FILED PURSUANT TO
RULE 424(B)(5)
REGISTRATION NO: 333-83411
REGISTRATION NO: 333-74930
PROSPECTUS SUPPLEMENT
(To Prospectus Dated November 30, 1999)
$180,000,000
TORCHMARK CORPORATION [LOGO]
6 1/4% Senior Notes due 2006
----------------
Interest on the senior notes of Torchmark Corporation is payable semi-
annually on June 15 and December 15 of each year, beginning June 15, 2002. The
senior notes will mature on December 15, 2006, may not be redeemed prior to
maturity and do not have the benefit of any sinking fund.
The senior notes are unsecured and rank equally with all our other unsecured
and unsubordinated indebtedness.
----------------
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 prospectus to which it relates is truthful or
complete. Any representation to the contrary is a criminal offense.
----------------
Per Note Total
-------- ------------
Public offering price(1)................................. 99.585% $179,253,000
Underwriters' discount................................... 0.600% $ 1,080,000
Proceeds, before expenses, to Torchmark(1)............... 98.985% $178,173,000
--------
(1) Plus accrued interest from December 14, 2001, if settlement occurs after
that date.
----------------
The senior notes will be ready for delivery in book-entry form only through
the facilities of The Depository Trust Company in New York, New York on or
about December 14, 2001.
Joint Book-Running Managers
Banc One Capital Markets, Inc. Banc of America Securities LLC
----------------
Fleet Securities, Inc. SunTrust Robinson Humphrey
----------------
The date of this prospectus supplement is December 11, 2001.
TABLE OF CONTENTS
Page
----
Prospectus Supplement
Summary................................................................... S-1
Forward-Looking Statements................................................ S-5
Selected Consolidated Financial Information............................... S-6
Use of Proceeds........................................................... S-7
Capitalization............................................................ S-7
Ratio of Earnings from Continuing Operations to Fixed Charges ............ S-8
Description of Senior Notes............................................... S-9
Underwriting.............................................................. S-13
Legal Matters............................................................. S-14
Experts................................................................... S-14
Prospectus
Risk Factors.............................................................. 3
Forward-Looking Statements................................................ 6
Torchmark Corporation..................................................... 7
The Trusts................................................................ 7
Use of Proceeds........................................................... 8
Ratio of Earnings from Continuing Operations to Combined Fixed Charges and
Preferred Stock Dividends................................................ 8
Description of Securities................................................. 9
Description of Capital Stock.............................................. 9
Description of Depositary Shares.......................................... 12
Description of the Trust Preferred Securities............................. 15
Description of Debt Securities............................................ 21
Description of the Trust Preferred Securities Guarantees.................. 29
Relationship Among the Trust Preferred Securities, the Trust Preferred
Securities Guarantee and the Debt Securities Held by Each Trust.......... 31
Plan of Distribution...................................................... 32
Legal Opinions............................................................ 32
Experts................................................................... 33
Where You Can Find More Information....................................... 33
----------------
You should rely only on the information contained in or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We
have not authorized anyone to provide you with different information. We are
not making any offer of these securities in any state where the offer is not
permitted. You should not assume the information provided by this prospectus
supplement, the accompanying prospectus or the documents incorporated by
reference in the prospectus is accurate as of any date other than the date on
the front of this prospectus supplement, the date on the front of the
accompanying prospectus or the date of the applicable incorporated document, as
the case may be. Our business, financial condition, results of operations and
prospects may have changed since that date.
PROSPECTUS SUPPLEMENT SUMMARY
The following summary may not contain all of the information that is
important to you. You should read the following summary together with the more
detailed information regarding us and the senior notes being sold in this
offering and our financial statements and notes thereto which are included or
incorporated by reference in this prospectus supplement and the accompanying
prospectus. Unless otherwise indicated or the context otherwise requires, all
references in this prospectus supplement and the accompanying prospectus to
"Torchmark," "we," "us," and "our" refer to Torchmark Corporation and its
subsidiaries.
Torchmark Corporation
Torchmark is an insurance holding company that provides individual life and
supplemental health insurance and related products. Torchmark was incorporated
in Delaware on November 19, 1979. It is the ultimate parent company of Liberty
National Life Insurance Company, Globe Life And Accident Insurance Company,
United American Insurance Company, United Investors Life Insurance Company, and
American Income Life Insurance Company.
Torchmark's principal executive offices are located at 2001 Third Avenue
South, Birmingham, Alabama 35233, and its telephone number is (205) 325-4200.
Recent Developments
Issuance of Trust Preferred Securities
During November 2001, we sold to the public through our subsidiary,
Torchmark Capital Trust I, 7 3/4% trust preferred securities (the "Capital
Trust I Preferred Securities") with an aggregate liquidation amount of
$125,000,000. We used the net proceeds from the sale of the Capital Trust I
Preferred Securities to repurchase shares of our outstanding 9.18% Monthly
Income Preferred Securities, Series A (the "MIPS"), and to repay a portion of
our outstanding commercial paper.
We are currently in the process of selling to the public through our
subsidiary, Torchmark Capital Trust II, an additional series of 7 3/4% trust
preferred securities (the "Capital Trust II Preferred Securities") with an
aggregate liquidation amount of $25,000,000. We intend to use the net proceeds
from the sale of the Capital Trust II Preferred Securities to repay a portion
of our outstanding commercial paper.
Implications of the September 11, 2001 Disaster
Information received to date regarding the effect on us of the September 11,
2001 attacks on the World Trade Center and the Pentagon indicates that none of
our insurance subsidiaries expects unusual numbers of life or health insurance
claims. Our insurance subsidiaries generally write high volumes of relatively
lower face-amount life insurance, and most sell nationwide. This characteristic
of our life insurance business tends to minimize the financial effect of
localized, rare occurrence disasters. We expect to receive life insurance
claims from policyholders that were at the Pentagon; however, those claims are
not expected to exceed $1 million. Health insurance policies written by our
insurance subsidiaries are primarily Medicare supplements sold nationwide to
retirees, and an unusual number of claims are not expected from these events.
We do not consider the events of September 11th to be subject to "acts of war"
policy exclusions that may be in some policies issued by our insurance
subsidiaries. We do not write property and casualty or disability insurance,
and have no real estate investments affected by the attacks.
S-1
The Offering
The following is a brief summary of certain terms of this offering. For a
more complete description of the terms of the senior notes, see "Description of
Senior Notes" in this prospectus supplement.
Terms of the Senior Notes:
Issuer............................ Torchmark Corporation, a Delaware
corporation.
Aggregate Principal Amount........ $180,000,000.
Interest Rate..................... 6 1/4% per year.
Maturity Date..................... December 15, 2006.
Interest Payment Dates............ June 15 and December 15 of each year,
beginning June 15, 2002, to holders of
record on the June 1 or December 1
preceding the relevant interest payment
date.
Interest Calculations............. Based on a 360-day year of twelve 30-day
months.
Ranking........................... The senior notes will rank equally with all
of our unsecured and unsubordinated
indebtedness. The senior notes will be
effectively subordinated to all liabilities
of our subsidiaries, and our ability to pay
principal and interest on the senior notes
will be affected by the ability of our
insurance company subsidiaries, our
principal source of cash flows, to declare
and distribute dividends to us. See "Risk
Factors--Our Ability to Pay Principal,
Interest and/or Dividends on Offered
Securities is Limited by the Amounts Our
Subsidiaries May Pay to Us" in the
accompanying prospectus.
Redemption........................ The senior notes are not redeemable by us
in whole or in part prior to maturity.
Sinking Fund...................... None.
Form and Denominations............ The senior notes will be issued in book-
entry form in denominations of $1,000 and
integral multiples of $1,000 and
represented by one or more global notes
deposited with a custodian for, and
registered in the name of a nominee of, The
Depository Trust Company.
Settlement........................ Same-day--immediately available funds.
Trustee........................... The Bank of New York.
S-2
Ratings........................... We expect that Standard & Poor's, Moody's,
Fitch and A.M. Best will assign the senior
notes ratings of "A", "Baa1", "A+" and "A",
respectively. The ratings reflect only the
views of those rating agencies. A security
rating is not a recommendation to buy, sell
or hold securities and may be revised or
withdrawn at any time by the rating agency,
and if another rating agency were to rate
the senior notes, such rating agency may
assign a rating different from the ratings
described above. See "Description of Senior
Notes--Ratings" in this prospectus
supplement.
Use of Proceeds................... We estimate that we will receive net
proceeds from the offering of approximately
$178 million, after deducting underwriting
discounts and other offering expenses. We
intend to use the proceeds to repay a
portion of our outstanding commercial
paper.
Risk Factors...................... Your investment in the senior notes will
involve risks. You should carefully
consider the discussion of risks in "Risk
Factors" in the accompanying prospectus,
and the other information included or
incorporated by reference in this
prospectus supplement and the accompanying
prospectus before deciding whether or not
an investment in the senior notes is
suitable for you.
General Indenture Provisions Applicable to the Senior Notes:
No Limit on Debt.................. The senior indenture governing the senior
notes does not limit the amount of debt
that we may issue or provide holders any
protection should we be involved in a
highly leveraged transaction.
Certain Covenants................. The senior indenture contains certain
restrictive covenants that, among other
things, will limit our ability to:
. incur or permit any of our subsidiaries
to incur any indebtedness which is
secured by an encumbrance on the common
stock of certain designated
subsidiaries; and
. issue, sell, transfer or dispose of
shares of our significant subsidiaries
or to permit such subsidiaries to issue,
sell, transfer or dispose of such
shares.
These covenants are subject to important
exceptions and qualifications, which are
described under the heading "Description of
Senior Notes" in this prospectus supplement
and under the heading "Description of Debt
Securities" in the accompanying prospectus.
S-3
Events of Default................. The events of default under the senior
indenture governing the senior notes
include the following:
. our failure to pay interest on the
senior notes for 30 days after the date
payment is due;
. our failure to pay principal of the
senior notes when due;
. our failure to perform other covenants
or a breach of warranty with respect to
the senior notes for 60 days after
receipt of notice that performance or
cure of breach was required;
. certain events of bankruptcy, insolvency
or reorganization; and
. a default under any of our other
indebtedness if we fail to pay a
principal amount due in excess of
$10,000,000 or if a principal amount in
excess of $10,000,000 is declared due
prior to the date it would have
otherwise been due.
If any event of default with respect to the
senior notes occurs and is continuing, the
trustee for the senior notes or holders of
at least 25% in aggregate principal amount
of outstanding senior notes may declare the
principal thereof immediately due and
payable.
S-4
FORWARD-LOOKING STATEMENTS
This prospectus supplement and the accompanying prospectus and the
information incorporated by reference herein include forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, and Section
21E of the Securities Exchange Act of 1934. Some of the forward-looking
statements can be identified by the use of forward-looking words such as
"believes," "expects," "may," "will," "should," "seeks," "approximately,"
"intends," "plans," "estimates," or "anticipates" or the negative of those
words or other comparable terminology. Forward-looking statements involve
inherent risks and uncertainties. A number of important factors could cause
actual results to differ materially from those in the forward-looking
statements. For a discussion of factors that could cause actual results to
differ, please see the discussion under "Risk Factors" contained in the
accompanying prospectus and in other information contained in our publicly
available SEC filings. You are cautioned not to place undue influence on these
forward-looking statements, which speak only as of their dates. Torchmark
undertakes no obligation to update or revise forward-looking statements to
reflect changed assumptions, the occurrence of unanticipated events or changes
to projections over time.
S-5
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following selected consolidated financial information for each of the
years in the five-year period ended December 31, 2000, and for the nine-month
periods ended September 30, 2000 and 2001 should be read in conjunction with
the more detailed information and financial statements available as described
under "WHERE YOU CAN FIND MORE INFORMATION" in the accompanying prospectus. The
selected financial and other data for the years in the five-year period ended
December 31, 2000 have been derived from our audited financial statements. The
selected financial and other data for interim periods are derived from our
unaudited consolidated financial statements and, in the opinion of management,
include all adjustments necessary to state fairly the information included
therein in accordance with accounting principles generally accepted in the
United States of America for interim financial information. The results for the
interim periods are not necessarily indicative of the results to be expected
for an entire year.
Nine Months Ended
September 30, Year Ended December 31,
--------------------- ----------------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ---------- ---------- ----------
(Amounts in thousands except per share amounts)
Income Statement Data
Premium and policy
fees................... $1,662,125 $1,522,625 $2,046,210 $1,884,086 $1,753,630 $1,678,004 $1,609,919
Net investment income... 366,973 352,611 472,426 447,337 459,558 429,116 399,551
Realized investment
gains (losses)......... 19,399 (2,606) (5,322) (110,971) (57,637) (36,979) 5,830
Other income............ 1,989 2,074 2,580 6,443 2,325 962 1,116
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total revenues......... 2,050,486 1,874,704 2,515,894 2,226,895 2,157,876 2,071,103 2,016,416
Benefits and expenses... 1,578,817 1,455,184 1,952,936 1,824,487 1,710,885 1,679,104 1,628,924
Income tax expense...... 161,644 141,996 190,841 134,320 154,338 138,409 138,676
Monthly income preferred
securities dividend.... 4,609 7,612 10,284 9,158 9,777 9,875 9,655
Income (loss) related to
investment in Vesta.... -- -- -- -- (27,100) 16,714 13,654
Discontinued operations:
income (loss) from
operations and loss on
disposal............... (3,280) -- -- (1,060) (6,373) 77,314 58,557
Extraordinary gain
(loss) from redemption
of debt or preferred
securities............. (2,165) -- 202 -- (4,962) -- --
Cumulative effect of
changes in accounting
principles............. (26,584) -- -- 16,086 -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income.............. $ 273,387 $ 269,912 $ 362,035 $ 273,956 $ 244,441 $ 337,743 $ 311,372
========== ========== ========== ========== ========== ========== ==========
Per Share Data
Net operating income (1)
per share-diluted...... $ 2.32 $ 2.11 $ 2.85 $ 2.55 $ 2.29 $ 1.94 $ 1.67
Net income from
continuing
operations-diluted..... 2.42 2.09 2.82 1.93 1.81 1.84 1.76
Net income per share-
diluted................ 2.16 2.09 2.82 2.04 1.73 2.39 2.17
Net income from
continuing
operations-basic....... 2.43 2.10 2.83 1.95 1.83 1.87 1.78
Net income per share-
basic.................. 2.18 2.10 2.83 2.06 1.75 2.43 2.19
Cash dividends.......... 0.27 0.27 0.36 0.36 0.58 0.59 0.58
Shareholders' equity.... 20.31 16.60 17.43 15.10 16.51 13.80 11.69
Shareholders' equity
excluding net
unrealized gains and
losses on investments.. 20.03 17.99 18.53 16.32 15.43 12.90 11.42
Average shares
outstanding-diluted.... 126,325 128,871 128,353 133,986 141,352 141,431 143,783
Average shares
outstanding-basic...... 125,535 128,666 128,089 133,197 139,999 139,202 142,460
--------
(1) Net income from continuing operations, excluding realized investment gains
(losses), the related adjustment to deferred acquisition costs, equity in
Vesta Insurance Group, Inc. earnings for periods prior to 1999, a one-time
gain on the sale of equipment in 1999, and a nonrecurring charge in 1999
related to unrecoverable guarantees on direct response business. For
additional information, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Results of Operations--
Summary of Operating Results" in our Annual Report on Form 10-K for the
year ended December 31, 2000.
S-6
As of September 30, As of December 31,
----------------------- ----------------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
----------- ----------- ----------- ----------- ----------- ----------- ----------
(Amounts in thousands)
Balance Sheet Data
Total assets............ $12,187,430 $12,862,439 $12,962,558 $12,131,664 $11,249,028 $11,127,648 $9,893,964
Long-term debt.......... 358,703 371,885 365,989 371,555 383,422 564,298 791,880
Total debt.............. 697,509 680,853 695,137 789,949 738,814 911,450 832,790
9.18% Cumulative Monthly
Income Preferred
Securities............. 106,404 193,377 193,395 193,324 193,259 193,199 193,145
Shareholders' equity.... 2,535,176 2,108,428 2,202,360 1,993,337 2,259,528 1,932,736 1,629,343
Shareholders' equity
excluding net
unrealized gains and
losses on investments.. 2,500,952 2,284,449 2,341,584 2,154,386 2,111,697 1,805,911 1,591,679
USE OF PROCEEDS
We expect to receive net proceeds from this offering of approximately $178
million, after deducting underwriting discounts and other offering expenses.
These proceeds will be used to repay approximately $178 million of our
outstanding commercial paper, which at November 30, 2001 bore interest at a
weighted-average interest rate of 2.41% per year and had a weighted-average
maturity of 12 days.
CAPITALIZATION
The following table presents our total capitalization on a consolidated
basis at September 30, 2001, as adjusted to give effect to (i) the consummation
of the offering of the senior notes, (ii) the application of the net proceeds
from the sale of the senior notes, (iii) the offering of the Capital Trust I
Preferred Securities, (iv) the application of the net proceeds from the sale of
the Capital Trust I Preferred Securities to the redemption of our outstanding
MIPS and the repayment of a portion of our outstanding commercial paper, (v)
the offering of the Capital Trust II Preferred Securities and (vi) the
application of the net proceeds from the sale of the Capital Trust II Preferred
Securities to repay a portion of our outstanding commercial paper. See "Use of
Proceeds" and "Prospectus Supplement Summary--Recent Developments". You should
read the following table in conjunction with the detailed information and
financial statements appearing in the documents incorporated by reference into
this prospectus supplement and the accompanying prospectus.
September 30, 2001
-----------------------
Actual As Adjusted
----------- -----------
(Unaudited) (Unaudited)
(Amounts in Thousands)
Short-term debt....................................... $ 338,806 $ 126,114
Long-term debt
8 1/4% Senior Debentures due 2009.................... 99,450 99,450
7 7/8% Notes due 2023................................ 166,345 166,345
7 3/8% Notes due 2013................................ 92,908 92,908
6 1/4% Senior Notes due 2006......................... -- 177,770
---------- ----------
Total long-term debt................................ 358,703 536,473
9.18% Cumulative Monthly Income Preferred Securities,
Series A............................................. 106,404 --
7 3/4% Trust Preferred Securities, Capital Trust I.... -- 120,504
7 3/4% Trust Preferred Securities, Capital Trust II... -- 24,050
Shareholders' equity.................................. 2,535,176 2,532,839
---------- ----------
Total capitalization................................ $3,339,089 $3,339,980
========== ==========
S-7
RATIO OF EARNINGS FROM CONTINUING OPERATIONS TO FIXED CHARGES
The following table presents the ratio of our earnings from continuing
operations to fixed charges and the pro forma ratio of earnings to fixed
charges, for the periods indicated and on a pro forma basis. The pro forma
ratio reflects adjustments to the historical ratio to give effect to (i) the
offering of the senior notes, (ii) the application of the net proceeds from the
sale of the senior notes, (iii) the offering of the Capital Trust I Preferred
Securities, (iv) the application of the net proceeds from the sale of the
Capital Trust I Preferred Securities, including the MIPS redemption, (v) the
offering of the Capital Trust II Preferred Securities, and (vi) the application
of the net proceeds from the sale of the Capital Trust II Preferred Securities.
The pro forma ratio further assumes an effective 3.3% rate of interest on the
senior notes effected through an interest rate swap transaction.
Nine Months
Year Ended December 31, Ended
------------------------ September 30,
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- -------------
Ratio of earnings to fixed charges:
Excluding interest credited on deposit
products.............................. 5.2 5.3 6.9 7 8.9 12.1
Including interest credited on deposit
products.............................. 3.1 3.1 3.8 3.8 4.8 5.7
Pro forma ratio of earnings to fixed
charges:
Excluding interest credited on deposit
products.............................. -- -- -- -- 10.1 13.1
Including interest credited on deposit
products.............................. -- -- -- -- 5.1 5.9
For purposes of computing these ratios, earnings represent consolidated
income before income taxes and fixed charges. Fixed charges represent interest
expense, including interest credited on deposit products where indicated, and
that portion of rental expense deemed representative of the interest factor.
S-8
DESCRIPTION OF SENIOR NOTES
The following description of the particular terms of the senior notes
offered hereby supplements and, to the extent inconsistent with, supersedes the
description of the general terms of the senior debt securities set forth under
the heading "Description of Debt Securities" in the accompanying prospectus,
which should be read in conjunction with this prospectus supplement.
Capitalized terms used below and in the accompanying prospectus have the
meanings set forth in the senior indenture dated as of February 1, 1987, as
supplemented by the supplemental indenture dated as of December 14, 2001,
between us, as issuer, and The Bank of New York, as trustee for the senior
notes.
General
The senior notes constitute a single series of senior debt securities for
purposes of the senior indenture and are initially limited to an aggregate
principal amount of $180,000,000. Torchmark may reopen this series of senior
notes and issue additional notes of this series without consent from the
holders of the senior notes. The senior notes will mature on December 15, 2006.
Interest on the senior notes will accrue from the date of original issuance, or
the most recent interest payment date to which interest has been paid or duly
provided for and will be payable semi-annually on June 15 and December 15,
beginning June 15, 2002, and at maturity to the persons in whose names the
senior notes are registered at the close of business on the June 1 or
December 1 prior to the applicable payment date, at the annual rate set forth
on the cover of this prospectus supplement. The amount of interest payable will
be computed on the basis of a 360-day year of twelve 30-day months.
If any interest payment date or maturity falls on a day that is not a
business day, then the payment will be made on the next business day without
additional interest and with the same effect as if it were made on the
originally scheduled date. "Business day," with respect to any place of
payment, means each Monday, Tuesday, Wednesday, Thursday and Friday which is
not a day on which banking institutions in that place of payment are authorized
or obligated by law or executive order to close.
The senior notes will be issued only in book-entry form represented by one
or more global securities through the facilities of The Depository Trust
Company (the "Depository"), and will be in denominations of $1,000 and integral
multiples of $1,000. Transfers or exchanges of beneficial interests in the
senior notes in book-entry form may be effected only through a participating
member of the Depository. Under certain limited circumstances, the senior notes
may be issued in certificated form in exchange for the global securities. See
"--Global Securities" below and "Descriptions of Debt Securities--Registered
Global Securities" in the accompanying prospectus.
Payments on the senior notes will be made to the Depository. The senior
notes will not be listed on any securities exchange. The senior notes will be a
new issue of securities with no established trading market and there can be no
assurance as to whether any market will develop, the liquidity of any markets
that may develop or the prices at which holders would be able to sell the
senior notes.
The senior indenture does not limit the amount of debt securities that we
may issue and, as supplemented, provides that we may appoint different trustees
for different series of debt securities. As of November 30, 2001, we had
$362,487,000 aggregate principal amount of debt securities outstanding under
the senior indenture, for which Bank One Trust Company, N.A. is acting as
trustee.
Ranking
The senior notes will rank equally with all of our existing and future
senior indebtedness, and senior to all of our existing and future subordinated
indebtedness. As of November 30, 2001, we had outstanding $362,487,000
aggregate principal amount of senior indebtedness. The senior notes will be
effectively subordinated to all liabilities of our subsidiaries, and our
ability to pay
S-9
principal and interest on the senior notes will be affected by the ability of
our insurance company subsidiaries, our principal source of cash flows, to
declare and distribute dividends to us. See "Risk Factors--Our Ability to Pay
Principal, Interest and/or Dividends on Offered Securities is Limited by the
Amounts Our Subsidiaries May Pay to Us" in the accompanying prospectus.
Redemption
The senior notes are not redeemable prior to their stated maturity and do
not provide for any sinking fund.
Ratings
We expect that Standard & Poor's, Moody's, Fitch and A.M. Best will assign
the senior notes ratings of "A", "Baal", "A+" and "A", respectively. The
ratings reflect only the views of those rating agencies, and an explanation of
the significance of the ratings may be obtained from the rating agencies at the
following addresses: Standard & Poor's, a Division of The McGraw-Hill
Companies, Inc., 55 Water Street, New York, New York 10041; Moody's Investors
Service, Inc., 99 Church Street, New York, NY 10007; Fitch, Inc., One State
Street Plaza, New York, NY 10004; and A.M. Best Company, Inc., Ambest Road,
Oldwick, NJ 08858. Note that if another rating agency were to rate the senior
notes, such rating agency may assign a rating different from the ratings
described above.
A security rating is not a recommendation to buy, sell or hold securities
and may be revised or withdrawn at any time by the rating agency. Each rating
assigned to the senior notes should be evaluated independently of any other
rating. No person is obligated to maintain its rating on the senior notes, and
accordingly, we cannot assure you that a rating assigned to the senior notes
upon initial issuance will not be revised or withdrawn by a rating agency at
any time thereafter. If a rating of the senior notes is revised or withdrawn,
the liquidity of the senior notes may be materially adversely affected. In
general, ratings address credit risk and the likelihood of payment in full of
the senior notes at maturity, as well as the timely payment of interest.
Restrictive Covenants
Limitations on Liens
We will not, and will not permit any of our subsidiaries to incur any
indebtedness which is secured by an encumbrance of any nature (a "Mortgage") on
the common stock of Liberty National Life Insurance Company, United American
Insurance Company, Globe Life and Accident Insurance Company, United Investors
Life Insurance Company and American Income Life Insurance Company, or any other
significant subsidiary of Torchmark (as defined according to Regulation S-X
promulgated by the Commission) (the "Designated Subsidiaries"), unless the
senior notes and, if we so elect, any other indebtedness of ours ranking at
least on an equal basis with the senior notes, will be secured equally and
ratably with, or prior to, such other secured indebtedness. We are not
restricted, however, from incurring indebtedness for money borrowed that is
secured with:
(1) Mortgages securing indebtedness owed by a Designated Subsidiary to
another Designated Subsidiary or to Torchmark;
(2) pledges or deposits under workers' compensation or other similar laws
and liens of judgments thereunder that are not currently dischargeable;
(3) good faith deposits in connection with leases to which we or any
Designated Subsidiary is a party;
(4) deposits to secure our public or statutory obligations;
(5) deposits in connection with obtaining or maintaining self-insurance or
obtaining the benefits of any law, regulation or arrangement pertaining
to unemployment insurance, old age pensions, social security or similar
matters;
(6) deposits in litigation or other proceedings;
(7) Mortgages created by or resulting from any judgments or awards against
us or the Designated Subsidiaries with respect to which we are in good
faith prosecuting an appeal or other review proceedings, or Mortgages
incurred by us or any Designated Subsidiary for the purpose of
obtaining a stay or discharge in the course of any litigation to which
we are a party; or
S-10
(8) Mortgages for taxes or assessments, governmental charges or levies not
yet due or delinquent, or which can be paid thereafter without penalty,
or which are being contested in good faith by appropriate proceedings.
Limitations on Sales of Capital Stock of Certain Subsidiaries
Under the senior indenture, we are not permitted to issue, sell, transfer or
dispose of (except to a Designated Subsidiary), nor may we permit any
Designated Subsidiary to issue, sell, transfer or dispose of (except to us or
another Designated Subsidiary), any shares of capital stock of a Designated
Subsidiary, unless the entire capital stock of such subsidiary is disposed of
for consideration of cash or property, which, in the opinion of our Board of
Directors, is at least equal to the fair value of such capital stock.
Other Covenants
See also "Description of Debt Securities--Consolidation, Merger or Sale,"
and the defeasance provisions described under the "Description of Debt
Securities--Discharge, Defeasance and Covenant Defeasance" in the accompanying
prospectus.
Events of Default
An Event of Default with respect to the senior notes is defined in the
senior indenture as being:
(1) our failure to pay any installment of interest on the senior notes for
30 days after the date payment is due;
(2) default in the payment of any principal on the senior notes when due,
either at maturity, upon redemption, by declaration of acceleration or
otherwise;
(3) our failure to perform any of the covenants or the breach of a warranty
in the senior indenture applicable to the senior notes which shall not
have been remedied within a period of 60 days after receipt of written
notice that performance or cure of breach was required;
(4) certain events in bankruptcy, insolvency or reorganization of
Torchmark; and
(5) a default under any other indebtedness of Torchmark if we fail to pay a
principal amount due in excess of $10,000,000 or if a principal amount
in excess of $10,000,000 is declared due prior to the date it would
have otherwise been due.
The senior indenture provides that if an Event of Default shall have
occurred and be continuing, either the trustee or the holders of at least 25%
in aggregate principal amount of debt securities of the affected series issued
under the senior indenture then outstanding may declare the principal amount of
all the debt securities and interest, if any, accrued thereon to be due and
payable immediately.
The senior indenture contains a provision entitling the trustee, subject to
the duty of the trustee during default to act with the required standard of
care, to be indemnified by the holders of the senior notes before proceeding to
exercise any right or power under the senior indenture at the request of the
holders of the senior notes. The senior indenture also provides that the
holders of a majority in principal amount of the senior notes may direct the
time, method and place of conducting any proceeding for any remedy available to
the trustee, or exercising any trust or power conferred on such trustee.
No holder of senior notes will have any right to institute any proceeding
with respect to the senior indenture or for any remedy thereunder, unless: (1)
the holder shall have previously given the trustee written notice of an Event
of Default with respect to the senior notes, (2) the holders of at least 25% in
aggregate principal amount of the senior notes shall have made written request
to the trustee to institute such proceeding as trustee, (3) the holders shall
have offered the trustee reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request, (4) the trustee
shall have failed to institute any such proceeding for 60 days after its
receipt of such notice and (5) no direction inconsistent with such written
request has been given to the trustee during the 60-day period by the holders
of a majority in principal amount of the outstanding debt securities under the
senior indenture. However, any right of a holder of senior notes to receive
payment of the principal of and any interest on the senior notes and to
institute suit for the enforcement of any such payment shall not be impaired
without the consent of such holder.
S-11
The senior indenture contains a covenant that we will file annually with the
trustee a certificate, signed by an officer of Torchmark, stating whether or
not the officer knows of any default by us in the performance, observance or
fulfillment of any condition or covenant of the senior indenture.
Trustee
The trustee for the issuance of the senior notes under the senior indenture
is The Bank of New York. The Bank of New York or one of its affiliates also
serves as the trustee, registrar and paying agent for our Trust Preferred
Securities, and The Bank of New York is a lender in our new credit facility.
Global Securities
The senior notes will be issued in whole or in part in the form of one or
more global securities that will be deposited with, or on behalf of, the
Depository and registered in the name of a nominee of the Depository. Global
securities may not be transferred except as a whole by the Depository to a
nominee of the Depository or by a nominee of the Depository to the Depository
or another nominee of the Depository or by the Depository or any nominee to a
successor of the Depository or a nominee of such successor. A further
description of the Depository's procedures with respect to global securities
representing the senior notes is set forth in the accompanying prospectus under
"Description of Debt Securities--Registered Global Securities." The Depository
has confirmed to us, the underwriters and the trustee that it intends to follow
such procedures.
The Depository has advised us and the underwriters that the Depository 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 Securities Exchange Act of
1934. The Depository holds securities that its participants deposit with it.
The Depository also facilitates the settlement among 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 of the Depository include securities brokers and dealers
(including the agents), banks, trust companies, clearing corporations and
certain other organizations. The Depository is owned by a number of its direct
participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the Depository's system is also available to others such as securities
brokers and dealers, banks and trust companies that clear through or maintain a
custodial relationship with a direct participant, either directly or
indirectly. The rules applicable to the Depository and its participants are on
file with the SEC.
The senior indenture provides that if (i) the Depository notifies Torchmark
that it is unwilling or unable to continue as depositary or if the Depository
ceases to be eligible under the senior indenture and a successor depositary is
not appointed by Torchmark within 90 days of written notice, (ii) Torchmark
determines that the senior notes will no longer be represented by global
securities and executes and delivers to the trustee a company order to such
effect or (iii) an Event of Default with respect to the senior notes has
occurred and is continuing, the global securities will be exchanged for senior
notes in definitive form of like tenor and of an equal aggregate principal
amount, in authorized denominations. Such definitive senior notes will be
registered in such name or names as the depositary shall instruct the trustee
for the senior notes.
Same-Day Settlement and Payment
Settlement for the senior notes will be made by the underwriters in
immediately available funds. All payments of principal and interest in respect
of the senior notes will be made by us in immediately available funds.
The senior notes will trade in the Depository's Same-Day Funds Settlement
System until maturity and secondary market trading activity in the senior notes
will settle in immediately available funds. No assurance can be given as to the
effect, if any, of settlement in immediately available funds on trading
activity in the senior notes.
S-12
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
among us, Banc One Capital Markets, Inc., Banc of America Securities LLC, Fleet
Securities, Inc. and SunTrust Capital Markets, Inc. (collectively, the
"underwriters"), we have agreed to sell to each of the underwriters named
below, and each of the underwriters has severally, but not jointly, agreed to
purchase from us, the principal amount of senior notes set forth opposite its
name below. Banc One Capital Markets, Inc. and Banc of America Securities LLC
are acting as joint book-running managers for the offering of senior notes.
Principal
Underwriters Amount
------------ ------------
Banc One Capital Markets, Inc. ................................ $ 85,500,000
Banc of America Securities LLC................................. 67,500,000
Fleet Securities, Inc. ........................................ 18,000,000
SunTrust Capital Markets, Inc. ................................ 9,000,000
------------
Total........................................................ $180,000,000
============
The underwriters have agreed to purchase all of the senior notes sold
pursuant to the underwriting agreement if any of these senior notes are
purchased. If an underwriter defaults, the underwriting agreement provides that
the purchase commitments of the nondefaulting underwriters may be increased or
the purchase agreement may be terminated.
The underwriters are offering the senior notes, subject to prior sale, when,
as and if issued to and accepted by them, subject to approval of legal matters
by their counsel, including the validity of the senior notes, and other
conditions contained in the underwriting agreement, such as the receipt by the
underwriters of officer's certificates and legal opinions. The underwriters
reserve the right to withdraw, cancel or modify offers to the public and to
reject orders in whole or in part.
The underwriters have advised us that they propose initially to offer the
senior notes to the public at the public offering price set forth on the cover
page of this prospectus supplement, and to certain dealers at such price less a
concession not in excess of 0.35% of the principal amount. The underwriters may
allow, and such dealers may reallow, a discount not in excess of 0.25% of the
principal amount to certain other dealers. After the initial public offering of
the senior notes, the underwriters may vary the offering price and other
selling terms of the senior notes from time to time.
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, as amended, or to
contribute to payments the underwriters may be required to make in respect
thereof.
The senior notes are a new issue of securities with no established trading
market. We currently have no intention to list the senior notes on any
securities exchange or quotation system. The underwriters have advised us that,
following the completion of this offering, the underwriters presently intend to
make a market in the senior notes, as permitted by applicable laws and
regulations. The underwriters, however, are under no obligation to do so and
may discontinue any market-making at any time without notice and at the sole
discretion of the underwriters. No assurance can be given as to the development
or liquidity of any trading market for the senior notes.
In connection with the offering, the underwriters are permitted to engage in
transactions that stabilize the market price of the senior notes. Such
transactions consist of bids or purchases for the purpose of pegging, fixing or
maintaining the price of the senior notes. Such transactions may also include
over-allotment transactions and purchases to cover short positions created by
the underwriters in connection with the offering. If the underwriters create a
short position in the senior notes in connection with the offering, i.e., if
they sell more senior notes than are set forth on the cover page of this
prospectus supplement, the underwriters must
S-13
reduce that short position by purchasing senior notes in the open market. A
short position is more likely to be created if the underwriters are concerned
that there may be downward pressure in the price of the senior notes in the
open market after pricing that could adversely affect investors who purchase in
the offering. In general, purchases of a security for the purpose of
stabilization or to reduce a short position could cause the price of the
security to be higher than it might be in the absence of such purchases.
Neither we nor any of the underwriters makes any representation or
prediction as to the direction or magnitude of an effect that the transactions
described above may have on the price of the senior notes. In addition, neither
we nor any of the underwriters makes any representation that the underwriters
will engage in such transactions or that such transactions, once commenced,
will not be discontinued without notice.
Torchmark has agreed that for a period of 90 days from the date hereof, it
will not, without the prior written consent of Banc One Capital Markets, Inc.
and Banc of America Securities LLC, directly or indirectly, issue, sell, offer
to sell, grant any option for the sale of, or otherwise dispose of, any debt
securities, except for the senior notes sold to the underwriters pursuant to
the underwriting agreement.
Torchmark estimates that its share of total expenses of the offering,
excluding underwriting discounts, will be approximately $402,500.
In the ordinary course of their respective businesses, the underwriters and
their affiliates have engaged, and may in the future engage, in investment
banking or commercial banking transactions with us and our affiliates. For
example, affiliates of Banc One Capital Markets, Inc. and Banc of America
Securities LLC are dealers in our commercial paper and are participants in our
new credit facility. An affiliate of Banc One Capital Markets, Inc. also serves
as trustee for our outstanding 8 1/4% Senior Debentures, 7 7/8% Notes and 7
3/8% Notes. Furthermore, an affiliate of Fleet Securities, Inc. serves as a
specialist with regard to our equity securities.
As described above under "Use of Proceeds," we intend to use the net
proceeds from the offering of the senior notes to repay a portion of our short-
term indebtedness, lenders of which include affiliates of certain of the
underwriters named above. Because more than 10% of the net proceeds of this
offering will be paid to affiliates of members of the National Association of
Securities Dealers, Inc. participating in the offering, the offering will be
conducted in accordance with NASD Conduct Rule 2710(c)(8).
LEGAL MATTERS
The validity of the senior notes offered hereby and certain other legal
matters will be passed upon for us by Maynard, Cooper & Gale, P.C., Birmingham,
Alabama. Certain legal matters will be passed upon for the underwriters by
Sidley Austin Brown & Wood LLP, New York, New York.
EXPERTS
The financial statements incorporated in this prospectus supplement by
reference from Torchmark's Annual Report on Form 10-K for the year ended
December 31, 2000 as it relates to the years ended December 31, 2000 and 1999,
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report which is incorporated in this prospectus supplement by reference.
Such financial statements are incorporated by reference into this prospectus
supplement in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
The financial statements incorporated in this prospectus supplement by
reference from Torchmark's Annual Report on Form 10-K for the year ended
December 31, 2000 as it relates to the year ended December 31, 1998, have been
audited by KPMG LLP, independent auditors, as stated in their report
incorporated in this prospectus supplement by reference, and have been so
incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
S-14
Prospectus
$300,000,000
TORCHMARK CAPITAL TRUST I
TORCHMARK CAPITAL TRUST II
[LOGO OF TORCHMARK CORPORATION]
Preferred Stock, Depositary Shares Trust Preferred Securities Guaranteed by
and Debt Securities Torchmark Corporation
--------------------------------------------------------------------------------
TORCHMARK CORPORATION
. may sell preferred stock to the public;
. may sell depositary shares representing preferred stock to the public;
. may sell debt securities to the public; and
. will fully and unconditionally guarantee the payment by each trust of
any trust preferred securities based on its obligations under a
guarantee, a trust declaration and an indenture.
. our principal executive offices are located at 2001 Third Avenue South,
Birmingham, Alabama 35233, and our Telephone number is (205) 325-4200
THE TRUSTS
Torchmark Capital Trust I and Torchmark Capital Trust II may:
. sell trust preferred securities to the public;
. sell trust common securities to Torchmark;
. use the proceeds from these sales to buy an equal amount of debt
securities of Torchmark; and
. distribute the cash payments it receives on the debt securities it owns
to the holders of the trust preferred and trust common securities.
We urge you to read carefully this prospectus and the accompanying
prospectus supplement, which will describe the specific terms of the securities
being offered to you, before you make your investment decision.
Investing in the securities involves risks. See "Risk Factors" beginning on
page 3.
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
This prospectus may not be used to sell securities unless accompanied by a
prospectus supplement.
November 30, 1999
TABLE OF CONTENTS
Page
----
Risk Factors............................................................. 3
Forward-Looking Statements............................................... 6
Torchmark Corporation.................................................... 7
The Trusts............................................................... 7
Use of Proceeds.......................................................... 8
Ratio of Earnings from Continuing Operations to Combined Fixed Charges
and Preferred Stock Dividends........................................... 8
Description of Securities................................................ 9
Description of Capital Stock............................................. 9
Description of Depositary Shares......................................... 12
Description of the Trust Preferred Securities............................ 15
Description of Debt Securities........................................... 21
Description of the Trust Preferred Securities Guarantees................. 29
Relationship Among the Trust Preferred Securities, the Trust Preferred
Securities Guarantee and
the Debt Securities Held by Each Trust.................................. 31
Plan of Distribution..................................................... 32
Legal Opinions........................................................... 32
Experts.................................................................. 33
Where You Can Find More Information...................................... 33
2
RISK FACTORS
Investing in securities offered by this prospectus involves certain risks.
Any of the following risks could materially adversely affect our business
operating results and financial condition and could result in a loss of your
investment. You should carefully consider the following risks as well as the
other information contained or incorporated by reference in this prospectus
before purchasing the securities.
In this prospectus, "we", "us", "our" and "Torchmark" refer to Torchmark
Corporation. Unless the context otherwise requires, "Trusts" refers to
Torchmark Capital Trust I and Torchmark Capital Trust II.
We Operate in a Mature, Highly Competitive Industry, Which Could Limit Our
Ability to Gain or Maintain Our Position.
Life and health insurance is a mature industry. In recent years, the
industry has experienced virtually no growth in life insurance sales, though
the aging population has increased the demand for retirement savings products.
Insurance is a highly competitive industry and we encounter significant
competition in all lines of business from other insurance companies, many of
which have greater financial resources than us, as well as competition from
other providers of financial services.
The life and health insurance industry is consolidating, with larger, more
efficient organizations emerging from consolidation. Also, mutual insurance
companies are converting to stock ownership which will give them greater access
to capital markets than in the past.
Our ability to compete is dependent upon, among other things, our ability to
attract and retain distribution channels to market our insurance and investment
products, our ability to develop competitive and profitable products, our
ability to maintain low unit costs, and our maintenance of strong financial
strength ratings from rating agencies.
A Ratings Downgrade Could Adversely Affect Our Ability to Compete.
Ratings are an important factor in our competitive position. Rating
organizations periodically review the financial performance and condition of
insurers, including our insurance subsidiaries. A downgrade in the ratings of
our insurance subsidiaries could adversely affect their ability to sell their
products and their ability to compete for attractive acquisition opportunities.
Rating organizations assign ratings based upon several factors. While most
of the considered factors relate to the rated company, some of the factors
relate to general economic conditions and circumstances outside the rated
company's control. For the past several years rating downgrades in the industry
have exceeded upgrades.
Declining Interest-Rates Could Negatively Affect Our Spread Income.
Sudden and/or significant changes in interest rates expose insurance
companies to the risk of not earning anticipated spreads between the interest
rate earned on investments and the credited rates paid on outstanding policies.
Declining interest rates can negatively affect our spread income. While we
attempt to manage our investments to preserve spread income, we can give no
assurance that a significant decline in interest rates will not materially
affect such spreads. In addition, lower interest rates may result in lower
sales of our insurance and investment products.
Regulatory Changes Could Adversely Affect Our Business.
Our insurance subsidiaries are subject to government regulation in each of
the states in which they conduct business. State agencies have broad
administrative power over many aspects of the insurance business, which may
include premium rates, marketing practices, advertising, licensing agents,
policy forms, capital adequacy and permitted investments. Government regulators
are concerned primarily with the protection of policyholders rather than our
shareholders. Insurance laws, regulations and policies currently affecting us
and our subsidiaries may change at any time having an adverse effect on our
business. Furthermore, we cannot predict the timing or form of any future
regulatory initiatives.
3
Medicare Supplement insurance constitutes a significant portion of our
health insurance business. Because of increasing medical cost inflation and
concerns about the solvency of the Medicare program, it is likely that changes
will be made to the Medicare program in the future. These changes could have an
adverse effect on our business.
The Tax Treatment of Our Policyholders' Earnings Could Change.
Under the Internal Revenue Code of 1986, as amended, income tax payable by
policyholders on investment earnings is deferred during the accumulation period
of certain life insurance and annuity products. This favorable tax treatment
may give certain of our products a competitive advantage over other non-
insurance products. To the extent that the internal revenue code is revised to
reduce the tax-deferred status of life insurance and annuity products, or to
increase the tax-deferred status of competing products, all life insurance
companies, including our subsidiaries, would be adversely affected with respect
to their ability to sell such products, and, depending on grandfathering
provisions, the surrenders of existing annuity contracts and life insurance
policies.
Industrywide Litigation Concerning Sales Practices, Agent Misconduct, Failure
to Supervise Agents, and Other Matters Could Result in Substantial Judgments
Against Us.
A number of civil jury verdicts have been returned against insurers in the
jurisdictions in which we do business involving the insurers' sales practices,
alleged agent misconduct, failure to properly supervise agents, and other
matters. Increasingly these lawsuits have resulted in the award of substantial
judgments against the insurer that are disproportionate to the actual damages,
including material amounts of punitive damages. In some states, including
Alabama, juries have substantial discretion in awarding punitive damages which
creates the potential for unpredictable material adverse judgments in any given
punitive damages suit. We, like other insurers, in the ordinary course of
business, are involved in such litigation or alternatively in arbitration. The
outcome of any such litigation or arbitration cannot be predicted with
certainty. In addition, in some class action and other lawsuits involving
insurers' sales practices, insurers have made material settlement payments.
Our Investments are Subject to Market Risks.
Our invested assets are subject to customary risks of defaults and changes
in market values. Factors that may affect the overall default rate on, and
market value of, our invested assets include interest rate levels, financial
market performance, and general economic conditions, as well as particular
circumstances affecting the businesses of individual borrowers and tenants.
Anti-takeover Provisions in Our Governing Documents and Delaware Law Could
Prevent or Delay a Change in Control of Torchmark.
Our governing documents contain provisions that make it more difficult to
implement corporate actions that may have the effect of delaying, deterring or
preventing a change in control. A stockholder might consider a change in
control in his or her best interest because he or she might receive a premium
for his or her common stock. Examples of these provisions include:
. a vote of more than 80% of the outstanding voting stock is required for
stockholders to amend specified provisions of the governing documents;
. our board of directors is divided into three classes, each serving
three-year terms;
. members of our board of directors may be removed only for cause and only
upon the affirmative vote of at least 80% of the outstanding voting
stock; and
. a vote of more than 80% of the outstanding voting stock is required to
approve specified transactions between us and any person or group that
owns at least 10% of our voting stock.
4
Our board of directors has the ability, without stockholder action, to issue
shares of preferred stock that could, depending on their terms, delay,
discourage or prevent a change in control of Torchmark. In addition, the
Delaware General Corporation Law, under which we are incorporated, contains
provisions that impose restrictions on business combinations such as mergers
between us and a holder of 15% or more of our voting stock. You should read the
"Description of Securities" section for a more complete description of these
provisions.
Year 2000 Computer Compliance Issues May Adversely Affect Us.
The new millennium poses a significant concern to all businesses which use
computer systems or electronic data in their operations. This concern arises
because the computer systems and programs used by organizations cannot always
identify a proper date. For many years, programs were written using a two digit
code to represent a year. At the beginning of the year 2000, more digits are
needed to accurately determine the date in these programs. Without addressing
this issue, many computer programs could fail or produce erroneous results.
Additionally, companies which are electronically engaged with other businesses
or which rely on other businesses for services are exposed to risk of failure
by the electronic devices and computer systems of those other entities which
are not Year 2000 compliant. The potential of failure of these systems creates
considerable uncertainty and could potentially adversely affect the ongoing
operations and stability of a business.
Torchmark is exposed to these risks should its computer systems fail due to
date-related problems. We are also reliant on a number of third party
businesses and governmental agencies with which we either interact
electronically or depend upon for services in the conduct of our business.
These institutions include but are not limited to banks, financial
institutions, telecommunication companies, utilities, mail delivery
organizations, and a variety of governmental agencies. Should our computer
systems or the systems of our third-party business partners not be compliant,
we may be exposed to considerable risks, including business interruption, loss
of revenue, increased expense, loss of policyholders, and litigation.
To reduce our business risk to an acceptable level, we have established a
project plan to insure that our business-critical computer systems will be Year
2000 compliant. This plan also addresses third-party compliance issues. Under
the direction of executive management, objectives and timetables have been set
forth to achieve compliance in each geographic location where Torchmark
operates. Progress toward achieving those objectives is constantly monitored.
We currently expect the entire project, including all Year 2000 testing
activities, to be completed during 1999.
As of June 30, 1999, Torchmark remains on schedule to meet all of its Year
2000 compliance requirements. All known required software changes have been
completed, and further testing currently in process is planned to be completed
in 1999. With regard to third party concerns, we have in process the following
procedures:
(1) We are confirming, with our software vendors, the Year 2000 readiness
of our purchased software packages on all of our computer platforms;
(2) We are verifying the Year 2000 compliance status of our financial
business partners' computer and data communications systems to insure
readiness, including data interface testing with third parties; and
(3) All of our electronic operational systems (telephones, security,
utility, environmental) are being evaluated for Year 2000 compliance.
There can be no assurances that our Year 2000 efforts will be successful,
that interactions with other service providers with Year 2000 issues will not
impair our operations, or that the Year 2000 issue will not otherwise adversely
affect us.
5
Should some of our systems not be available due to Year 2000 problems, in a
reasonably likely worst case scenario, we may experience significant delays in
our ability to perform certain functions, but we do not expect an inability to
perform critical functions or to otherwise conduct business. However, other
worst case scenarios, depending upon their duration, could have a material
adverse effect on us and our operations.
Our Ability to Pay Principal, Interest and/or Dividends on Offered Securities
is Limited by the Amounts Our Subsidiaries May Pay to Us.
Our ability to pay principal and interest on any Debt Securities or
dividends on any Preferred Stock is affected by the ability of our insurance
company subsidiaries, our principal sources of cash flow, to declare and
distribute dividends on their common stock and preferred stock held by us. Our
insurance company subsidiaries are subject to various state statutory and
regulatory restrictions, applicable to insurance companies generally, that
limit the amount of cash dividends, loans and advances that those subsidiaries
may pay to us. For example, under certain state insurance laws, an insurance
company generally may pay dividends only out of its unassigned surplus as
reflected in its statutory financial statements filed in that state.
We can give no assurance that more stringent restrictions will not be
adopted from time to time by states in which our insurance subsidiaries are
domiciled, which could have the effect, under certain circumstances, of
significantly reducing dividends or other amounts payable to us by such
subsidiaries without affirmative prior approval by state insurance regulatory
authorities. In addition, we rely on our ability to increase our premiums based
upon a number of factors including loss experience. Our inability to obtain
approval of rate increases in a timely manner from state insurance regulatory
authorities could adversely impact our business and the ability of our
insurance subsidiaries to declare and distribute dividends.
Our results may vary from year to year on account of fluctuations in policy
claims received by us. A significant increase in policy claims could adversely
impact our business and the ability of our insurance subsidiaries to declare
and distribute dividends.
In the event of the insolvency, liquidation, reorganization, dissolution or
other winding-up of one of our insurance subsidiaries, all creditors of such
subsidiary, including holders of life and health insurance policies, would be
entitled to payment in full out of the assets of such subsidiary before we, as
shareholder, would be entitled to any payments. Creditors of subsidiaries would
have to be paid in full before our creditors, including holders of debt
securities, and would be entitled to receive any payment from the assets of
such subsidiary.
FORWARD-LOOKING STATEMENTS
This prospectus and the information incorporated by reference include
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, and Section 21E of the Securities Exchange Act of 1934 that
reflect Torchmark's current view with respect to future events and financial
performance. Some of the forward-looking statements can be identified by the
use of forward-looking words such as "believes," "expects," "may," "will,"
"should," "seeks," "approximately," "intends," "plans," "estimates," or
"anticipates" or the negative of those words or other comparable terminology.
These forward-looking statements are subject to inherent risks and
uncertainties, including those identified in "Risk Factors," as well as those
noted in the documents incorporated by reference which could cause actual
results to differ materially from historical results or anticipated results.
You are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of their dates. Torchmark undertakes no
obligation to update or revise forward-looking statements to reflect changed
assumptions, the occurrence of unanticipated events or changes to projections
over time.
6
TORCHMARK CORPORATION
Torchmark is an insurance and diversified financial services holding company
that provides individual life and supplemental health insurance and related
products. Torchmark was incorporated in Delaware on November 19, 1979. It is
the ultimate parent company of Liberty National Life Insurance Company, Globe
Life And Accident Insurance Company, United American Insurance Company, United
Investors Life Insurance Company, and American Income Life Insurance Company.
Torchmark's principal executive offices are located at 2001 Third Avenue South,
Birmingham, Alabama 35233, and its telephone number is (205) 325-4200.
THE TRUSTS
We created two Delaware business trusts by executing, as sponsor, two
Declarations of Trust with four appointed trustees for each trust. The trusts
are named Torchmark Capital Trust I and Torchmark Capital Trust II (each, a
"Trust"). Prior to the issuance of trust preferred securities, we will file an
Amended and Restated Declaration of Trust for the Trust that will issue the
trust preferred securities. The trust declaration will state the terms and
conditions for the Trust to issue and sell its preferred securities and its
common securities. A form of trust declaration is filed as an exhibit to the
registration statement of which this prospectus is a part.
Each Trust will exist solely to:
. issue and sell its trust preferred and trust common securities;
. use the proceeds from the sale of its trust preferred and trust common
securities to purchase a series of our debt securities; and
. engage in other activities that are necessary or incidental to these
purposes.
We will purchase all of the trust common securities of each Trust. Unless
otherwise stated in the applicable prospectus supplement, the trust common
securities will represent an aggregate liquidation amount equal to at least 3%
of each Trust's total capitalization. The trust preferred securities will
represent the remaining approximately 97% of such Trust's total capitalization.
The trust common securities will have terms substantially identical to, and
will rank equal in priority of payment with, the trust preferred securities.
However, if an event of default under the related trust declaration has
occurred, then cash distributions and liquidation, redemption and other amounts
payable on the trust common securities will rank lower in priority of payment
than the trust preferred securities.
We will guarantee the trust preferred securities as described later in this
prospectus and the applicable prospectus supplement.
We have appointed four trustees to conduct the Trusts' business and affairs:
. Bank One Delaware, Inc. as the Delaware trustee; and
. three officers of Torchmark as the regular trustees.
Only Torchmark, as the only holder of the trust common securities of each
Trust, can remove or replace the trustees. In addition, we can increase or
decrease the number of trustees. The majority of trustees, however, will always
be regular trustees.
We will pay all fees and expenses related to each Trust and to each offering
of the related preferred securities, except each Trust will pay for its
obligations under the related trust preferred and trust common securities.
The Trusts will not have separate financial statements. The statements would
not be material to holders of the preferred securities because the Trusts will
not have any independent operations. The Trusts exist solely for the reasons
stated above.
7
USE OF PROCEEDS
The net proceeds of the sale of the trust common and trust preferred
securities issued by each Trust will be invested by the applicable Trust in the
related series of our debt securities. Unless otherwise stated in the
applicable prospectus supplement, we intend to use those proceeds, in addition
to the net proceeds of any securities sold by us, for possible repurchases of
our outstanding securities and for general corporate purposes, including
working capital, repayment of bank debt, acquisitions and other business
opportunities.
RATIO OF EARNINGS FROM CONTINUING OPERATIONS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
The following table presents the ratio of earnings from continuing
operations to combined fixed charges and preferred stock dividends for
Torchmark for the periods indicated.
Six Months Ended
Years Ended December 31, June 30,
------------------------ -----------------
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- -----------------
Ratio of earnings from continuing
operations to combined fixed
charges and preferred stock
dividends:
Excluding interest credited on
deposit products.................. 4.8 4.4 5.2 5.3 6.9
Including interest credited on
deposit products.................. 3.1 2.8 3.1 3.1 3.8
For purposes of computing these ratios, earnings represent consolidated
income before income taxes and fixed charges. Combined fixed charges represent
interest expense, including interest credited on deposit products where
indicated, and that portion of rental expense deemed representative of the
interest factor. The denominator is increased for preferred stock dividend
requirements which represent the amount of pre-tax earnings required to cover
such dividend requirements.
8
DESCRIPTION OF SECURITIES
This prospectus contains a summary of our preferred stock, depositary
shares, debt securities, preferred securities of the Trusts, and preferred
securities guarantees of Torchmark relating to each Trust. The securities
issued by the Trusts will be identical to each individual Trust, except as
otherwise described in the prospectus supplement for such securities. These
summaries are not meant to be a complete description of each security. However,
this prospectus and the accompanying prospectus supplement contain the material
terms and conditions for each security.
DESCRIPTION OF CAPITAL STOCK
The following descriptions of our capital stock are not complete. You should
also read our Restated Certificate of Incorporation, as amended, our Bylaws and
the Delaware General Corporation Law. We have filed copies of the Restated
Certificate of Incorporation and the Bylaws with the SEC. These documents are
incorporated by reference into the registration statement of which this
prospectus is a part.
We have 325,000,000 shares of capital stock authorized, of which 320,000,000
shares are common stock and 5,000,000 shares are preferred stock. As of June
30, 1999, we had 133,257,162 shares of common stock issued and outstanding, and
299,493 shares of our preferred stock were issued and outstanding.
Preferred Stock
We are authorized to issue 5,000,000 shares of preferred stock, 299,493
shares of which currently are issued and outstanding. The following is a
general description of the terms of our preferred stock. The particular terms
of any series of preferred stock offered hereby will be set forth in a
prospectus supplement relating to such securities. The rights, preferences,
privileges and restrictions, including dividend rights, voting rights, terms of
redemption and liquidation preferences, of the preferred stock of each series
will be fixed or designated pursuant to a certificate of designations adopted
by our Board of Directors or a duly authorized committee of our board. The
description of preferred stock set forth below and the description of the terms
of a particular series of preferred stock that will be set forth in a
prospectus supplement do not purport to be complete and are qualified in their
entirety by reference to the certificate of designations relating to such
series. In all respects, regardless of series, the preferred stock will rank in
preference to Torchmark's common stock as to payment of dividends and as to
distribution of assets of Torchmark upon the liquidation, dissolution or
winding up of Torchmark. Upon issuance against full payment of their purchase
price, shares of preferred stock will be fully paid and nonassessable.
Dividends. Holders of a series of preferred stock will be entitled to
receive, when, as and if declared by our Board of Directors out of any funds
legally available for that purpose, dividends in cash at such rates, payable on
such dates in each year and in respect of such dividend periods, as stated in
Torchmark's Restated Certificate of Incorporation or the certificate of
designations for that series of preferred stock, before any dividends may be
declared, paid or set apart for payment upon the common stock or any other
class of stock ranking junior to that series of preferred stock. No dividend
may be declared or paid on any series of preferred stock unless at the same
time a dividend in like proportion to the designated dividend amounts has been
declared or paid on each other series of preferred stock then issued and
outstanding ranking prior to or on a parity with that particular series with
respect to the payment of dividends. Dividends on preferred stock may be either
cumulative or noncumulative.
Liquidation Preference. In the event of our liquidation, dissolution or
winding up, whether voluntary or involuntary, holders of preferred stock of
each series (if any shares thereof are then issued and outstanding) will be
entitled to payment of the applicable liquidation price or prices plus accrued
dividends, out of our available assets, in preference to the holders of common
stock or any other class of stock ranking junior to such series of preferred
stock upon liquidation, dissolution or winding up.
Redemption and Conversion. Each series of preferred stock will be subject to
redemption, if applicable, on such terms, at such prices and on such dates as
may be set forth in the applicable certificates of designations. The preferred
stock will not be convertible.
9
Voting Rights. The holders of the preferred stock have no voting rights
except as specifically required by statute and except for certain voting rights
specifically provided in Torchmark's Restated Certificate of Incorporation or
the certificates of designations creating the various series of such stock.
Voting rights of the preferred stock will be noncumulative.
Anti-Takeover Effects of Certain Provisions of Delaware Law and Our Restated
Certificate of Incorporation and Bylaws
Delaware Law
As a corporation organized under the laws of the State of Delaware, we are
subject to Section 203 of the Delaware General Corporation Law, which restricts
specified business combinations between us and an "interested stockholder" or
its affiliates or associates for a period of three years following the time
that the stockholder becomes an "interested stockholder." In general, an
"interested stockholder" is defined for purposes of Delaware law as a
stockholder owing 15% or more of our outstanding voting stock. The restrictions
do not apply if:
. prior to an interested stockholder becoming such, our board of directors
approved either the business combination or the transaction which
resulted in the stockholder becoming an interested stockholder;
. upon completion of the transaction which resulted in any person becoming
an interested stockholder, such interested stockholder owns at least 85%
of our voting stock outstanding at the time the transaction commenced,
excluding shares owned by employee stock ownership plans and persons who
are both directors and officers of Torchmark; or
. at or subsequent to the time an interested stockholder becomes such, the
business combination is both approved by our board of directors and
authorized at an annual or special meeting of our stockholders, not by
written consent, by the affirmative vote of at least 66 2/3% of the
outstanding voting stock not owned by the interested stockholder.
Under some circumstances, Section 203 makes it more difficult for a person
who would be an "interested stockholder" to effect various business
combinations with a corporation for a three-year period, although the
stockholders may elect to exclude a corporation from the restrictions imposed
under Section 203. Our Restated Certificate of Incorporation does not exclude
us from the restrictions imposed under Section 203. It is anticipated that the
provisions of Section 203 may encourage companies interested in acquiring us to
negotiate in advance with our board of directors since the stockholder approval
requirement would be avoided if a majority of the directors then in office
approves, prior to the date on which a stockholder becomes an interested
stockholder, either the business combination or the transaction which results
in the stockholder becoming an interested stockholder.
Restated Certificate of Incorporation and Bylaw Provisions
The summary below describes certain provisions of our Restated Certificate
of Incorporation and Bylaws which may have the effect, either alone or in
combination with the provisions of Section 203 discussed above, of making more
difficult or discouraging a tender offer, proxy contest or other takeover
attempt that is opposed by our board of directors but that a stockholder might
consider to be in such stockholder's best interest. Those provisions include:
. restrictions on the rights of stockholders to remove directors;
. prohibitions against stockholders calling a special meeting of
stockholders or acting by unanimous written consent in lieu of a
meeting; and
. restrictions on business combination transactions with "interested
stockholders."
10
Number of Directors; Classified Board of Directors; Removal; Filling
Vacancies. Our Bylaws provide that the number of directors shall consist of not
less than seven nor more than 15 persons which exact number shall be fixed by a
majority vote of the board of directors. The board of directors are divided
into three classes with the classes to be as nearly equal in number as
possible. The directors serve three year terms.
Our Bylaws provide that any vacancies will be filled by the affirmative vote
of a majority of the remaining directors, or if all directors have been
removed, by a majority vote of the stockholders. Accordingly, absent an
amendment to the Bylaws, our board of directors could prevent any stockholder
from enlarging the board of directors and filling the new directorships with
such stockholder's own nominees. Moreover, our Bylaws provide that directors
may be removed only for cause and only upon the affirmative vote of holders of
at least 80% of our voting stock.
The classification of directors could have the effect of making it more
difficult for stockholders to change the composition of the board of directors.
At least two annual meetings of stockholders, instead of one, are generally
required to effect a change in a majority of the board of directors. Such a
delay may help ensure that our directors, if confronted by a holder attempting
to force a proxy contest, a tender or exchange offer, or an extraordinary
corporate transaction, would have sufficient time to review the proposal as
well as any available alternatives to the proposal and to act in what they
believe to be the best interest of the stockholders. The classification
provisions will apply to every election of directors, however, regardless of
whether a change in the composition of the board of directors would be
beneficial to us and our stockholders and whether or not a majority of our
stockholders believe that such a change would be desirable.
The classification provisions could also have the effect of discouraging a
third party from initiating a proxy contest, making a tender offer or otherwise
attempting to obtain control of Torchmark, even though such an attempt might be
beneficial to us and our stockholders. The classifications of the board of
directors could thus increase the likelihood that incumbent directors will
retain their positions. In addition, because the classification provisions may
discourage accumulations of large blocks of our stock by purchasers whose
objective is to take control of Torchmark and remove a majority of the board of
directors, the classification of the board of directors could tend to reduce
the likelihood of fluctuations in the market price of the common stock that
might result from accumulations of large blocks of our stock. Accordingly,
stockholders could be deprived of opportunities to sell their shares of common
stock at a higher market price than might otherwise be the case.
No Stockholder Action by Written Consent; Special Meetings. Our Bylaws
provide that stockholder action can be taken only at an annual or special
meeting of stockholders, and stockholder action may not be taken by written
consent in lieu of a meeting. Special meetings of stockholders can be called
only by our board of directors by a resolution adopted by a majority of the
board of directors, upon not less than ten nor more than 60 days' written
notice. Moreover, the business permitted to be conducted at any special meeting
of stockholders is limited to the business described in the notice of meeting
given by the board of directors, unless the consideration of new business is
approved by the unanimous consent of all the stockholders entitled to vote at
the meeting.
The provisions of our Restated Certificate of Incorporation and Bylaws
prohibiting stockholder action by written consent and permitting special
meetings to be called only at the request of a majority of the board of
directors, may have the effect of delaying consideration of a stockholder
proposal until the next annual meeting. The provisions would also prevent the
holders of a majority of our voting stock from unilaterally using the written
consent procedure to take stockholder action. Moreover, a stockholder could not
force stockholder consideration of a proposal over the opposition of a majority
of the board of directors, by calling a special meeting of stockholders prior
to the time such parties believe such consideration to be appropriate.
Fair Price Provisions Involving Business Combinations. Our Restated
Certificate of Incorporation contains a "fair price" provision that applies to
certain business combination transactions involving any person, entity or group
that beneficially owns at least 10% of our aggregate voting stock--such person,
entity or group is referred to in the Restated Certificate of Incorporation as
an "interested stockholder". This
11
provision requires the affirmative vote of the holders of not less than 80% of
our voting stock to approve specified transactions between an interested
stockholder or its affiliate and us or our subsidiaries, including:
. any merger or consolidation;
. any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of assets (in one transaction or a series of transactions)
having a fair market value of $5,000,000 or more;
. the issuance or transfer of any of our securities or any of our
subsidiaries' securities by us or any of our subsidiaries to an
interested stockholder in exchange for cash, securities or other
property having a fair market value of $5,000,000 or more;
. the adoption of a plan or proposal for our liquidation or dissolution
proposed by or on behalf of an interested stockholder or its affiliate;
. any reclassification of securities, recapitalization, or any other
transaction involving us or any of our subsidiaries that would have the
effect of increasing the voting power of an interested stockholder or
its affiliate;
This voting requirement will not apply to any transaction approved by a
majority vote of the directors unaffiliated with the interested stockholder and
existing before the interested stockholder became a stockholder. This voting
requirement will also not apply to any transaction involving the payment of
consideration to holders of Torchmark's outstanding capital stock in which
certain minimum "fair price" and procedural requirements are met.
This "fair price" provision could have the effect of delaying or preventing
a change in control of Torchmark in a transaction of series of transactions
that does not satisfy the stated criteria.
Amendments. Ordinarily, the Bylaws may be amended by a majority vote of the
board of directors or by a majority vote of stockholders at a special or annual
meeting. However, the affirmative vote of holders of not less than 80% of our
voting stock, voting together as a single class, shall be required to alter,
amend, adopt any provision inconsistent with or to repeal certain provisions of
our Bylaws and Restated Certificate of Incorporation, including those anti-
takeover provisions discussed in this section.
Issuance of Additional Preferred Stock. Our Restated Certificate of
Incorporation authorizes the board of directors to create and issue additional
preferred stock for such consideration and on such terms as it may determine.
The rights assigned to a series of preferred stock by the board including
voting, dividend and conversion rights, may delay, discourage or prevent a
change in control of Torchmark. For example, the board of directors has the
power, to the extent consistent with its fiduciary duties, to issue a series of
preferred stock with preferential voting rights to persons friendly to
management to attempt to block a post-tender offer merger or other transaction
by which a third party seeks control, and thereby assist management to retain
its position.
DESCRIPTION OF DEPOSITARY SHARES
The following description of the depositary shares is not complete. You
should also read the form of Deposit Agreement relating to the depositary
shares and the depositary receipt relating to the preferred stock that is
attached to the Deposit Agreement. We have filed those documents with the SEC
as an exhibit to the registration statement of which this prospectus is a part.
General
If we elect to offer fractional interests in shares of preferred stock, we
will provide for the issuance by a depositary to the public of receipts for
depositary shares. Each depositary share will represent fractional interests of
preferred stock. We will deposit the shares of preferred stock underlying the
depositary shares under a Deposit Agreement between us and a bank or trust
company selected by us which will sometimes be
12
referred to herein as the depositary. The bank or trust company must have its
principal office in the United States and a combined capital and surplus of at
least $50 million. The depositary receipts will evidence the depositary shares
issued under the Deposit Agreement.
The Deposit Agreement will contain terms applicable to the holders of
depositary shares in addition to the terms stated in the depositary receipts.
Each owner of depositary shares will be entitled to all the rights and
preferences of the preferred stock underlying the depositary shares in
proportion to the applicable fractional interest in the underlying shares of
preferred stock. The depositary will issue the depositary receipts to
individuals purchasing the fractional interests in shares of the related
preferred stock according to the terms of the offering described in a
prospectus supplement.
Dividends and Other Distributions
The depositary will distribute all cash dividends or other cash
distributions received for the preferred stock to the entitled record holders
of depositary shares in proportion to the number of depositary shares that the
holder owns on the relevant record date. The depositary will distribute only an
amount that can be distributed without attributing to any holder of depositary
shares a fraction of one cent. The depositary will add the undistributed
balance to and treat it as part of the next sum received by the depositary for
distribution to holders of depositary shares.
If there is a non-cash distribution, the depositary will distribute property
received by it to the entitled record holders of depositary shares, in
proportion, insofar as possible, to the number of depositary shares owned by
the holders, unless the depositary determines, after consultation with us, that
it is not feasible to make such distribution. If this occurs, the depositary
may, with our approval, sell such property and distribute the net proceeds from
the sale to the holders. The Deposit Agreement also will contain provisions
relating to how any subscription or similar rights that we may offer to holders
of the preferred stock will be available to the holders of the depositary
shares.
Conversion, Exchange and Redemption
If any series of preferred stock underlying the depositary shares is
converted or exchanged, each record holder of depositary receipts will have the
right or obligation to convert or exchange the depositary shares represented by
the depositary receipts.
Whenever we redeem shares of preferred stock held by the depositary, the
depositary will redeem, at the same time, the number of depositary shares
representing the preferred stock. The depositary will redeem the depositary
shares from the proceeds it receives from the corresponding redemption, in
whole or in part, of the applicable series of preferred stock.
The depositary will mail notice of redemption or conversion to the record
holders of the depositary shares which are to be redeemed or converted between
30 and 60 days before the date fixed for redemption or conversion. The
redemption price per depositary share will be equal to the applicable fraction
of the redemption price per share on the applicable series of preferred stock.
If less than all the depositary shares are to be redeemed, the depositary will
select which shares are to be redeemed by lot or by proportionate allocation.
After the date fixed for redemption or conversion, the depositary shares
called for redemption or conversion will no longer be outstanding. When the
depositary shares are no longer outstanding, all rights of the holders will
end, except the right to receive money, securities or other property payable
upon redemption.
Voting
When the depositary receives notice of a meeting at which the holders of the
preferred stock are entitled to vote, the depositary will mail the particulars
of the meeting to the record holders of the depositary shares. Each
13
record holder of depositary shares on the record date may instruct the
depositary on how to vote the shares of preferred stock underlying the holder's
depositary shares. The depositary will try, if practical, to vote the number of
shares of preferred stock underlying the depositary shares according to those
instructions. We will agree to take all reasonable action requested by the
depositary to enable it to vote as instructed.
Amendments
We and the depositary may agree to amend the Deposit Agreement and the
depositary receipt evidencing the depositary shares. Any amendment that (a)
imposes or increases certain fees, taxes or other charges payable by the
holders of the depositary shares as described in the Deposit Agreement or that
(b) otherwise prejudices any substantial existing right of holders of
depositary shares, will not take effect until 30 days after the depositary has
mailed notice of the amendment to the record holders of depositary shares. Any
holder of depositary shares that continues to hold its shares at the end of the
30-day period will be deemed to have agreed to the amendment.
Termination
We may direct the depositary to terminate the Deposit Agreement by mailing a
notice of termination to holders of depositary shares at least 30 days prior to
termination. If 90 days after the depositary has provided notice to us of its
election to resign a new depositary has not been appointed, the depositary may
terminate the Deposit Agreement. In addition, a Deposit Agreement will
automatically terminate if:
. the depositary has redeemed all related outstanding depositary shares;
or
. we have liquidated, terminated or wound up our business and the
depositary has distributed the preferred stock of the relevant series to
the holders of the related depositary shares.
Payment of Fees And Expenses
We will pay all fees, charges and expenses of the depositary, including the
initial deposit of the preferred stock and any redemption of the preferred
stock. Holders of depositary shares will pay transfer and other taxes and
governmental charges and any other charges as are stated in the Deposit
Agreement for their accounts.
Resignation And Removal of Depositary
At any time, the depositary may resign by delivering notice to us, and we
may remove the depositary. Resignations or removals will take effect upon the
appointment of a successor depositary and its acceptance of the appointment.
The successor depositary must be appointed within 60 days after delivery of the
notice of resignation or removal and must be a bank or trust company having its
principal office in the United States and having a combined capital and surplus
of at least $50 million.
Miscellaneous
The depositary will forward to the holders of depositary shares all reports
and communications from us that are delivered to the depositary and that we are
required by law, the rules of an applicable securities exchange, our Restated
Certificate of Incorporation or the Certificate of Determination to furnish to
the holders of the preferred stock. Neither we nor the depositary will be
liable if the depositary is prevented or delayed by law or any circumstances
beyond its control in performing its obligations under the Deposit Agreement.
The Deposit Agreement limits our obligations and the depositary's obligations
to performance in good faith of the duties stated in the Deposit Agreement.
Neither we nor the depositary will be obligated to prosecute or defend any
legal proceeding connected with any depositary shares or preferred stock unless
the holders of depositary shares requesting us to do so furnish us with
satisfactory indemnity. In performing our obligations, we and the depositary
may rely upon the written advice of our counsel or accountants, on any
information that competent people provide to us and on documents that we
believe are genuine.
14
DESCRIPTION OF THE TRUST PREFERRED SECURITIES
The following is a summary of the general terms of the trust preferred
securities. We will file a prospectus supplement that may contain additional
terms when a Trust issues preferred securities. The terms presented here,
together with the terms in a related prospectus supplement, will be a
description of the material terms of the trust preferred securities to be sold.
You should also read the trust declaration for each Trust and the indentures
between Torchmark and certain trustees relating to the issuance of the debt
securities by Torchmark. We have filed these documents with the SEC as exhibits
to the registration statement of which this prospectus is a part.
General
Each trust declaration authorizes the regular trustees to issue on behalf of
a Trust one series of trust preferred securities that will have the terms
described in a prospectus supplement. A Trust will use the proceeds from the
sale of its preferred and common securities to purchase a series of our debt
securities. The property trustee will hold the debt securities in trust for the
benefit of the holders of the trust preferred and trust common securities.
Torchmark will guarantee the trust preferred securities under a Trust
Preferred Securities Guarantee. We will agree to make payments of distributions
and payments on redemption or liquidation concerning a Trust's trust preferred
securities, but only if the Trust has funds available to make those payments
and has not done so. See "Description of the Trust Preferred Securities
Guarantees" on page 26.
The assets of a Trust available for distribution to the holders of its trust
preferred securities will be limited to payments from us under the series of
debt securities held by the Trust. If we fail to make a payment on the related
debt securities, the Trust will not have enough funds to make related payments,
including distributions on its preferred securities.
Each guarantee, when taken together with our obligations under the related
series of debt securities and the indenture and the related trust declaration,
will provide a full and unconditional guarantee of amounts due on the trust
preferred securities issued by a Trust.
Each trust declaration will be qualified as an indenture under the Trust
Indenture Act of 1939. Each property trustee will act as indenture trustee for
the trust preferred securities to be issued by the applicable Trust, in order
to comply with the provisions of the Trust Indenture Act.
Each series of trust preferred securities will have the terms, including
distributions, redemption, voting, liquidation rights and such other preferred,
deferred or other special rights or restrictions as are described in the
relevant trust declaration or made part of the trust declaration by the Trust
Indenture Act or by the Delaware Business Trust Act. The terms of the preferred
securities will mirror the terms of the debt securities held by the applicable
Trust.
The prospectus supplement relating to the trust preferred securities of a
Trust will describe the specific terms of the preferred securities, including:
. the name of the trust preferred securities;
. the dollar amount and number of trust preferred securities issued;
. the annual distribution rate(s), or method of determining the rate(s),
the payment date(s) and the record dates used to determine the holders
who are to receive distributions and the place(s) where distributions
and other amounts payable will be paid;
. any provision relating to deferral of distribution payments;
. the date from which distributions shall be cumulative;
15
. the optional redemption provisions, if any, including the prices, time
periods and other terms and conditions for which trust preferred
securities will be purchased or redeemed, in whole or in part;
. the terms and conditions, if any, upon which the applicable series of
debt securities may be distributed to holders of such trust preferred
securities;
. the voting rights, if any, of holders of the trust preferred securities;
. any securities exchange on which the trust preferred securities will be
listed;
. whether such trust preferred securities are to be issued in book-entry
form and represented by one or more global certificates, and if so, the
depositary for such global certificates and the specific terms of the
depositary arrangements; and
. any other relevant rights, preferences, privileges, limitations or
restrictions of such trust preferred securities.
Each prospectus supplement will describe the United States federal income
tax considerations applicable to the purchase, holding and disposition of the
series of trust preferred securities covered by the prospectus supplement.
Liquidation Distribution Upon Dissolution
Unless otherwise specified in the applicable prospectus supplement, each
trust declaration states that the related Trust shall be dissolved:
. upon the expiration of the term of such Trust;
. upon the bankruptcy of Torchmark;
. upon the filing of a certificate of dissolution or its equivalent by
Torchmark;
. upon the consent of at least a majority in liquidation amount of the
trust preferred and trust common securities of the related Trust, voting
together as a single class to dissolve the Trust;
. 90 days after the revocation of our charter and the charter is not
reinstated during that 90-day period;
. upon the written direction from us and after the distribution of the
related debt securities directly to the holders of the trust preferred
and trust common securities of the applicable Trust in exchange for
those securities within 90 days after notice, as long as the regular
trustees receive an opinion of counsel experienced in such matters to
the effect that the holders of the trust preferred and the trust common
securities will not recognize income, gain or loss for United States
federal income tax purposes as a result of the termination of the Trust
and the distribution of the debt securities;
. upon the occurrence of adverse tax or other specified events that cause
the Trust to be dissolved and the distribution of the related debt
securities directly to the holders of the trust preferred and trust
common securities of the Trust;
. before the issuance of any securities with the consent of all regular
trustees and Torchmark;
. upon the redemption of all of the trust common and trust preferred
securities of such Trust; or
. upon entry of a court order for the dissolution of Torchmark or such
Trust.
Unless otherwise specified in the applicable prospectus supplement, in the
event of a dissolution, after the Trust pays all amounts owed to creditors, the
holders of the trust preferred and trust common securities issued by the Trust
will be entitled to receive:
. cash equal to the aggregate liquidation amount of each trust preferred
and trust common security specified in an accompanying prospectus
supplement, plus accumulated and unpaid distributions to the date of
payment; unless
16
. debt securities in an aggregate principal amount equal to the aggregate
liquidation amount of the trust preferred and trust common securities
are distributed to the holders of the trust preferred and trust common
securities.
After the liquidation date is fixed for any distribution of debt securities:
. the trust preferred securities will no longer be deemed to be
outstanding;
. DTC or its nominee, as the registered holder of the trust preferred
securities, will receive a registered global certificate or certificates
representing debt securities to be delivered upon distribution with
respect to the trust preferred securities held by DTC or its nominee;
and
. any certificates representing trust preferred securities not held by DTC
or its nominee will be deemed to represent debt securities having a
principal amount equal to the $25 stated liquidation amount of the trust
preferred securities and bearing accrued and unpaid interest in an
amount equal to the accumulated and unpaid distributions on the trust
preferred securities until the holder of those certificates presents
them to the registrar for the trust preferred securities for transfer or
reissuance.
If the Trust cannot pay the full amount due on its trust preferred and trust
common securities because it does not have enough assets for payment, then the
amounts the Trust owes on its trust preferred and trust common securities will
be proportionately allocated. However, if an event of default under the related
trust declaration has occurred, the total amounts due on the trust preferred
securities will be paid before any distribution on the trust common securities.
Declaration Events of Default
An event of default under the indenture relating to a series of debt
securities is an event of default under the trust declaration of the Trust that
owns those debt securities. See "Description of Debt Securities--Events of
Default."
Under the trust declaration, we, as the holder of the trust common
securities, will be treated as if we have waived an event of default under the
trust declaration that affects us until all events of default under the trust
declaration affecting the preferred securities have been cured or eliminated.
Torchmark and the regular trustees of a Trust must file annually with the
applicable property trustee a certificate stating whether or not Torchmark is
in compliance with all the applicable conditions and covenants under the
related trust declaration.
Upon the happening of an event of default under the trust declaration, the
property trustee of the applicable Trust, as the sole holder of the debt
securities held by that Trust, will have the right under any indenture to
declare the principal of, premium, if any, and interest on such debt securities
to be immediately due and payable.
If a property trustee fails to enforce its rights under the related trust
declaration or any indenture to the fullest extent permitted by law and by the
terms of the trust declaration and any indenture, any holder of the trust
preferred securities issued by the Trust may sue us, or seek other remedies, to
enforce the property trustee's rights under the trust declaration or any
indenture without first instituting a legal proceeding against the property
trustee or any other person.
If we fail to pay principal, premium, if any, or interest on a series of
debt securities when payable, then a holder of the related trust preferred
securities may directly sue us or seek other remedies, to collect its
proportional allocation of payments owned.
17
Removal and Replacement of Trustees
Only we, as the only holder of a Trust's trust common securities, have the
right to remove or replace the trustees of such Trust. The resignation or
removal of any trustee and the appointment of a successor trustee shall be
effective only on the acceptance of appointment by the successor trustee in
accordance with the provisions of the trust declaration for that Trust.
Conversion or Exchange Rights
The terms that govern whether trust preferred securities of any series are
convertible into or exchangeable for our common stock or other securities of
ours will be set forth in the prospectus supplement relating to the trust
preferred securities. The terms will include provisions regarding whether
conversion or exchange is mandatory, at the option of the holder or at our
option and may include provisions that adjust the number of shares of our
common stock or other securities of ours that the holders of trust preferred
securities may receive.
Mergers, Consolidations or Amalgamations of the Trusts
A Trust may not consolidate, amalgamate, merge with or into, be replaced by,
or convey, transfer or lease its properties and assets substantially as an
entirety to, any other corporation or other body ("Merger Event"), except as
described below. A Trust may, with the consent of a majority of its regular
trustees and without the consent of the holders of its trust preferred and
trust common securities or the other Trustees, consolidate, amalgamate, merge
with or into, or be replaced by another trust, provided that:
. the successor entity either:
(1) assumes all of the obligations of the Trust relating to its trust
preferred and trust common securities; or
(2) substitutes for the Trust's trust preferred and trust common
securities other securities substantially similar to the Trust's
trust preferred and trust common securities, so long as the
successor securities rank the same as the trust preferred and trust
common securities for distributions and payments upon liquidation,
redemption and otherwise;
. we acknowledge a trustee of the successor entity who has the same powers
and duties as the property trustee of the Trust as the holder of the
particular series of debt securities;
. the Merger Event does not adversely affect the rights, preferences and
privileges of the holders of its trust preferred and trust common
securities or successor securities in any material way, except
concerning any dilution of the holders' interest in the new entity;
. the Merger Event does not cause the trust preferred securities or
successor securities to be downgraded by any nationally recognized
statistical rating organization;
. the successor entity has a purpose identical to that of the Trust;
. the trust preferred securities or any successor securities are listed,
or any successor securities will be listed upon notification of
issuance, on any national securities exchange or with another
organization on which the trust preferred securities are then listed;
. prior to the Merger Event, we have received an opinion of counsel from a
firm qualified to give such opinion stating that (a) the Merger Event
does not adversely affect the rights, preferences and privileges of the
holders of the trust preferred securities, including any successor
securities, in any material respect and (b) following the Merger Event,
neither the Trust nor the successor entity will be required to register
as an "investment company" under the Investment Company Act of 1940; and
. we guarantee the obligations of the successor entity under the successor
securities in the same manner as in the applicable guarantee and the
guarantee of the trust common securities for the Trust, if any.
18
In addition, unless all of the holders of the trust preferred and trust
common securities approve otherwise, a Trust shall not consolidate, amalgamate,
merge with or into, or be replaced by any other entity or permit any other
entity to consolidate, amalgamate, merge with or into, or replace it, if such
transaction would cause the Trust or the successor entity to be classified as
other than a grantor trust for United States federal income tax purposes.
Voting Rights; Amendment of Declarations
The holders of trust preferred securities have no voting rights except as
discussed above and under "--Mergers, Consolidations or Amalgamations of the
Trusts" and "Description of the Trust Preferred Securities Guarantees--
Amendments and Assignment," and as otherwise required by law and the trust
declaration for the applicable Trust.
A trust declaration may be amended if approved by a majority of the regular
trustees, and in limited circumstances, the property trustee or Delaware
trustee, of the applicable Trust. However, if any proposed amendment provides
for, or the regular trustees otherwise propose to effect,
. any action that would adversely affect the powers, preferences or
special rights of the Trust's trust preferred and trust common
securities, whether by way of amendment to such trust declaration or
otherwise, or
. the dissolution, winding-up or termination of the Trust other than under
the terms of its trust declaration,
then the holders of the Trust's trust preferred and trust common securities
voting together as a single class will be entitled to vote on the amendment or
proposal. In that case, the amendment or proposal will only be effective if
approved by at least a majority in liquidation amount of the trust preferred
and trust common securities affected by the amendment or proposal.
If any amendment or proposal referred to above would adversely affect only
the trust preferred securities or only the trust common securities of a Trust,
then only the affected class will be entitled to vote on the amendment or
proposal and the amendment or proposal will only be effective with the approval
of at least a majority in liquidation amount of the affected class.
Notwithstanding the foregoing, specified provisions of the trust declaration
may not be amended without the consent of all holders of the trust's preferred
and common securities.
No amendment may be made to a trust declaration, if the amendment would:
. cause the related Trust to be characterized as other than a grantor
trust for United States federal income tax purposes;
. reduce or otherwise adversely affect the powers of the related property
trustee, unless approved by that property trustee; or
. cause the related Trust to be deemed to be an "investment company" which
is required to be registered under the Investment Company Act.
The holders of a majority in aggregate liquidation amount of the trust
preferred securities of each Trust have the right to:
. direct the time, method and place of conducting any proceeding for any
remedy available to the property trustee of the Trust; or
. direct the exercise of any trust or power conferred upon such property
trustee under that Trust's trust declaration, including the right to
direct the property trustee, as the holder of a series of debt
securities, to
19
(1) exercise the remedies available under any indenture involving the
debt securities,
(2) waive any event of default under any indenture that is waivable,
(3) cancel an acceleration of the principal of the debt securities, or
(4) consent to any amendment, modification or termination of the
indenture where consent is required,
but if an event of default under any indenture has occurred and is continuing,
then the holders of 25% of the aggregate liquidation amount of the trust
preferred securities may direct the property trustee to declare the debt
securities immediately due and payable. If, however, any indenture requires the
consent of the holders of more than a majority in aggregate principal amount of
a series of debt securities (a "super-majority"), then the property trustee for
the trust preferred securities related to that series of debt securities must
get approval of the holders of the same super-majority in liquidation amount of
the trust preferred securities. In addition, before taking any of the foregoing
actions, except for directing the time, method and place of conducting any
proceeding for any remedy available to the property trustee, the property
trustee must obtain an opinion of counsel from a firm qualified to give such
opinion stating that the action would not cause the Trust to be classified as
other than a grantor trust for United States federal income tax purposes.
The property trustee of a Trust will notify all trust preferred securities
holders of the Trust of any notice received from the Trustee concerning the
debt securities held by the Trust.
As described in each trust declaration, the regular trustee may hold a
meeting to have trust preferred securities holders vote on a change or have
them approve the change by written consent.
If a vote of trust preferred securities holders is taken or a consent is
obtained, any trust preferred securities that are owned by us or any of our
affiliates will, for purposes of the vote or consent, be treated as if they
were not outstanding. This means that:
. we and any of our affiliates will not be able to vote on or consent to
matters requiring the vote or consent of holders of trust preferred
securities; and
. any trust preferred securities owned by us, the regular trustees or any
of our respective affiliates will not be counted in determining whether
the required percentage of votes or consents has been obtained.
Information Concerning the Property Trustees
The property trustees will be unaffiliated with us. For matters relating to
compliance with the Trust Indenture Act, the property trustee of each Trust
will have all of the duties and responsibilities of an indenture trustee under
the Trust Indenture Act. Each property trustee, other than during the
occurrence and continuance of an event of default under the trust declaration
under the applicable Trust, undertakes to perform only those duties that are
specifically stated in the applicable trust declaration and, upon an event of
default under the trust declaration, must use the same degree of care and skill
as a prudent person would exercise or use in the conduct of his or her own
affairs. In addition, a property trustee is under no obligation to exercise any
of the powers given it by the applicable trust declaration at the request of
any holder of trust preferred securities unless it is offered reasonable
security or indemnity against the costs, expenses and liabilities that it might
incur.
Miscellaneous
The trustees of each Trust are authorized and directed to conduct the
affairs of and to operate the Trust in such a way that:
. the Trust will not be deemed to be an "investment company" required to
be registered under the Investment Company Act;
20
. the Trust will be classified as a grantor trust for United States
federal income tax purposes; and
. the debt securities held by the Trust will be treated as indebtedness of
Torchmark for United States federal income tax purposes.
Torchmark and the trustees of a Trust are authorized to take any legal
action that we and the trustees of that Trust determine to be necessary or
desirable for such purposes so long as the action does not violate the Trust's
certificate of trust or its trust declaration.
Holders of trust preferred securities have no preemptive or similar rights.
A Trust may not borrow money, issue debt, execute mortgages or pledge any of
its assets.
The property trustee will promptly make distributions to the holders of the
Trust's preferred securities and common securities out of funds received by
such Trust from holding our debt securities.
Governing Law
Each trust declaration and the related trust preferred securities will be
governed by and construed in accordance with the laws of the State of Delaware.
DESCRIPTION OF DEBT SECURITIES
The following is a summary of the general terms of the debt securities. We
will file a prospectus supplement that may contain additional terms when we
issue debt securities. The terms presented here, together with the terms in a
related prospectus supplement, will be a description of the material terms of
the debt securities. You should also read the Indentures described below.
We may issue, from time to time, debt securities, in one or more series,
that will consist of either our senior debt ("Senior Debt Securities"), our
senior subordinated debt ("Senior Subordinated Debt Securities"), our
subordinated debt ("Subordinated Debt Securities") or our junior subordinated
debt ("Junior Subordinated Debt Securities" and, together with the Senior
Subordinated Debt Securities and the Subordinated Debt Securities, the
"Subordinated Securities"). The Senior Debt Securities we offer will be issued
under an Indenture Agreement dated February 1, 1987, between Torchmark and
Morgan Guaranty Trust Company of New York, as the original trustee (the "Senior
Indenture"). The Senior Indenture is incorporated by reference as an exhibit to
the Registration Statement. The First National Bank of Chicago is the successor
trustee under the Senior Indenture and has served in such capacity since August
8, 1994.
The Senior Debt Securities will rank on an equal basis with all other
unsecured debt of Torchmark except any subordinated indebtedness of Torchmark.
In particular, the Senior Debt Securities will rank on an equal basis with our
8 1/4% Senior Debentures Due 2009, our 7 7/8% Notes Due 2023 and our 7 3/8%
Notes due 2013.
The Subordinated Securities we offer will be issued under a separate
indenture between us and The First National Bank of Chicago, acting as trustee
(the "Junior Indenture," and together with the Senior Indenture, the
"Indentures"). We have filed the form of Junior Indenture as an exhibit to the
Registration Statement of which this prospectus is a part. Debt securities,
whether senior, senior subordinated, subordinated or junior subordinated, may
be issued as convertible debt securities or exchangeable debt securities. All
capitalized terms not defined herein have the meanings specified in the
Indentures.
General Terms of The Indentures
The Debt Securities will be unsecured general obligations of the Company.
The Indentures do not limit the amount of debt securities that we may issue.
The Indentures provide that we may issue debt securities up to the principal
amount that we may authorize and may be in any currency or currency unit that
we may designate.
21
We may issue the debt securities issued under the Indentures as "discount
securities," which means they may be sold at a discount below their stated
principal amount. These debt securities, as well as other debt securities that
are not issued at a discount, may, for United States federal income tax
purposes, be treated as if they were issued with "original issue discount"
("OID") because of interest payment and other characteristics. Special United
States federal income tax considerations applicable to debt securities issued
with original issue discount will be described in more detail in any applicable
prospectus supplement.
The applicable prospectus supplement for a series of debt securities that we
issue will describe, among other things, the following terms of the offered
debt securities:
. the title;
. the designation, the aggregate principal amount and the authorized
denominations;
. whether issued in fully registered form without coupons or in a form
registered as to principal only with coupons or in bearer form with
coupons;
. whether issued in the form of one or more global securities and whether
all or a portion of the principal amount of the debt securities is
represented thereby;
. the price or prices at which the debt securities will be issued;
. the date or dates on which principal is payable;
. the place or places where and the manner in which principal, premium or
interest will be payable and the place or places where the debt
securities may be presented for transfer and, if applicable, conversion
or exchange;
. interest rates, and the dates from which interest, if any, will accrue,
and the dates when interest is payable and the maturity;
. the right, if any, to extend the interest payment periods and the
duration of the extensions;
. our rights or obligations to redeem or purchase the debt securities;
. conversion or exchange provisions, if any, including conversion or
exchange prices or rates and adjustments thereto;
. the currency or currencies of payment of principal or interest;
. the terms applicable to any debt securities issued at a discount from
their stated principal amount;
. the terms, if any, under which any debt securities will rank junior to
any of our other debt;
. if the amounts of payments of principal or interest are to be determined
by reference to an index or formula, or based on a coin or currency
other than that in which the debt securities are stated to be payable,
the manner in which these amounts are determined and the calculation
agent, if any, with respect to them;
. if other than the entire principal amount of the debt securities when
issued, the portion of the principal amount payable upon acceleration of
maturity as a result of a default on our obligations;
. if applicable, covenants affording holders of debt protection against
changes in our operations, financial condition or transactions involving
us; and
. any other specific terms of any debt securities.
The applicable prospectus supplement will present United States federal
income tax considerations for holders of any debt securities and the securities
exchange or quotation system on which any debt securities are listed or quoted.
22
Senior Debt Securities
Payment of the principal of, premium, if any, and interest on Senior Debt
Securities will rank on a parity with all of our other unsecured and
unsubordinated debt.
Senior Subordinated Debt Securities
Payment of the principal of, premium, if any, and interest on Senior
Subordinated Debt Securities will be junior in right of payment to the prior
payment in full of all of our unsubordinated debt, including Senior Debt
Securities. We will state in the applicable prospectus supplement relating to
any Senior Subordinated Debt Securities the subordination terms of the
securities as well as the aggregate amount of outstanding debt, as of the most
recent practicable date, that by its terms would be senior to the Senior
Subordinated Debt Securities. We will also state in such prospectus supplement
limitations, if any, on issuance of additional senior debt.
Subordinated Debt Securities
Payment of the principal of, premium, if any, and interest on Subordinated
Debt Securities will be subordinated and junior in right of payment to the
prior payment in full of all of our senior debt, including our senior
subordinated debt. We will state in the applicable prospectus supplement
relating to any Subordinated Debt Securities the subordination terms of the
securities as well as the aggregate amount of outstanding indebtedness, as of
the most recent practicable date, that by its terms would be senior to the
Subordinated Debt Securities. We will also state in such prospectus supplement
limitations, if any, on issuance of additional senior indebtedness.
Junior Subordinated Debt Securities
Payment of the principal of, premium, if any, and interest on Junior
Subordinated Debt Securities will be subordinated and junior in right of
payment to the prior payment in full of all of our senior, senior subordinated
and subordinated debt. We will state in the applicable prospectus supplement
relating to any Junior Subordinated Debt Securities the subordination terms of
the securities as well as the aggregate amount of outstanding debt, as of the
most recent practicable date, that by its terms would be senior to the Junior
Subordinated Debt Securities. We will also state in such prospectus supplement
limitations, if any, on issuance of additional senior indebtedness.
Conversion or Exchange Rights
Debt securities may be convertible into or exchangeable for shares of our
equity securities. The terms and conditions of conversion or exchange will be
stated in the applicable prospectus supplement. The terms will include, among
others, the following:
. the conversion or exchange price;
. the conversion or exchange period;
. provisions regarding the ability of us or the holder to convert or
exchange the debt securities;
. events requiring adjustment to the conversion or exchange price; and
. provisions affecting conversion or exchange in the event of our
redemption of the debt securities.
Limitations on Liens
We will not, and will not permit any of our subsidiaries to incur any
indebtedness which is secured by an encumbrance of any nature (a "Mortgage") on
the common stock of Liberty National, United American or Globe Life (the
"Designated Subsidiaries"), unless the Senior Debt Securities and, if we so
elect, any other
23
indebtedness of ours ranking at least on an equal basis with the Senior Debt
Securities, shall be secured equally and ratably with, or prior to, such other
secured indebtedness. We are not restricted, however, from incurring
indebtedness for money borrowed secured as follows:
(1) Mortgages securing indebtedness owed by a Designated Subsidiary to
another Designated Subsidiary or to Torchmark;
(2) pledges or deposits under workers' compensation or other similar laws
and liens of judgments thereunder that are not currently dischargeable;
(3) good faith deposits in connection with leases to which we or any
Designated Subsidiary is a party;
(4) deposits to secure our public or statutory obligations;
(5) deposits in connection with obtaining or maintain self-insurance or to
obtain the benefits of any law, regulation or arrangement pertaining to
unemployment insurance, old age pensions, social security or similar
matters;
(6) deposits in litigation or other proceedings;
(7) Mortgages created by or resulting from any judgments or awards against
us or the Designated Subsidiaries with respect to which we are in good
faith prosecuting an appeal or other review proceedings, or Mortgages
incurred by us or any Designated Subsidiary for the purpose of
obtaining a stay or discharge in the course of any litigation to which
we are a party; or
(8) Mortgages for taxes or assessments, governmental charges or levies not
yet due or delinquent, or which can be paid thereafter without penalty,
or which are being contested in good faith by appropriate proceedings.
Limitations on Sales of Capital Stock of Certain Subsidiaries
Under the Senior Indenture, we are not permitted to issue, sell, transfer or
dispose of (except to certain of our affiliates) any shares of capital stock of
Liberty National, United American or Globe Life, unless the entire capital
stock of such subsidiary is disposed of for consideration of cash or property,
which, in the opinion of our Board of Directors, is at least equal to the fair
value of such capital stock.
Consolidation, Merger or Sale
We cannot consolidate or merge with or into, or transfer or lease all or
substantially all of our assets to, any person unless (a) we will be the
continuing corporation or (b) the successor corporation or person to which our
assets are transferred or leased is a corporation organized under the laws of
the United States, any state of the United States or the District of Columbia
and it expressly assumes our obligations under the debt securities and the
Indentures. In addition, we cannot complete such a transaction unless
immediately after completing the transaction, no event of default under either
of the Indentures, and no event which, after notice or lapse of time or both,
would become an event of default under either of the Indentures, has happened
and is continuing. When the person to whom our assets are transferred or leased
has assumed our obligations under the debt securities and the Indentures, we
will be discharged from all our obligations under the debt securities and the
Indentures except in limited circumstances.
Events of Default
The term "Event of Default," when used in the Indentures, unless otherwise
indicated, means any of the following:
. failure to pay interest for 30 days after the date payment is due and
payable;
. failure to pay principal or premium, if any, on any debt security when
due, either at maturity, upon any redemption, by declaration or
otherwise;
24
. failure to make sinking fund payments after the date payment is due and
payable (and in the case of the Senior Indenture, 10 days after the date
payment is due);
. failure to perform other covenants or breach of a warranty for 60 days
after notice that performance or cure of breach was required;
. events in bankruptcy, insolvency or reorganization of Torchmark; or
. a default under any other indebtedness of Torchmark if Torchmark fails
to pay a principal amount due in excess of $10,000,000 or if a principal
amount in excess of $10,000,000 is declared due prior to the date it
would have otherwise been due (which, in the case of the Junior
Indenture, continues for 30 days after notice thereof).
If an Event of Default involving any series of debt securities has occurred
and is continuing, the trustee or the holders of not less than 25% in aggregate
principal amount of the debt securities of each affected series may declare the
entire principal of all the debt securities of that series to be due and
payable immediately. If an Event of Default involving bankruptcy, insolvency or
reorganization of Torchmark occurs under the Junior Indenture, then the
principal of all prior subordinated debt securities will be immediately due and
payable.
We will be required to file annually with the trustee a certificate, signed
by an officer of Torchmark, stating whether or not the officer knows of any
default by us in the performance, observance or fulfillment of any condition or
covenant of the Indentures.
Registered Global Securities
We may issue the debt securities of a series in whole or in part in the form
of one or more fully registered global securities. We will deposit any
registered global securities with a depositary or with a nominee for a
depositary identified in the applicable prospectus supplement and registered in
the name of such depositary or nominee. In such case, we will issue one or more
registered global securities denominated in an amount equal to the aggregate
principal amount of all of the debt securities of the series to be issued and
represented by such registered global security or securities.
Unless and until it is exchanged in whole or in part for debt securities in
definitive registered form, a registered global security may not be transferred
except as a whole:
. by the depositary for such registered global security to its nominee;
. by a nominee of the depositary to the depositary or another nominee of
the depositary; or
. by the depositary or its nominee to a successor of the depositary or a
nominee of the successor.
The prospectus supplement relating to a series of debt securities will
describe the specific terms of the depositary arrangement involving any portion
of the series represented by a registered global security. We anticipate that
the following provisions will apply to all depositary arrangements for debt
securities:
. ownership of beneficial interests in a registered global security will
be limited to persons that have accounts with the depositary for such
registered global security, these persons being referred to as
"participants," or persons that may hold interests through participants;
. upon the issuance of a registered global security, the depositary for
the registered global security will credit, on its book-entry
registration and transfer system, the participants' accounts with the
respective principal amounts of the debt securities represented by the
registered global security beneficially owned by the participants;
. any dealers, underwriters, or agents participating in the distribution
of the debt securities will designate the accounts to be credited; and
25
. ownership of beneficial interest in such registered global security will
be shown on, and the transfer of such ownership interest will be
effected only through, records maintained by the depositary for such
registered global security for interests of participants, and on the
records of participants for interests of persons holding through
participants.
The laws of some states may require that specified purchasers of securities
take physical delivery of the securities in definitive form. These laws may
limit the ability of those persons to transfer beneficial interests in
registered global securities.
So long as the depositary for a registered global security, or its nominee,
is the registered owner of such registered global security, the depositary or
such nominee, as the case may be, will be considered the sole owner or holder
of the debt securities represented by the registered global security for all
purposes under the indenture. Except as stated below, owners of beneficial
interests in a registered global security:
. will not be entitled to have the debt securities represented by a
registered global security registered in their names;
. will not receive or be entitled to receive physical delivery of the debt
securities in the definitive form; and
. will not be considered the owners or holders of the debt securities
under the Indentures.
Accordingly, each person owning a beneficial interest in a registered global
security must rely on the procedures of the depositary for the registered
global security and, if the person is not a participant, on the procedures of a
participant through which the person owns its interest, to exercise any rights
of a holder under the Indentures.
We understand that under existing industry practices, if we request any
action of holders or if an owner of a beneficial interest in a registered
global security desires to give or take any action that a holder is entitled to
give or take under the indenture, the depositary for the registered global
security would authorize the participants holding the relevant beneficial
interests to give or take the action, and the participants would authorize
beneficial owners owning through the participants to give or take the action or
would otherwise act upon the instructions of beneficial owners holding through
them.
We will make payments of principal and premium, if any, and interest, if
any, on debt securities represented by a registered global security registered
in the name of a depositary or its nominee to the depositary or its nominee, as
the case may be, as the registered owners of the registered global security.
Neither Torchmark, the trustee nor any other agent of Torchmark or the trustee
will be responsible or liable for any aspect of the records relating to, or
payments made on account of, beneficial ownership interests in the registered
global security or for maintaining, supervising or reviewing any records
relating to the beneficial ownership interests.
We expect that the depositary for any debt securities represented by a
registered global security, upon receipt of any payments of principal and
premium, if any, and interest, if any, in respect of the registered global
security, will immediately credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the
registered global security as shown on the records of the depositary. We also
expect that standing customer instructions and customary practices will govern
payments by participants to owners of beneficial interests in the registered
global security held through the participants, as is now the case with the
securities held for the accounts of customers in bearer form or registered in
"street name." We also expect that any of these payments will be the
responsibility of the participants.
If the depositary for any debt securities represented by a registered global
security is at any time unwilling or unable to continue as depositary or stops
being a clearing agency registered under the Exchange Act, we will appoint an
eligible successor depositary. If we fail to appoint an eligible successor
depositary within 90 days,
26
we will issue the debt securities in definitive form in exchange for the
registered global security. In addition, we may at any time and in our sole
discretion decide not to have any of the debt securities of a series
represented by one or more registered global securities. In that event, we will
issue debt securities of the series in a definitive form in exchange for all of
the registered global securities representing the debt securities. The trustee
will register any debt securities issued in definitive form in exchange for a
registered global security in the name or names as the depositary, based upon
instructions from its participants, shall instruct the trustee.
We may also issue bearer debt securities of a series in the form of one or
more global securities, referred to as "bearer global securities." We will
deposit these securities with a common depositary for Euroclear System and
Cedel Bank, societe anonyme, or with a nominee for the depositary identified in
the prospectus supplement relating to the series. The prospectus supplement
relating to a series of debt securities represented by a bearer global security
will describe the applicable terms and procedures. These will include the
specific terms of the depositary arrangement and any specific procedures for
the issuance of debt securities in definitive form in exchange for a bearer
global security, in proportion to the series represented by a bearer global
security.
Discharge, Defeasance and Covenant Defeasance
We can discharge or decrease our obligations under each of the Indentures as
stated below.
We may discharge obligations to holders of any series of debt securities
that have not already been delivered to the trustee for cancellation and that
have either become due and payable or are by their terms to become due and
payable, or are scheduled for redemption, within one year. We may effect a
discharge by irrevocably depositing with the trustee cash or U.S. government
obligations, as trust funds, in an amount certified to be enough to pay when
due, whether at maturity, upon redemption or otherwise, the principal of,
premium, if any, and interest on the debt securities and any mandatory sinking
fund payments.
Unless otherwise provided in the applicable prospectus supplement, we may
also discharge any and all of our obligations to holders of any series of debt
securities at any time ("defeasance"). We may also be released from the
obligations imposed by any covenants of any outstanding series of debt
securities and provisions of the Indentures, and we may omit to comply with
those covenants without creating an event of default under the trust
declaration ("covenant defeasance"). We may effect defeasance and covenant
defeasance only if, among other things:
. we irrevocably deposit with the trustee cash or U.S. government
obligations, as trust funds, in an amount certified to be enough to pay
at maturity, or upon redemption, the principal, premium, if any, and
interest on all outstanding debt securities of the series and any
mandatory sinking fund payments;
. we deliver to the trustee an opinion of counsel from a law firm
qualified to give such opinion to the effect that the holders of the
series of debt securities will not recognize income, gain or loss for
U.S. federal income tax purposes as a result of the defeasance or
covenant defeasance and that defeasance or covenant defeasance will not
otherwise alter the holders' U.S. federal income tax treatment of
principal, premium, if any, and interest payments on the series of debt
securities; and
. in the case of subordinated debt securities, no event or condition
shall exist that, based on the subordination provisions applicable to
the series, would prevent us from making payments of principal of,
premium, if any, and interest on any of the applicable subordinated
debt securities at the date of the irrevocable deposit referred to
above or at any time during the period ending on the 61st day after the
deposit date.
Although we may discharge or decrease our obligations under the Indentures
as described in the two preceding paragraphs, we may not avoid, among other
things, our duty to register the transfer or exchange of any series of debt
securities, to replace any temporary, mutilated, destroyed, lost or stolen
series of debt securities or to maintain an office or agency in respect of any
series of debt securities.
27
Modification of the Indentures
The Indentures provide that we and the trustee may enter into supplemental
indentures without the consent of the holders of debt securities to:
. secure any debt securities;
. evidence the assumption by a successor corporation of our obligations;
. add covenants for the protection of the holders of debt securities;
. add any additional events of default under the Indentures;
. cure any ambiguity or correct any inconsistency in the Indentures;
. change or eliminate provisions of the Senior Indenture, provided such
change or elimination will only become effective after all then current
outstanding debt securities are no longer outstanding;
. establish the forms or terms of debt securities of any series; and
. evidence and provide for the acceptance of appointment by a successor
trustee.
Each of the Indentures also provides that we and the trustee may, with the
consent of the holders of not less than 66 2/3% in aggregate principal amount
of debt securities of each series of Senior Debt Securities or a majority in
aggregate principal amount of debt permitted of all series of Subordinated
Securities, as the case may be, then outstanding and affected, add any
provisions to, or change in any manner, eliminate or modify in any way the
provisions of, the applicable indenture or modify in any manner the rights of
the holders of the debt securities. We and the trustee may not, however,
without the consent of the holder of each outstanding debt security affected
thereby:
. change the stated maturity of any debt security;
. reduce the principal amount or premium, if any, or reduce the rate or
extend the time of payment of interest on any debt security;
. change the currency in which the principal, premium, if any, or
interest is payable;
. reduce the amount of the principal of any debt security issued with an
original issue discount that is payable upon acceleration or provable
in bankruptcy;
. impair the right to institute suit for the enforcement of any payment
on any debt security when due; or
. reduce the percentage of holders of debt securities of any series whose
consent is required for any modification of the Indentures or, waive
compliance with or default under certain provisions of the Indentures.
Concerning the Trustee
The First National Bank of Chicago is the trustee under the both Indentures.
Torchmark may also maintain banking and other commercial relationships with The
First National Bank of Chicago and its affiliates in the ordinary course of
business. The Indentures contain certain limitations on the right of the
trustee, should it become a creditor of Torchmark, to obtain payment of claims
in certain cases, or to realize for its own account on certain property
received in respect of any such claim as security or otherwise. A trustee under
the Indentures will be permitted to engage in certain other transactions;
however, if it acquires any conflicting interest, it must eliminate such
conflict or resign.
Governing Law
The Indentures and the debt securities will be governed by, and construed in
accordance with, the laws of the State of New York.
28
DESCRIPTION OF THE TRUST PREFERRED SECURITIES GUARANTEES
The following is a description of the material terms of the trust preferred
securities guarantees. If we plan to issue a trust preferred securities
guarantee in the future that differs from this description, we will file a
prospectus supplement with the additional terms. You should also read the
guarantees. We have filed the form of guarantees with the SEC as an exhibit to
the registration statement of which this prospectus is a part.
General
We will execute a guarantee, which benefits the holders of trust preferred
securities, at the time that a Trust issues those trust preferred securities.
Each guarantee will be qualified as an indenture under the Trust Indenture Act.
Unless otherwise stated in a prospectus supplement, The First National Bank of
Chicago will act as indenture trustee under each guarantee for the purposes of
compliance with the Trust Indenture Act. The trustee will hold each guarantee
for the benefit of the holders of the preferred securities of the applicable
Trust.
We will agree, as described in each guarantee, to pay in full to the holders
of the trust preferred securities issued by the applicable Trust, the Guarantee
Payments, when and as due, regardless of any defense, right of set-off or
counterclaim which the Trust may have or assert. The following payments
("Guarantee Payments"), if not previously paid by a Trust, will be covered by
the applicable guarantee:
. any accumulated and unpaid distributions required to be paid on the
applicable trust preferred securities, if the Trust has funds available
to make the payment;
. the redemption price and all accumulated and unpaid distributions to the
date of redemption, if the Trust has funds available to make the
payment; and
. upon a voluntary or involuntary dissolution, winding up or termination
of the Trust, other than in connection with a distribution of debt
securities to holders of the applicable trust preferred securities or
the redemption of all the trust preferred securities, the lesser of:
(1) the aggregate of the liquidation amount specified in the prospectus
supplement for each trust preferred security plus all accumulated
and unpaid distributions on the trust preferred securities to the
date of payment, if the Trust has funds available to make the
payment; and
(2) the amount of assets of the Trust remaining available for
distribution to holders of its trust preferred securities upon a
dissolution and termination of the Trust.
Our obligation to make a Guarantee Payment may be satisfied by directly
paying the required amounts to the holders of the trust preferred securities or
by causing the Trust to pay the amounts to the holders.
No single document executed by us relating to the issuance of trust
preferred securities will provide for a full, irrevocable and unconditional
guarantee of the trust preferred securities. It is only the combined operation
of our obligations under any indenture and the applicable guarantee and trust
declaration that has the effect of providing a full, irrevocable and
unconditional guarantee of a Trust's obligations under its trust preferred
securities.
Status of The Trust Preferred Securities Guarantees
Each guarantee will constitute an unsecured obligation of Torchmark and will
rank:
. subordinate and junior in right of payment to all of our other
liabilities, except those obligations made equal or junior to our
obligations under a guarantee;
. equal with the most senior preferred or preference stock now or
hereafter issued by us, and with any guarantee now or hereafter issued
by us in respect of any preferred or preference stock of any of our
affiliates; and
. senior to our common stock.
29
Each trust declaration will require that the holder of trust preferred
securities accept the subordination provisions and other terms of the
guarantee. Each guarantee will constitute a guarantee of payment and not of
collection. In other words, the holder of the guaranteed security may sue us,
or seek other remedies, to enforce its rights under the guarantee without first
suing any other person or entity.
Termination of the Trust Preferred Securities Guarantee
A guarantee will terminate upon the earlier of:
. the full payment of the redemption price of the trust preferred
securities and all accumulated and unpaid distributions with respect
thereto;
. the distribution of the underlying securities to the holders of trust
preferred securities upon any conversion or exchange of the holder's
trust preferred securities into the designated securities, if
applicable;
. the distribution to the applicable holders of trust preferred securities
of the corresponding series of debt securities under the appropriate
trust declaration; or
. the full payment of the amounts payable under the appropriate trust
declaration upon liquidation of the Trust.
Each guarantee will continue to be effective or will be reinstated if at any
time any holder of trust preferred securities issued by the applicable Trust
must restore payment of any sums paid under such trust preferred securities or
such guarantee.
Amendments and Assignment
Changes to the guarantee that do not adversely affect the rights of holders
of trust preferred securities may be made without the consent of those holders.
Otherwise, a guarantee may only be amended with the prior approval of the
holders of at least a majority in aggregate liquidation amount of the
outstanding trust preferred securities. A description of the way to obtain any
approval is described under "Description of the Trust Preferred Securities--
Voting Rights; Amendment of Declarations." All guarantees and agreements
contained in the guarantee will be binding on our successors, assigns,
receivers, trustees and representatives and are for the benefit of the holders
of the applicable trust preferred securities.
Trust Preferred Securities Guarantee Events of Default
An event of default under a guarantee occurs if:
. we fail to make any of our required payments or perform our obligations
under the guarantee; or
. we fail to deliver the designated securities upon an appropriate
election by the holder of related trust preferred securities to convert
or exchange the trust preferred securities into the designated
securities, if applicable.
The holders of at least a majority in aggregate liquidation amount of the
trust preferred securities relating to each guarantee will have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the trustee relating to that guarantee or to direct the exercise
of any Trust or power given to the trustee under the guarantee.
Information Concerning the Trust Preferred Guarantee Trustee
The trustee under a guarantee will only perform the duties that are
specifically described in the guarantee. The trustee will not be liable for any
action taken or omitted in good faith and reasonably believed by it to be
authorized or within its discretion under the guarantee. A trustee is under no
obligation to exercise any of its powers as described in the applicable
guarantee at the request of any holder of covered trust preferred securities
unless it is offered reasonable security and indemnity against the costs,
expenses and liabilities that it might incur.
30
Miscellaneous
Torchmark will pay all fees and expenses related to:
. the offering of the trust preferred securities and the junior
subordinated debentures;
. the organization, maintenance and dissolution of the Trusts;
. the retention of the trustees; and
. the enforcement by the property trustee of the rights of the holders of
the trust preferred securities.
Governing Law
The guarantees will be governed by and construed in accordance with the
laws of the State of New York.
RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES, THE TRUST PREFERRED
SECURITIES GUARANTEE AND THE DEBT SECURITIES HELD BY EACH TRUST
We will guarantee payments of distributions and redemption and liquidation
payments due on each series of the trust preferred securities, if the
applicable Trust has funds available for the payments, as described under
"Description of the Trust Preferred Securities Guarantees." No single document
executed by us in connection with the issuance of any series of the trust
preferred securities will provide for a full, irrevocable and unconditional
guarantee of any trust preferred securities. It is only the combined operation
of our obligations under the applicable guarantee, trust declaration and the
indenture that has the effect of providing a full, irrevocable and
unconditional guarantee of the Trust's obligations under its trust preferred
securities.
As long as we make payments of interest and other payments when due on the
debt securities held by a Trust, those payments will be sufficient to cover
the payment of distributions and redemption and liquidation payments due on
the trust preferred securities issued by that Trust, primarily because:
. the aggregate principal amount of the debt securities will be equal
to the sum of the aggregate liquidation amount of the trust preferred
and trust common securities;
. the interest rate and interest and other payment dates on the debt
securities will match the distribution rate and distribution and
other payment dates for the trust preferred securities;
. we will pay for any and all costs, expenses and liabilities of each
Trust, except such Trust's obligations under its trust preferred
securities; and
. each trust declaration provides that the related Trust will not
engage in any activity that is not consistent with the limited
purposes of the Trust.
If we do not make payments on the debt securities, the applicable Trust
will not have funds available to make payments of distributions or other
amounts due on its trust preferred securities. In those circumstances, you
will not be able to rely upon the guarantee for payment of these amounts.
Instead, you may directly sue us or seek other remedies to collect your
proportionate share of payments owed. If you sue us to collect payment, then
we will assume your rights as a holder of trust preferred securities under the
Trust's trust declaration if we make a payment to you in any legal action.
A holder of any trust preferred security may sue us, or seek other
remedies, to enforce its rights under the guarantee without first suing the
applicable trustee, the Trust that issued the trust preferred security or any
other person or entity.
31
PLAN OF DISTRIBUTION
Torchmark may sell preferred stock, depositary shares or any series of debt
securities and a Trust may sell trust preferred securities in one or more of
the following ways from time to time:
. to underwriters or dealers for resale to the public or to institutional
investors;
. directly to institutional investors; or
. through agents to the public or to institutional investors.
The prospectus supplements will state the terms of the offering of the
securities, including:
. the name or names of any underwriters or agents;
. the purchase price of the securities;
. the proceeds to Torchmark or the applicable Trust, as the case may be,
from the sale;
. any underwriting discounts or agency fees and other items constituting
underwriters' or agents' compensation;
. any initial public offering price;
. any discounts or concessions allowed or reallowed or paid to dealers;
and
. any securities exchanges on which such securities may be listed.
If underwriters are used in the sale, the underwriters will acquire the
securities for their own account and may resell them 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.
If a dealer is used in the sale, we and/or a Trust, as the case may be, will
sell such securities to the dealer, as principal. The dealer may then resell
the securities to the public at varying prices to be determined by the dealer
at the time for resale.
Unless otherwise set forth in a prospectus supplement, there will be
conditions to the underwriters' obligations to purchase any series of
securities, and the underwriters will be obligated to purchase all of a series
of securities, if any are purchased.
Underwriters and agents may be entitled under agreements entered into with
us and/or a Trust to indemnification by us and/or a Trust against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
concerning payments that the underwriters or agents may be required to make in
respect thereof. Underwriters and agents may be customers of, engage in
transactions with, or perform services for us and our affiliates in the
ordinary course of business.
Each of the securities issued hereunder will be a new issue of securities
and will have no prior trading market. Any underwriters to whom Torchmark or a
Trust sells securities for public offering and sale may make a market in the
securities, but no underwriter will be obligated to do so and may discontinue
any market making at any time without notice. The securities may or may not be
listed on a national securities exchange.
LEGAL OPINIONS
The validity of the securities being offered hereby is being passed upon for
Torchmark and each Trust by Maynard, Cooper & Gale, P.C., Birmingham, Alabama,
and with respect to certain matters of Delaware law relating to the validity of
the trust preferred securities, by Morris, Nichols, Arsht & Tunnell,
Wilmington, Delaware, special Delaware counsel to Torchmark and each Trust. If
any of the securities are issued in an underwritten offering, it is expected
that Davis Polk & Wardwell, New York, New York, will pass on certain legal
matters for the underwriters.
32
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference from Torchmark's Annual Report on Form 10-K for the year ended
December 31, 1998, have been audited by KPMG LLP, independent auditors, as
stated in their report incorporated in this prospectus by reference, and have
been so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements, and other information with the SEC. You
can read and copy these reports, proxy statements, and other information
concerning Torchmark 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 further
information on the Public Reference Room. The SEC maintains an internet site at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding issuers that file electronically with the SEC,
including Torchmark. Our common stock is listed on the New York Stock Exchange
and the International Stock Exchange in London, England. These reports, proxy
statements and other information are also available for inspection at the
offices of the National Association of Securities Dealers, Inc., Report
Section, 1735 K Street N.W., Washington, D.C. 20006.
This prospectus is part of a registration statement that we and the Trusts
filed with the SEC. You can obtain the full registration statement from the SEC
as indicated above, or from us.
The SEC allows us to "incorporate by reference" the information we file with
the SEC. This permits us to disclose important information to you by referring
to these filed documents. Any information referred to in this way is considered
part of this prospectus, and any information that we file with the SEC after
the date of this prospectus will automatically be deemed to update and
supersede this information. We incorporate by reference the following documents
that have been filed with the SEC:
. Annual Report on Form 10-K for the year ended December 31, 1998;
. Quarterly Report on Form 10-Q for the quarter ended March 31, 1999;
. Quarterly Report on Form 10-Q/A for the quarter ended March 31, 1999;
and
. Quarterly Report on Form 10-Q for the quarter ended June 30, 1999.
We also incorporate by reference any future filings made with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until
we file a post-effective amendment that indicates the termination of the
offering of the securities made by this prospectus.
We will provide without charge upon written or oral request a copy of any or
all of the documents that are incorporated by reference into this prospectus,
other than exhibits which are specifically incorporated by reference into such
documents. Requests should be directed to Investor Relations Department,
Torchmark Corporation, 2001 Third Avenue South, 16th Floor, Birmingham, Alabama
35233 (telephone (205) 325-4200).
There are no separate financial statements of the Trusts in this prospectus.
We do not believe such financial statements would be helpful because:
. The Trusts are subsidiaries of Torchmark, which files consolidated
financial information under the Exchange Act;
. The Trusts do not have any independent operations other than issuing
the preferred and common securities and purchasing our debt securities;
. The Trusts' only material assets will be our debt securities when
issued; and
. The combined obligations of Torchmark under the debt securities, the
Trust Preferred Securities Guarantees, the Declarations and the
Indenture have the effect of providing a full, irrevocable and
unconditional guarantee of the Trusts' obligations under their trust
preferred securities. See "Description of Debt Securities,"
"Description of the Trust Preferred Securities Guarantees" and
"Relationship Among the Trust Preferred Securities, the Trust Preferred
Securities Guarantee and the Debt Securities Held by Each Trust."
33
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TORCHMARK CORPORATION [LOGO]
$180,000,000
TORCHMARK CORPORATION
6 1/4% Senior Notes due 2006
--------
PROSPECTUS SUPPLEMENT
December 11, 2001
--------
Banc One Capital Markets, Inc. Banc of America Securities LLC
Fleet Securities, Inc. SunTrust Robinson Humphrey
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------