which will be filed with the SEC each time we issue stock purchase contracts or
stock purchase units. United States federal income tax considerations applicable
to the stock purchase units and the stock purchase contracts will also be
discussed in the applicable prospectus supplement.
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PLAN OF DISTRIBUTION
We may sell the offered securities in and outside the United States:
o through underwriters or dealers;
o directly to purchasers, including our affiliates and shareholders, in
a rights offering;
o through agents; or
o through a combination of any of these methods.
The prospectus supplement will include the following information:
o the terms of the offering;
o the names of any underwriters or agents;
o the name or names of any managing underwriter or underwriters;
o the purchase price or initial public offering price of the securities;
o the net proceeds from the sale of the securities;
o any delayed delivery arrangements;
o any underwriting discounts, commissions and other items constituting
underwriters' compensation;
o any discounts or concessions allowed or reallowed or paid to dealers;
and
o any commissions paid to agents.
SALE THROUGH UNDERWRITERS OR DEALERS
If underwriters are used in the sale, the underwriters will acquire the
securities for their own account. The underwriters may resell the securities
from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. Underwriters may offer securities to the public either
through underwriting syndicates represented by one or more managing underwriters
or directly by one or more firms acting as underwriters. Unless we inform you
otherwise in the prospectus supplement, the obligations of the underwriters to
purchase the securities will be subject to certain conditions, and the
underwriters will be obligated to purchase all the offered securities if they
purchase any of them. The underwriters may change from time to time any initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers.
During and after an offering through underwriters, the underwriters may
purchase and sell the securities in the open market. These transactions may
include overallotment and stabilizing transactions and purchases to cover
syndicate short positions created in connection with the offering. The
underwriters may also impose a penalty bid, which means that selling concessions
allowed to syndicate members or other broker-dealers for the offered securities
sold for their account may be reclaimed by the syndicate if the offered
securities are repurchased by the syndicate in stabilizing or covering
transactions. These activities may stabilize, maintain or otherwise affect the
market price of the offered securities, which may be higher than the price that
might otherwise prevail in the open market. If commenced, the underwriters may
discontinue these activities at any time.
Some or all of the securities that we offer though this prospectus may be
new issues of securities with no established trading market. Any underwriters to
whom we sell our securities for public offering and sale may make a market in
those securities, but they will not be obligated to do so and they may
discontinue any market making at any time without notice. Accordingly, we cannot
assure you of the liquidity of, or continued trading markets for, any securities
that we offer.
27
If dealers are used in the sale of securities, we will sell the securities
to them as principals. They may then resell those securities to the public at
varying prices determined by the dealers at the time of resale. We will include
in the prospectus supplement the names of the dealers and the terms of the
transaction.
DIRECT SALES AND SALES THROUGH AGENTS
We may sell the securities directly. In this case, no underwriters or
agents would be involved. We may also sell the securities through agents
designated from time to time. In the prospectus supplement, we will name any
agent involved in the offer or sale of the offered securities, and we will
describe any commissions payable to the agent. Unless we inform you otherwise in
the prospectus supplement, any agent will agree to use its reasonable best
efforts to solicit purchases for the period of its appointment.
We may sell the securities directly to institutional investors or others
who may be deemed to be underwriters within the meaning of the Securities Act of
1933 with respect to any sale of those securities. We will describe the terms of
any sales of these securities in the prospectus supplement.
REMARKETING ARRANGEMENTS
Offered securities may also be offered and sold, if so indicated in the
applicable prospectus supplement, in connection with a remarketing upon their
purchase, in accordance with a redemption or repayment pursuant to their terms,
or otherwise, by one or more remarketing firms, acting as principals for their
own accounts or as agents for us. Any remarketing firm will be identified and
the terms of its agreements, if any, with us and its compensation will be
described in the applicable prospectus supplement.
DELAYED DELIVERY CONTRACTS
If we so indicate in the prospectus supplement, we may authorize agents,
underwriters or dealers to solicit offers from certain types of institutions to
purchase securities from us or the trusts at the public offering price under
delayed delivery contracts. These contracts would provide for payment and
delivery on a specified date in the future. The contracts would be subject only
to those conditions described in the prospectus supplement. The prospectus
supplement will describe the commission payable for solicitation of those
contracts.
GENERAL INFORMATION
We may have agreements with the agents, dealers, underwriters and
remarketing firms to indemnify them against certain civil liabilities, including
liabilities under the Securities Act of 1933, or to contribute with respect to
payments that the agents, dealers, underwriters or remarketing firms may be
required to make. Agents, dealers, underwriters and remarketing firms may be
customers of, engage in transactions with or perform services for us in the
ordinary course of their businesses.
LEGAL MATTERS
Except as set forth in the applicable prospectus supplement, Jones, Day,
Reavis & Pogue, Cleveland, Ohio, will pass upon the validity of our debt
securities, common shares, serial preferred stock, depositary shares, warrants,
stock purchase contracts and stock purchase units.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to the Annual Report on Form 10-K for the year ended June 30, 2001
have been so incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
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$225,000,000
Parker-Hannifin Corporation
4.875% Senior Notes Due 2013
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Prospectus Supplement
February 5, 2003
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Banc of America Securities LLC
McDonald Investments Inc.
Morgan Stanley
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