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triangle Item 1 - Election of Directors
triangle Item 2 - Proposal to Amend Restated Certificate of Incorporation to Permit 3-for-1 Stock Split
triangle Item 3 - Proposal to Amend 1993 Directors Stock Option Plan
triangle Item 4 - Ratification of Auditors
triangle Item 5 - Shareholder Proposal


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ITEM 2— PROPOSAL TO AMEND RESTATED CERTIFICATE OF INCORPORATION TO PERMIT 3-FOR-1 STOCK SPLIT

Description of Proposal
The Board of Directors has unanimously approved, subject to shareholder approval, an amendment to our Restated Certificate of Incorporation. The amendment would increase the number of common shares we can issue from 1,200,000,000 shares to 3,600,000,000 shares and reduce the par value of all common shares from $.60 per share to $.20 per share. This amendment would permit us to effectuate a 3-for-1 stock split of our issued and unissued common shares. The Board of Directors authorized the stock split on January 24, 2000. If shareholders approve the amendment, the first paragraph of Section 4 of the Restated Certificate of Incorporation will read as follows:

"1. The aggregate number of shares of all classes which the corporation shall have the authority to issue is 3,620,000,000 shares, consisting of 20,000,000 preferred shares of the par value of $1.66 2/3 each and 3,600,000,000 common shares of the par value of $.20 each."

Information About Outstanding and Reserved Shares
On March 1, 2000 we had 442,737,610 common shares outstanding. We had the following common shares reserved for issuance:

  • 54,301,660 shares for our stock-based compensation and benefit plans,
  • 3,341,633 shares for the Purchase Plan, and
  • 9,359,388 shares for a share purchase agreement with a financial institution (the Share Purchase Agreement).

We had not issued or reserved the remaining 690,259,709 authorized common shares. We also had no authorized preferred shares outstanding.

If the amendment and stock split become effective, each outstanding common share would become three common shares. Of the 3,600,000,000 common shares that the Restated Certificate of Incorporation would authorize, we would have 1,328,212,830 shares issued and outstanding based on information as of March 1, 2000. In addition, we would have the following common shares reserved for issuance:

  • 162,904,980 shares for our stock-based compensation and benefit plans,
  • 10,024,899 shares for the Purchase Plan, and
  • 28,078,164 shares for the Share Purchase Agreement.
Following the stock split, we will make equitable adjustments to outstanding compensation awards to preserve the value of the awards. For example, we will change an employee or director stock option to purchase 1,000 common shares with an exercise price of $150 to a stock option to purchase 3,000 common shares with an exercise price of $50.

Purpose of Stock Split
The Board of Directors believes that the stock split would result in our shares trading in a range more consistent with the shares of other major companies. The Board also believes that the stock split may result in a share price that is attractive to a greater number of investors.

Rights of Common Shareholders
The proposed additional 2,400,000,000 common shares would be part of the current class of common shares and will have the same rights as the common shares that are currently issued and outstanding. Shareholders have no preemptive right to purchase additional shares from us. This means shareholders have no right to purchase shares to maintain their proportionate ownership in the Company.

Impact of Amendment and Stock Split
The shareholders’ proportionate equity interest in the Company will not change following adoption of the amendment and the stock split. In addition, the relative proportion of our authorized but unissued shares to our issued shares would not be affected. We would have the same relative flexibility to meet future share needs and would not change our stated capital or surplus accounts.

Plans for Additional Shares
We do not have any specific plans to issue shares at this time other than to complete the proposed 3-for-1 stock split and to issue some or all of the shares we have reserved for issuance. However, after approval of the amendment, we may issue the additional authorized shares without shareholder approval except if we need such approval to meet legal or stock exchange requirements. We may issue additional shares for capital funding, future acquisitions of assets or securities of other companies, employee compensation and benefit plans, future stock dividends or splits and other corporate purposes.

Although we have no present plans to do so, we could issue authorized common and preferred shares in transactions that would make a takeover of the Company more difficult or expensive. The Board of Directors is not recommending the proposed amendment to the Restated Certificate of Incorporation in response to any specific proposal made to the Board to take control of the Company and the Board is not presently recommending to shareholders any anti-takeover measures. In some situations our issuance of additional common shares could have a dilutive effect on earnings per share, meaning that earnings per share would be lower than before the issuance of shares.

New York Stock Exchange Listing
In April 2000 we intend to apply to the New York Stock Exchange for the continued listing of our shares on a split basis.

Expected Effective Date
If shareholders approve the amendment, we plan to file a Certificate of Amendment to the Restated Certificate of Incorporation with New York State authorities as soon as possible after the Annual Meeting. The amendment will be effective on the date the authorities accept the filing. We expect this date to be April 25, 2000. If you are a shareholder of record on such date, you will be entitled to receive two additional common shares for each common share you hold. We expect to distribute the additional share certificates on May 10, 2000. Street name shareholders will have the additional shares automatically credited to their accounts on that date.

Taxes
Our Tax Counsel has advised us that generally under current U.S. federal income tax laws:

  • You will not have taxable income as a result of the stock split.
  • The cost or other basis of each original share you hold before the split will be divided 1/3 to the original share and 1/3 to each of the two new shares.
  • The holding period for each of the three shares will include the period during which you held the original share.

The laws of other countries or jurisdictions may impose taxes on the receipt of shares from the stock split. This is not a complete discussion of all the tax consequences of the stock split and we do not intend it to be tax advice. Please consult your own tax advisor for advice based on your individual circumstances.

Certain Costs
If you purchase or sell common shares after the stock split, brokerage commissions on transactions of the same dollar amount may be higher than before the split. Transfer taxes, if any, may also be higher.

Any share certificates you presently hold continue to represent the number of common shares indicated on the certificate. There is no need to exchange your existing certificates for new ones.

The Board of Directors recommends a vote FOR the proposal to amend the Restated Certificate of Incorporation to permit a 3-for-1 stock split.

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