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PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED APRIL 1, 1996)
$700,000,000
[LOGO COLGATE-PALMOLIVE COMPANY]
MEDIUM-TERM NOTES, SERIES C
DUE MORE THAN ONE YEAR FROM DATE OF ISSUE
-------------------
Colgate-Palmolive Company (the "Company") may offer from time to time up to
$700,000,000 aggregate initial offering price, or the equivalent thereof in one
or more foreign or composite currencies, of its Medium-Term Notes, Series C (the
"Notes"). Each Note will mature on a day more than one year from the date of
issue, as selected by the purchaser and agreed to by the Company, and may be
subject to redemption by the Company or repayment at the option of the Holder
thereof, in each case, in whole or in part, prior to its Stated Maturity, as set
forth therein and specified in a pricing supplement hereto (each, a "Pricing
Supplement").
The interest rate, if any, or the formula for the determination of any such
interest rate, applicable to each Note and other variable terms of the Notes as
described herein will be established by the Company at the date of issue of such
Note and will be set forth therein and specified in a Pricing Supplement.
Interest rates, interest rate formulae and such other variable terms are subject
to change by the Company, but no change will affect any Note already issued or
as to which an offer to purchase has been accepted by the Company. Each Note
will be issued in fully registered book-entry form (a "Book-Entry Note") or
definitive form (a "Definitive Note"), as set forth in the applicable Pricing
Supplement, in denominations of $1,000 and integral multiples thereof, unless
otherwise specified in the applicable Pricing Supplement. Each Book-Entry Note
will be represented by one or more global securities (the "Global Securities")
deposited with or on behalf of The Depository Trust Company (or such other
depositary as is identified in an applicable Pricing Supplement) (the
"Depositary") and registered in the name of the Depositary's nominee. Interests
in Global Securities will be shown on, and transfers thereof will be effected
only through, records maintained by the Depositary (with respect to its
participants) and the Depositary's participants (with respect to beneficial
owners).
Unless otherwise specified in an applicable Pricing Supplement, the Notes
will bear interest at fixed rates (the "Fixed Rate Notes") or at floating rates
(the "Floating Rate Notes"). The applicable Pricing Supplement will specify
whether a Floating Rate Note is a Floating Rate/Fixed Rate Note or Inverse
Floating Rate Note or whether its rate of interest is determined by reference to
one or more of the CD Rate, the CMT Rate, the Commercial Paper Rate, the
Eleventh District Cost of Funds Rate, the Federal Funds Rate, LIBOR, the Prime
Rate or the Treasury Rate (each, an "Interest Rate Basis"), or any other
interest rate formula, as adjusted by any Spread and/or Spread Multiplier and
will specify such other terms applicable to such Note. See "Description of
Notes." Interest on Fixed Rate Notes will accrue from their date of issue and,
unless otherwise specified in the applicable Pricing Supplement, will be payable
semiannually in arrears on June 1 and December 1 of each year and at Maturity.
Unless otherwise specified in an applicable Pricing Supplement, the rate of
interest on Floating Rate Notes will be reset daily, weekly, monthly, quarterly,
semiannually or annually, as set forth therein and specified in the applicable
Pricing Supplement, and interest on Floating Rate Notes will accrue from their
date of issue and will be payable in arrears monthly, quarterly, semiannually or
annually, as specified in the applicable Pricing Supplement and at their
Maturity. Notes may also be issued with original issue discount, and such Notes
may or may not currently pay interest.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT, THE PROSPECTUS OR ANY SUPPLEMENT
HERETO. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
================================================================================
PRICE TO AGENTS' DISCOUNTS PROCEEDS TO THE
PUBLIC(1) AND COMMISSIONS(2)(3) COMPANY(2)(4)
- --------------------------------------------------------------------------------
Per Note.. 100% .150%-.750% 99.850%-99.250%
Total..... $700,000,000 $1,050,000-$5,250,000 $698,950,000-$694,750,000
================================================================================
(1) Unless otherwise specified in an applicable Pricing Supplement, the Notes
will be issued at 100% of their principal amount.
(2) The Company will pay to Chemical Securities Inc., Citicorp Securities, Inc.,
Goldman, Sachs & Co., Lazard Freres & Co. LLC, Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated or J.P. Morgan & Co., J.P. Morgan
Securities Inc. a commission ranging from .150% to .750% of the principal
amount of a Note, depending upon its Stated Maturity, sold through any such
agent, and may sell Notes to any agent, as principal, for resale to
investors and other purchasers at varying prices relating to prevailing
market prices at the time of resale, as determined by such agent or, if so
agreed, at a fixed public offering price.
(3) The Company has agreed to indemnify the agents against, and to provide
contribution under the Securities Act of 1933, as amended. See "Plan of
Distribution."
(4) Before deducting expenses payable by the Company estimated at $350,000.
-------------------
The Notes are being offered on a continuing basis by the Company through
agents, which may include those listed below (collectively, the "Agents"), who
have agreed to use their reasonable efforts to solicit offers to purchase the
Notes. The Company may also sell Notes to any Agent, as principal, for resale to
investors and other purchasers. The Company has reserved the right to sell Notes
directly on its own behalf or to appoint other agents from time to time, which
will be named in the applicable Pricing Supplement. No commission will be
payable on any Notes sold directly by the Company. Unless otherwise specified in
an applicable Pricing Supplement, the Notes will not be listed on any securities
exchange and there can be no assurance that the Notes offered by this Prospectus
Supplement will be sold or that there will be a secondary market for the Notes
or that there will be liquidity in such market if one develops. The Company
reserves the right to cancel or modify the offer made hereby without notice. The
Company or an Agent, if it solicits the offer, may reject any offer to purchase
Notes in whole or in part. See "Plan of Distribution."
-------------------
CHASE SECURITIES INC.
CITICORP SECURITIES, INC.
GOLDMAN, SACHS & CO.
LAZARD FRERES & CO. LLC
MERRILL LYNCH & CO.
J.P. MORGAN & CO.
-------------------
The date of this Prospectus Supplement is April 1, 1996.
IN CONNECTION WITH THE OFFERING OF NOTES PURCHASED BY THE AGENTS AS
PRINCIPAL ON A FIXED PRICE BASIS, THE AGENTS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE COMPANY
Colgate-Palmolive Company (the "Company"), founded in 1806, is one of the
world's leading global consumer products companies. It has operating companies
in approximately 75 countries and markets its products in approximately 200
countries and territories. The Company has been operating outside the United
States for more than 70 years. The Company is a Delaware corporation with its
principal executive offices located at 300 Park Avenue, New York, New York 10022
(telephone (212) 310-2000).
The Company manufactures and markets a wide variety of products in the
United States and around the world in two distinct business segments: Oral,
Personal and Household Care, and Pet Nutrition. Oral, Personal and Household
Care products include toothpastes, oral rinses and toothbrushes, bar and liquid
soaps, shampoos, conditioners, deodorants and antiperspirants, baby and shave
products, laundry and dishwashing detergents, fabric softeners, cleansers and
cleaners, bleaches, and other similar items. Pet Nutrition products include pet
food products manufactured and marketed by Hill's Pet Nutrition. The principal
customers for Pet Nutrition products are veterinarians and large format
specialty pet retailers. Principal global trademarks include Colgate, Palmolive,
Mennen, Kolynos, Ajax, Fab, Soupline/Suavitel, Science Diet and Prescription
Diet, in addition to various regional trademarks.
USE OF PROCEEDS
The net proceeds from the sale of the Notes will be used by the Company for
general corporate purposes, which may include repayment or refinancing of
short-term indebtedness, working capital and acquisitions. As of March 15, 1996,
the Company's outstanding commercial paper had a weighted average interest rate
of 5.45% with maturities ranging from 30 to 120 days.
DESCRIPTION OF NOTES
The Notes will be issued as a series of debt securities under an Indenture,
dated as of November 15, 1992, as supplemented or amended from time to time (the
"Indenture"), between the Company and The Bank of New York, as trustee (the
"Trustee"). The following summary of certain provisions of the Notes and of the
Indenture does not purport to be complete and is qualified in its entirety by
reference to the Indenture and the forms of Notes, copies of which have been
incorporated by reference into the Registration Statement of which this
Prospectus Supplement and the accompanying Prospectus are a part. Capitalized
terms used but not defined herein have the meanings given to them in the
Indenture or the Notes, as the case may be. The term "Debt Securities," as used
under this caption, refers to all securities issued and issuable from time to
time under the Indenture and includes the Notes.
Unless otherwise specified in an applicable Pricing Supplement, the Trustee
will also act as "Calculation Agent."
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GENERAL
THE FOLLOWING DESCRIPTION OF NOTES WILL APPLY UNLESS OTHERWISE SPECIFIED IN
AN APPLICABLE PRICING SUPPLEMENT.
All Debt Securities, including the Notes, issued and to be issued under the
Indenture will be unsecured general obligations of the Company and will rank
pari passu with all other unsecured and unsubordinated indebtedness of the
Company from time to time outstanding. The Indenture does not limit the
aggregate principal amount of Debt Securities which may be issued thereunder and
Debt Securities may be issued thereunder from time to time as a single series or
in two or more separate series up to the aggregate principal amount from time to
time authorized by the Company for each series. As of the date of this
Prospectus Supplement, the Company has issued and outstanding $820.2 million
aggregate principal amount of Debt Securities under the Indenture. The Company
may, from time to time, without the consent of the Holders of the Notes, provide
for the issuance of Notes or other Debt Securities under the Indenture in
addition to the $700,000,000 aggregate initial offering price of Notes offered
hereby.
The Notes are currently limited to $700,000,000 aggregate initial offering
price or the equivalent thereof in one or more foreign or composite currencies.
The Notes will be offered on a continuing basis and will mature on a day more
than one year from the date of issue, as selected by the purchaser and agreed to
by the Company. Unless otherwise specified in an applicable Pricing Supplement,
interest-bearing Notes will either be Fixed Rate Notes or Floating Rate Notes as
specified in the applicable Pricing Supplement. Notes may be issued at
significant discounts from their principal amount payable at Stated Maturity (or
any prior date on which the principal or an installment of principal of a Note
becomes due and payable whether by the declaration of acceleration, call for
redemption at the option of the Company, repayment at the option of the Holder
or otherwise) (each such date, a "Maturity"), and some Notes may not bear
interest.
Unless otherwise indicated in a Note or in a foreign currency supplement
hereto (a "Multi-Currency Supplement") or Indexed Note (as defined below)
supplement hereto (an "Indexed Note Supplement"), the Notes will be denominated
in United States dollars and payments of principal of, premium, if any, and
interest on, the Notes will be made in United States dollars. If any of the
Notes are to be denominated other than in United States dollars or if the
principal of, and interest on, the Notes, and any premium provided for in any
Note is to be payable in or by reference to a currency (or in composite currency
units or in amounts determined by reference to one or more currencies) other
than that in which such Note is denominated, provisions with respect thereto
will be set forth in such Note and in the applicable Multi-Currency Supplement
or Indexed Note Supplement.
Interest rates, interest rate formulas and other variable terms of the Notes
are subject to change by the Company from time to time, but no such change will
affect any Note already issued or as to which an offer to purchase has been
accepted by the Company. Interest rates offered by the Company with respect to
the Notes may differ depending upon, among other things, the aggregate principal
amount of the Notes purchased in any single transaction.
Each Note will be issued in fully registered book-entry form (a "Book-Entry
Note") or definitive form (a "Definitive Note"), in denominations of $1,000 and
integral multiples thereof, unless otherwise specified in the applicable Pricing
Supplement. Book-Entry Notes may be transferred or exchanged only through a
participating member of The Depository Trust Company (or such other depositary
as is identified in an applicable Pricing Supplement) (the "Depositary"). See
"Book-Entry Notes." Registration of transfer of Definitive Notes will be made at
the Corporate Trust Office of the Trustee. No service charge will be made by the
Company, the Trustee or the Security Registrar for any such registration of
transfer or exchange of Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith (other than exchanges pursuant to the Indenture not involving any
transfers).
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Payments of principal of, premium, if any, and interest on, Book-Entry Notes
will be made by the Company through the Trustee to the Depositary. See
"Book-Entry Notes." In the case of Definitive Notes, payments of principal of,
and premium, if any, at Maturity will be made in immediately available funds
upon presentation and surrender of the Definitive Note (or, in the case of
repayment on an Optional Repayment Date (as defined below), upon presentation
and surrender thereof and a duly completed election form in accordance with the
provisions described below) at the Corporate Trust Office of the Trustee in the
Borough of Manhattan, The City of New York, or at such other place as the
Company may designate. Payment of interest due at Maturity will be made to the
person to whom payment of the principal of, and premium, if any, on the
Definitive Note shall be made. Payment of interest due on Definitive Notes other
than at Maturity will be made at the Corporate Trust Office of the Trustee or,
at the option of the Company, may be made by check mailed to the address of the
person entitled thereto as such address shall appear in the Security Register.
Notwithstanding the foregoing, a Holder of $5,000,000 or more in aggregate
principal amount of Definitive Notes having the same Interest Payment Dates
will, at the option of the Company, be entitled to receive interest payments
(other than at Maturity) by wire transfer of immediately available funds if
appropriate wire transfer instructions have been received in writing by the
Trustee not less than 15 days prior to the applicable Interest Payment Date.
REDEMPTION
Unless otherwise specified in an applicable Pricing Supplement, the Notes
will not be subject to any sinking fund. If provided in an applicable Pricing
Supplement, Notes may be subject to redemption, in whole or in part, prior to
their Stated Maturity at the option of the Company (upon at least 30 but not
more than 60 days' prior notice to the Depositary in the case of Book-Entry
Notes) or through operation of a mandatory or optional sinking fund or analogous
provisions. Such Pricing Supplement will set forth the detailed terms of such
redemption, including, but not limited to, the date after or on which and the
price or prices (including premium, if any) at which such Notes may be redeemed.
REPAYMENT AT THE OPTION OF THE HOLDER
If so indicated in an applicable Pricing Supplement, Notes will be repayable
by the Company in whole or in part at the option of the Holders thereof on their
respective optional repayment dates, if any, as agreed upon by the Company and
the purchasers thereof at the time of sale (each, an "Optional Repayment Date").
If no Optional Repayment Date is indicated with respect to a Note, such Note
will not be repayable at the option of the Holder thereof prior to its Stated
Maturity. Any repayment in part will be in increments of $1,000 provided that
any remaining principal amount of such Note will be an authorized denomination
of such Note. Unless otherwise provided in an applicable Pricing Supplement, the
repayment price for any Note so repaid will be 100% of the principal amount to
be repaid, together with accrued interest thereon payable to the date of
repayment. For any Note to be so repaid, the Note must be received, together
with the form thereon entitled "Option to Elect Repayment" duly completed, by
the Trustee at its Corporate Trust Office (or at such other address of which the
Company shall from time to time notify the Holders) not more than 60 nor less
than 30 days prior to the Optional Repayment Date. Exercise of such repayment
option by the Holder will be irrevocable.
While the Book-Entry Notes are represented by Global Securities held by or
on behalf of the Depositary, and registered in the name of the Depositary or the
Depositary's nominee, the Depositary or its nominee will be the Holder of such
Book-Entry Note and therefore will be the only entity that can exercise a right
to repayment. In order to ensure that the Depositary or its nominee will timely
exercise a right to repayment with respect to a particular Book-Entry Note, the
beneficial owner of such Book-Entry Note must instruct the participant through
which it holds an interest in such Book-Entry Note to notify the Depositary of
its desire to exercise a right of repayment. Different firms may have different
deadlines for accepting instructions from their customers. Accordingly,
beneficial owners of Book-Entry Notes should consult the participants through
which they own their interest in the Book-Entry Notes for
S-4
the respective deadlines for such participants. All notices shall be executed by
a duly authorized officer of such participant (with signature guaranteed) and
shall be irrevocable. In addition, such beneficial owners of Book-Entry Notes
shall effect delivery of such Book-Entry Notes at the time such notices of
election are given to the Depositary by causing the participant to transfer such
beneficial owner's interest in the Book-Entry Notes, on the Depositary's
records, to the Trustee. Conveyance of notices and other communications by the
Depositary to participants, by participants to indirect participants and by
participants and indirect participants to beneficial owners of the Book-Entry
Notes will be governed by agreements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
The Company may at any time purchase Notes at any price or prices in the
open market or otherwise. Notes so purchased by the Company may, at the
discretion of the Company, be held, resold or surrendered to the Trustee for
cancellation.
INTEREST
General
Unless otherwise specified in an applicable Pricing Supplement, each
interest-bearing Note will bear interest from the date of issue at the rate per
annum or, in the case of a Floating Rate Note, pursuant to the interest rate
formula stated therein and in the applicable Pricing Supplement, until the
principal thereof is paid or made available for payment. Interest will be
payable in arrears on each date specified in the applicable Pricing Supplement
on which an installment of interest is due and payable (an "Interest Payment
Date") and at Maturity. Unless otherwise specified in an applicable Pricing
Supplement, the first payment of interest on any Note originally issued between
a Regular Record Date and the related Interest Payment Date or on an Interest
Payment Date will be made on the Interest Payment Date immediately following the
next succeeding Regular Record Date to the registered Holder on such next
succeeding Regular Record Date. Unless otherwise specified in an applicable
Pricing Supplement, a "Regular Record Date" shall be the fifteenth day (whether
or not a Business Day (as defined herein)) immediately preceding the related
Interest Payment Date. In the case of defaulted interest, the Company may elect
to make payment of such defaulted interest on a "Special Record Date," which
date shall be fixed in the manner provided for in the Indenture.
Fixed Rate Notes
Unless otherwise specified in an applicable Pricing Supplement, each Fixed
Rate Note will bear interest from and including the date of issue, or from and
including the most recent date to which interest has been paid or duly provided
for, to but excluding the Interest Payment Date or Maturity, as the case may be,
at the rate per annum stated on the face thereof until the principal amount
thereof is paid or made available for payment. Unless otherwise specified in an
applicable Pricing Supplement, interest on Fixed Rate Notes will be computed on
the basis of a 360-day year of twelve 30-day months.
Interest on Fixed Rate Notes will be payable semiannually on June 1 and
December 1 of each year, unless otherwise specified in an applicable Pricing
Supplement, and at Maturity. If any Interest Payment Date or the Maturity of a
Fixed Rate Note falls on a day that is not a Business Day, the related payment
of principal, premium, if any, or interest will be made on the next succeeding
Business Day as if made on the date such payment was due, and no interest will
accrue on the amount so payable for the period from and after such Interest
Payment Date or Maturity, as the case may be.
Floating Rate Notes
Unless otherwise specified in an applicable Pricing Supplement, Floating
Rate Notes will be issued as described below. Each applicable Pricing Supplement
will specify certain terms with respect to which such Floating Rate Note is
being delivered, including: whether such Floating Rate Note is a "Regular
S-5
Floating Rate Note" (as defined below), an "Inverse Floating Rate Note" (as
defined below) or a "Floating Rate/Fixed Rate Note" (as defined below), the
Fixed Rate Commencement Date, if any, the Fixed Interest Rate, if applicable,
the Interest Rate Basis or Bases, Initial Interest Rate, Initial Interest Reset
Date, Interest Reset Dates, Interest Reset Period, Regular Record Dates,
Interest Payment Dates, Index Maturity, maximum interest rate and minimum
interest rate, if any, and the Spread and/or Spread Multiplier, if any, as
described below. If one or more of the applicable Interest Rate Bases is LIBOR
or the CMT Rate, the applicable Pricing Supplement will also specify the Index
Currency, if any, and Designated LIBOR Page on the Designated CMT Maturity Index
and Designated CMT Telerate Page, respectively, as such terms are defined below.
The interest rate borne by the Floating Rate Notes will be determined as
follows:
(i) Unless such Floating Rate Note is designated as a "Floating
Rate/Fixed Rate Note," an "Inverse Floating Rate Note" or as having an
Addendum attached or as having "Other Provisions" apply relating to a
different interest rate formula, such Floating Rate Note will be designated
a "Regular Floating Rate Note" and, except as described below or in an
applicable Pricing Supplement, bear interest at the rate determined by
reference to the applicable Interest Rate Basis or Bases (a) plus or minus
the applicable Spread, if any, and/or (b) multiplied by the applicable
Spread Multiplier, if any. Commencing on the Initial Interest Reset Date,
the rate at which interest on such Regular Floating Rate Note shall be
payable shall be reset as of each Interest Reset Date; provided, however,
that the interest rate in effect for the period from the date of issue to
the Initial Interest Reset Date will be the Initial Interest Rate.
(ii) If such Floating Rate Note is designated as a "Floating Rate/Fixed
Rate Note," then, except as described below or in an applicable Pricing
Supplement, such Floating Rate Note will bear interest at the rate
determined by reference to the applicable Interest Rate Basis or Bases (a)
plus or minus the applicable Spread, if any, and/or (b) multiplied by the
applicable Spread Multiplier, if any. Commencing on the Initial Interest
Reset Date, the rate at which interest on such Floating Rate/Fixed Rate Note
shall be payable shall be reset as of each Interest Reset Date; provided,
however, that (y) the interest rate in effect for the period from the date
of issue to the Initial Interest Reset Date will be the Initial Interest
Rate; and (z) the interest rate in effect for the period commencing on, and
including, the Fixed Rate Commencement Date to Maturity shall be the Fixed
Interest Rate, if such rate is specified in the applicable Pricing
Supplement or, if no such Fixed Interest Rate is so specified, the interest
rate in effect thereon on the day immediately preceding the Fixed Rate
Commencement Date.
(iii) If such Floating Rate Note is designated as an "Inverse Floating
Rate Note," then, except as described below or in an applicable Pricing
Supplement, such Floating Rate Note will bear interest equal to the Fixed
Interest Rate specified in the applicable Pricing Supplement minus the rate
determined by reference to the Interest Rate Basis or Bases (a) plus or
minus the applicable Spread, if any, and/or (b) multiplied by the applicable
Spread Multiplier, if any; provided, however, that, unless otherwise
specified in an applicable Pricing Supplement, the interest rate thereon
will not be less than zero. Commencing on the Initial Interest Reset Date,
the rate at which interest on such Inverse Floating Rate Note is payable
shall be reset as of each Interest Reset Date; provided, however, that the
interest rate in effect for the period from the date of issue to the Initial
Interest Reset Date will be the Initial Interest Rate.
Unless otherwise provided in the applicable Pricing Supplement, each
Interest Rate Basis shall be the rate determined in accordance with the
applicable provisions below. Except as set forth above or in an applicable
Pricing Supplement, the interest rate in effect on each day shall be (i) if such
day is an Interest Reset Date, the interest rate determined as of the Interest
Determination Date (as defined below) immediately preceding such Interest Reset
Date or (ii) if such day is not an Interest Reset Date, the interest rate
determined as of the Interest Determination Date immediately preceding the most
recent Interest Reset Date.
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Interest on Floating Rate Notes will be determined by reference to an
"Interest Rate Basis," which may be one or more of (i) the "CD Rate," (ii) the
"CMT Rate," (iii) the "Commercial Paper Rate," (iv) the "Eleventh District Cost
of Funds Rate," (v) the "Federal Funds Rate," (vi) "LIBOR," (vii) the "Prime
Rate," (viii) the "Treasury Rate," or (ix) such other interest rate formula as
may be set forth in the applicable Pricing Supplement; provided, however, that
the interest rate in effect on a Floating Rate Note for the period, if any, from
the date of issue to the Initial Interest Reset Date will be the Initial
Interest Rate; and provided further, that with respect to a Floating Rate/Fixed
Rate Note, the interest rate commencing on the Fixed Rate Commencement Date and
continuing, unless otherwise specified in the applicable Pricing Supplement,
until Maturity shall be the Fixed Interest Rate, if such rate is specified in
the applicable Pricing Supplement, or if no such Fixed Interest Rate is so
specified, the interest rate in effect thereon on the day immediately preceding
the Fixed Rate Commencement Date. In addition, a Floating Rate Note may bear
interest in respect of two or more Interest Rate Bases.
The "Spread" is the number of basis points to be added to or subtracted from
the related Interest Rate Basis or Bases applicable to such Floating Rate Note.
The "Spread Multiplier" is the percentage of the related Interest Rate Basis or
Bases applicable to such Floating Rate Note by which such Interest Rate Basis or
Bases will be multiplied to determine the applicable interest rate on such
Floating Rate Note. The "Index Maturity" is the period to maturity of the
instrument or obligation with respect to which the Interest Rate Basis or Bases
will be calculated. The Spread, Spread Multiplier, Index Maturity and other
variable terms of the Floating Rate Notes are subject to change by the Company
from time to time, but no such change will affect any Floating Rate Note
previously issued or as to which an offer has been accepted by the Company.
Each applicable Pricing Supplement will specify whether the rate of interest
on the related Floating Rate Note will be reset daily, weekly, monthly,
quarterly, semiannually, annually or such other specified period (each, an
"Interest Reset Period") and the dates on which such interest rate will be reset
(each, an "Interest Reset Date"). Unless otherwise specified in the applicable
Pricing Supplement, the Interest Reset Dates will be, in the case of Floating
Rate Notes which reset: (i) daily, each Business Day; (ii) weekly, the Wednesday
of each week (with the exception of weekly reset Treasury Rate Notes which will
reset the Tuesday of each week, except as specified below); (iii) monthly, the
third Wednesday of each month (with the exception of Eleventh District Cost of
Funds Rate Notes, all of which reset monthly, which will reset on the first
calendar day of the month); (iv) quarterly, the third Wednesday of March, June,
September and December of each year; (v) semiannually, the third Wednesday of
the two months specified in the applicable Pricing Supplement; and (vi)
annually, the third Wednesday of the month specified in the applicable Pricing
Supplement; provided, however, that, with respect to Floating Rate/Fixed Rate
Notes, the fixed rate of interest thereon will not reset after the applicable
Fixed Rate Commencement Date. If any Interest Reset Date for any Floating Rate
Note would otherwise be a day that is not a Business Day, such Interest Reset
Date will be postponed to the next succeeding day that is a Business Day, except
that in the case of a Floating Rate Note as to which LIBOR is an applicable
Interest Rate Basis, if such Business Day falls in the next succeeding calendar
month, such Interest Reset Date will be the immediately preceding Business Day.
In addition, in the case of a Floating Rate Note as to which the Treasury Rate
is an applicable Interest Rate Basis and the Interest Determination Date would
otherwise fall on an Interest Reset Date, then such Interest Reset Date will be
postponed to the next succeeding Business Day.
As used herein, "Business Day" means, unless otherwise specified in the
applicable Pricing Supplement, any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banks in The City of New York are
generally authorized or obligated by law or executive order to close and, with
respect to Notes as to which LIBOR is an applicable Interest Rate Basis, is also
a London Business Day. As used herein, "London Business Day" means any day (i)
if the Index Currency (as hereinafter defined) is other than European Currency
Units ("ECU"), on which dealings in such Index Currency are transacted in the
London interbank market or (ii) if the Index Currency is ECU, that does not
appear as an ECU non-settlement day on the display designated as "ISDE" on the
Reuter
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Monitor Money Rates Service (or a day so designated by the ECU Banking
Association) or, if ECU non-settlement days do not appear on that page (and are
not so designated), is not a day on which payments in ECU cannot be settled in
the international interbank market.
A Floating Rate Note may also have either or both of the following: (i) a
maximum numerical limitation, or ceiling, on the rate at which interest may
accrue during any interest period and (ii) a minimum numerical limitation, or
floor, on the rate at which interest may accrue during any interest period. In
addition to any maximum interest rate that may be applicable to any Floating
Rate Note pursuant to the above provisions, the interest rate on Floating Rate
Notes will in no event be higher than the maximum rate permitted by New York
law, as the same may be modified by United States law of general application.
Each Floating Rate Note will bear interest from the date of issue at the
rates specified therein until the principal thereof is paid or otherwise made
available for payment. Except as provided below or in an applicable Pricing
Supplement, interest will be payable in the case of Floating Rate Notes which
reset: (i) daily, weekly or monthly, on the third Wednesday of each month or on
the third Wednesday of March, June, September and December of each year as
specified in the applicable Pricing Supplement; (ii) quarterly, on the third
Wednesday of March, June, September and December of each year; (iii)
semiannually, on the third Wednesday of the two months of each year specified in
the applicable Pricing Supplement; and (iv) annually, on the third Wednesday of
the month of each year specified in the applicable Pricing Supplement (each, an
"Interest Payment Date") and, in each case, at Maturity. If any Interest Payment
Date for any Floating Rate Note would otherwise be a day that is not a Business
Day, such Interest Payment Date will be postponed to the next succeeding day
that is a Business Day, except that in the case of a Floating Rate Note as to
which LIBOR is an applicable Interest Rate Basis, if such Business Day falls in
the next succeeding calendar month, such Interest Payment Date will be the
immediately preceding Business Day. If the Maturity of a Floating Rate Note
falls on a day that is not a Business Day, the payment of principal, premium, if
any, and interest will be made on the next succeeding Business Day, and no
interest on such payment shall accrue for the period from and after such
Maturity to the date of such payment or the next succeeding Business Day.
All percentages resulting from any calculation on Floating Rate Notes will
be rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point rounded upwards (e.g.,
9.876545% (or .09876545) would be rounded to 9.87655% (or .0987655)), and all
dollar amounts used in or resulting from such calculation on Floating Rate Notes
will be rounded to the nearest cent (with one-half cent being rounded upwards).
Unless otherwise specified in the applicable Pricing Supplement, interest
payments on Floating Rate Notes will equal the amount of interest accrued from
and including the next preceding Interest Payment Date in respect of which
interest has been paid (or from and including the date of issue, if no interest
has been paid with respect to such Floating Rate Notes), to but excluding the
related Interest Payment Date or Maturity, as the case may be.
With respect to each Floating Rate Note, unless otherwise specified in the
applicable Pricing Supplement, accrued interest is calculated by multiplying its
face amount by an accrued interest factor. Such accrued interest factor will be
computed by adding the interest factor calculated for each day in the period for
which accrued interest is being calculated. Unless otherwise specified in the
applicable Pricing Supplement, the interest factor for each such day will be
computed by dividing the interest rate applicable to such day by 360, in the
case of Notes for which the Interest Rate Basis is the CD Rate, the Commercial
Paper Rate, the Eleventh District Cost of Funds Rate, the Federal Funds Rate,
LIBOR or the Prime Rate, or by the actual number of days in the year in the case
of Notes for which the Interest Rate Basis is the Treasury Rate or the CMT Rate.
Unless otherwise specified in an applicable Pricing Supplement, the interest
factor for Notes for which the interest rate is calculated with reference to two
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or more Interest Rate Bases will be calculated in each period in the same manner
as if only one of the applicable Interest Rate Bases applied.
The interest rate applicable to each Interest Reset Period commencing on the
Interest Reset Date with respect to such Interest Reset Period will be the rate
determined as of the applicable "Interest Determination Date" and calculated on
or prior to the Calculation Date (as defined below), except with respect to
LIBOR and the Eleventh District Cost of Funds Rate, which will be calculated as
of such Interest Determination Date. Unless otherwise specified in the
applicable Pricing Supplement: (i) the Interest Determination Date with respect
to the CD Rate, the CMT Rate, the Commercial Paper Rate, the Federal Funds Rate
and the Prime Rate will be the second Business Day preceding each Interest Reset
Date for the related Note; (ii) the Interest Determination Date with respect to
the Eleventh District Cost of Funds Rate will be the last working day of the
month immediately preceding each Interest Reset Date on which the Federal Home
Loan Bank of San Francisco (the "FHLB of San Francisco") publishes the Index (as
defined below); and (iii) the Interest Determination Date with respect to LIBOR
will be the second London Business Day preceding each Interest Rate Date, unless
the Index Currency is British pounds sterling, in which case the Interest
Determination Date will be the applicable Interest Reset Date. With respect to
the Treasury Rate, unless otherwise specified in the applicable Pricing
Supplement, the Interest Determination Date will be the day in the week in which
the applicable Interest Reset Date falls on which day Treasury Bills (as defined
below) are normally auctioned (Treasury Bills are normally sold at auction on
Monday of each week, unless that day is a legal holiday, in which case the
auction is normally held on the following Tuesday, except that such auction may
be held on the preceding Friday); provided, however, that if an auction is held
on the Friday of the week preceding the applicable Interest Reset Date, the
related Interest Determination Date will be such preceding Friday. Unless
otherwise specified in the applicable Pricing Supplement, the Interest
Determination Date pertaining to a Floating Rate Note the interest rate of which
is determined with reference to two or more Interest Rate Bases will be the most
recent Business Day which is at least two Business Days prior to the applicable
Interest Reset Date for such Floating Rate Note on which each Interest Rate
Basis is determinable. Each Interest Rate Basis will be determined as of such
date, and the applicable interest rate will take effect on the applicable
Interest Reset Date.
Unless otherwise provided in the applicable Pricing Supplement, The Bank of
New York will be the "Calculation Agent." Upon request of the Holder of any
Floating Rate Note, the Calculation Agent will provide the interest rate then in
effect and, if determined, the interest rate that will become effective as a
result of a determination made for the next Interest Reset Date with respect to
such Floating Rate Note. Unless otherwise specified in the applicable Pricing
Supplement, the "Calculation Date," if applicable, pertaining to any Interest
Determination Date will be the earlier of (i) the tenth calendar day after such
Interest Determination Date, or, if such day is not a Business Day, the next
succeeding Business Day or (ii) the Business Day immediately preceding the
applicable Interest Payment Date or Maturity, as the case may be.
Unless otherwise specified in the applicable Pricing Supplement, the
Calculation Agent shall determine such Interest Rate Basis in accordance with
the following provisions.
CD Rate. CD Rate Notes will bear interest at the rates (calculated with
reference to the CD Rate and the Spread and/or Spread Multiplier, if any)
specified in such CD Rate Notes and in any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CD Rate"
means, with respect to any Interest Determination Date relating to a CD Rate
Note or any Floating Rate Note for which the interest rate is determined with
reference to the CD Rate (a "CD Rate Interest Determination Date"), the rate on
such date for negotiable United States dollar certificates of deposit having the
Index Maturity specified in the applicable Pricing Supplement as published by
the Board of Governors of the Federal Reserve System in "Statistical Release
H.15(519), Selected Interest Rates" or any successor
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publication ("H.15(519)") under the heading "CDs (Secondary Market)," or, if not
published by 3:00 P.M., New York City time, on the related Calculation Date, the
rate on such CD Rate Interest Determination Date for negotiable United States
dollar certificates of deposit of the Index Maturity specified in the applicable
Pricing Supplement as published by the Federal Reserve Bank of New York in its
daily statistical release "Composite 3:30 P.M. Quotations for U.S. Government
Securities" or any successor publication ("Composite Quotations") under the
heading "Certificates of Deposit." If such rate is not yet published in either
H.15(519) or Composite Quotations by 3:00 P.M., New York City time, on the
related Calculation Date, then the CD Rate on such CD Rate Interest
Determination Date will be calculated by the Calculation Agent and will be the
arithmetic mean of the secondary market offered rates as of 10:00 A.M., New York
City time, on such CD Rate Interest Determination Date, of three leading nonbank
dealers in negotiable United States dollar certificates of deposit in The City
of New York (which may include the Agents or their respective affiliates)
selected by the Calculation Agent for negotiable certificates of deposit of
major United States money center banks in the market for negotiable certificates
of deposit with a remaining maturity closest to the Index Maturity designated in
the applicable Pricing Supplement in an amount that is representative for a
single transaction in that market at that time; provided, however, that if any
of the dealers so selected by the Calculation Agent are not quoting as mentioned
in this sentence, the CD Rate with respect to such CD Rate Interest
Determination Date will be the CD Rate in effect on such CD Rate Interest
Determination Date.
CMT Rate Notes. CMT Rate Notes will bear interest at the rates (calculated
with reference to the CMT Rate and the Spread and/or Spread Multiplier, if any)
specified in such CMT Rate Notes and in any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CMT Rate"
means, with respect to any Interest Determination Date relating to a CMT Rate
Note or any Floating Rate Note for which the interest rate is determined with
reference to the CMT Rate (a "CMT Rate Interest Determination Date"), the rate
displayed on the Designated CMT Telerate Page under the caption". . . Treasury
Constant Maturities . . . Federal Reserve Board Release H.15 . . . Mondays
Approximately 3:45 P.M.," under the column for the Designated CMT Maturity Index
for (i) if the Designated CMT Telerate Page is 7055, the rate on such CMT Rate
Interest Determination Date and (ii) if the Designated CMT Telerate Page is
7052, the weekly or monthly average, as specified in the applicable Pricing
Supplement, for the week or the month, as applicable, ended immediately
preceding the week or the month, as applicable, in which the related CMT Rate
Interest Determination Date occurs. If such rate is no longer displayed on the
relevant page, or if not displayed by 3:00 P.M., New York City time, on the
related Calculation Date, then the CMT Rate for such CMT Rate Interest
Determination Date will be such treasury constant maturity rate for the
Designated CMT Maturity Index as published in H.15(519). If such rate is no
longer published, or if not published by 3:00 P.M., New York City time, on the
related Calculation Date, then the CMT Rate for such CMT Rate Interest
Determination Date will be such treasury constant maturity rate for the
Designated CMT Maturity Index (or other United States Treasury rate for the
Designated CMT Maturity Index) for the CMT Rate Interest Determination Date with
respect to such Interest Reset Date as may then be published by either the Board
of Governors of the Federal Reserve System or the United States Department of
the Treasury that the Calculation Agent determines to be comparable to the rate
formerly displayed on the Designated CMT Telerate Page and published in
H.15(519). If such information is not provided by 3:00 P.M., New York City time,
on the related Calculation Date, then the CMT Rate for the CMT Rate Interest
Determination Date will be calculated by the Calculation Agent and will be a
yield to maturity, based on the arithmetic mean of the secondary market closing
offer side prices as of approximately 3:30 P.M., New York City time, on the CMT
Rate Interest Determination Date reported, according to their written records,
by three leading primary United States government securities dealers (each, a
"Reference Dealer") in The City of New York (which may include the Agents or
their respective affiliates) selected by the Calculation Agent (from five such
Reference Dealers selected by the Calculation Agent and eliminating the highest
quotation (or, in the event of equality, one of the highest) and the lowest
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quotation (or, in the event of equality, one of the lowest)), for the most
recently issued direct noncallable fixed rate obligations of the United States
("Treasury Notes") with an original maturity of approximately the Designated CMT
Maturity Index and a remaining term to maturity of not less than such Designated
CMT Maturity Index minus one year. If the Calculation Agent is unable to obtain
three such Treasury Note quotations, the CMT Rate for such CMT Rate Interest
Determination Date will be calculated by the Calculation Agent and will be a
yield to maturity based on the arithmetic mean of the secondary market offer
side prices as of approximately 3:30 P.M., New York City time, on the CMT Rate
Interest Determination Date of three Reference Dealers in The City of New York
(from five such Reference Dealers selected by the Calculation Agent and
eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)), for Treasury Notes with an original maturity of the number of years
that is the next highest to the Designated CMT Maturity Index and a remaining
term to maturity closest to the Designated CMT Maturity Index and in an amount
of at least $100 million. If three or four (and not five) of such Reference
Dealers are quoting as described above, then the CMT Rate will be based on the
arithmetic mean of the offer prices obtained and neither the highest nor the
lowest of such quotes will be eliminated; provided, however, that if fewer than
three Reference Dealers selected by the Calculation Agent are quoting as
mentioned herein, the CMT Rate with respect to such CMT Rate Interest
Determination Date will be the CMT Rate in effect on such CMT Rate Interest
Determination Date. If two Treasury Notes with an original maturity as described
in the second preceding sentence have remaining terms to maturity equally close
to the Designated CMT Maturity Index, the Calculation Agent will obtain
quotations for the Treasury Note with the shorter remaining term to maturity.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service (or any successor service) on the page specified in the applicable
Pricing Supplement (or any other page as may replace such page on such service)
for the purpose of displaying Treasury Constant Maturities as reported in
H.15(519). If no such page is specified in the applicable Pricing Supplement,
the Designated CMT Telerate Page will be 7052 for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity of the
U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years) specified in
the applicable Pricing Supplement with respect to which the CMT Rate will be
calculated. If no such maturity is specified in the applicable Pricing
Supplement, the Designated CMT Maturity Index will be 2 years.
Commercial Paper Rate. Commercial Paper Rate Notes will bear interest at the
rates (calculated with reference to the Commercial Paper Rate and the Spread
and/or Spread Multiplier, if any) specified in such Commercial Paper Rate Notes
and in any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Commercial
Paper Rate" means, with respect to any Interest Determination Date relating to a
Commercial Paper Rate Note or any Floating Rate Note for which the interest rate
is determined with reference to the Commercial Paper Rate (a "Commercial Paper
Rate Interest Determination Date"), the Money Market Yield (as defined below) on
such date of the rate for commercial paper having the Index Maturity specified
in the applicable Pricing Supplement as published in H.15(519) under the heading
"Commercial Paper." In the event that such rate is not published by 3:00 P.M.,
New York City time, on the related Calculation Date, then the Commercial Paper
Rate on such Commercial Paper Rate Interest Determination Date will be the Money
Market Yield of the rate for commercial paper having the Index Maturity
specified in the applicable Pricing Supplement as published in Composite
Quotations under the heading "Commercial Paper" (with an Index Maturity of one
month or three months being deemed to be equivalent to an Index Maturity of 30
days or 90 days, respectively). If by 3:00 P.M., New York City time, on the
related Calculation Date such rate is not yet published in either H.15(519) or
Composite Quotations, then the Commercial Paper Rate for such Commercial Paper
Rate Interest Determination Date will be calculated by the Calculation Agent and
will be the Money Market Yield of the arithmetic mean of the offered rates at
approximately 11:00 A.M., New York City time, on such Commercial
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Paper Rate Interest Determination Date of three leading dealers of commercial
paper in The City of New York (which may include the Agents or their respective
affiliates) selected by the Calculation Agent for commercial paper having the
Index Maturity designated in the applicable Pricing Supplement placed for an
industrial issuer whose bond rating is "AA," or the equivalent, from a
nationally recognized statistical rating organization; provided, however, that
if any of the dealers so selected by the Calculation Agent are not quoting as
mentioned in this sentence, the Commercial Paper Rate determined on such
Commercial Paper Rate Interest Determination Date will be the rate in effect on
such Commercial Paper Rate Interest Determination Date.
"Money Market Yield" means a yield (expressed as a percentage) calculated in
accordance with the following formula:
360
Money Market Yield = D x ------------- x 100
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the interest period for which interest is being calculated.
Eleventh District Cost of Funds Rate. Eleventh District Cost of Funds Rate
Notes will bear interest at the rates (calculated with reference to the Eleventh
District Cost of Funds Rate and the Spread and/or Spread Multiplier, if any)
specified in such Eleventh District Cost of Funds Rate Notes and in any
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Eleventh
District Cost of Funds Rate" means, with respect to any Interest Determination
Date relating to an Eleventh District Cost of Funds Rate Note or any Floating
Rate Note for which the interest rate is determined with reference to the
Eleventh District Cost of Funds Rate (an "Eleventh District Cost of Funds Rate
Interest Determination Date"), the rate equal to the monthly weighted average
cost of funds for the calendar month preceding the month in which such Eleventh
District Cost of Funds Rate Interest Determination Date falls, as set forth
under the caption "11th District" on Telerate Page 7058 as of 11:00 A.M., San
Francisco time, on such Eleventh District Cost of Funds Rate Interest
Determination Date. If such rate does not appear on Telerate Page 7058 on such
Eleventh District Cost of Funds Rate Interest Determination Date, the Eleventh
District Cost of Funds Rate on such Eleventh District Cost of Funds Rate
Interest Determination Date will be the monthly weighted average cost of funds
paid by member institutions of the Eleventh Federal Home Loan Bank District that
was most recently announced (the "Index") by the FHLB of San Francisco as such
cost of funds for the calendar month immediately preceding such Eleventh
District Cost of Funds Rate Interest Determination Date. If the FHLB of San
Francisco fails to announce the Index on or prior to such Eleventh District Cost
of Funds Rate Interest Determination Date for the calendar month immediately
preceding such Eleventh District Cost of Funds Rate Interest Determination Date,
the Eleventh District Cost of Funds Rate determined as of such Eleventh District
Cost of Funds Rate Interest Determination Date will be the Eleventh District
Cost of Funds Rate in effect on such Eleventh District Cost of Funds Rate
Interest Determination Date.
Federal Funds Rate. Federal Funds Rate Notes will bear interest at the rates
(calculated with reference to the Federal Funds Rate and the Spread and/or
Spread Multiplier, if any) specified in such Federal Funds Rate Notes and in any
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Federal
Funds Rate" means, with respect to any Interest Determination Date relating to a
Federal Funds Rate Note or any Floating Rate Note for which the interest rate is
determined with reference to the Federal Funds Rate (a "Federal Funds Rate
Interest Determination Date"), the rate on such date for United States dollar
federal funds as published in H.15(519) under the heading "Federal Funds
(Effective)" or, if not published by 3:00 P.M., New York City time, on the
related Calculation Date, the rate on such Federal
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Funds Rate Interest Determination Date as published in Composite Quotations
under the heading "Federal Funds/Effective Rate." If such rate is not published
in either H.15(519) or Composite Quotations by 3:00 P.M., New York City time, on
the related Calculation Date, the Federal Funds Rate on such Federal Funds Rate
Interest Determination Date will be calculated by the Calculation Agent and will
be the arithmetic mean of the rates for the last transaction in overnight United
States dollar federal funds arranged by three leading brokers of federal funds
transactions in The City of New York (which may include the Agents or their
respective affiliates) selected by the Calculation Agent as of 9:00 A.M., New
York City time, on such Federal Funds Rate Interest Determination Date;
provided, however, that if any of the brokers so selected by the Calculation
Agent are not quoting as mentioned in this sentence, the Federal Funds Rate
determined as of such Federal Funds Rate Interest Determination Date will be the
Federal Funds Rate in effect on such Federal Funds Rate Interest Determination
Date.
LIBOR. LIBOR Notes will bear interest at the rates (calculated with
reference to LIBOR and the Spread and/or Spread Multiplier, if any) specified in
such LIBOR Notes and in any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "LIBOR"
means the rate determined by the Calculation Agent in accordance with the
following provisions:
(i) With respect to an Interest Determination Date relating to a LIBOR
Note or any Floating Rate Note for which the interest rate is determined
with reference to LIBOR (a "LIBOR Interest Determination Date"), LIBOR will
be either: (a) if "LIBOR Reuters" is specified in the applicable Pricing
Supplement, the arithmetic mean of the offered rates (unless the specified
Designated LIBOR Page by its terms provides only for a single rate, in which
case such single rate shall be used) for deposits in the Index Currency
having the Index Maturity specified in such Pricing Supplement, commencing
on the applicable Interest Reset Date, that appear (or, if only a single
rate is required as aforesaid, appears) on the Designated LIBOR Page as of
11:00 A.M., London time, on such LIBOR Interest Determination Date, or (b)
if "LIBOR Telerate" is specified in the applicable Pricing Supplement or if
neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the applicable
Pricing Supplement as the method for calculating LIBOR, the rate for
deposits in the Index Currency having the Index Maturity specified in such
Pricing Supplement, commencing on such Interest Reset Date, that appears on
the Designated LIBOR Page as of 11:00 A.M., London time, on such LIBOR
Interest Determination Date. If fewer than two such offered rates so appear,
or if no such rate so appears, as applicable, LIBOR on such LIBOR Interest
Determination Date will be determined in accordance with the provisions
described in clause (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which fewer
than two offered rates appear, or no rate appears, as the case may be, on
the Designated LIBOR Page as specified in clause (i) above, the Calculation
Agent will request the principal London offices of each of four major
reference banks in the London interbank market, as selected by the
Calculation Agent, to provide the Calculation Agent with its offered
quotation for deposits in the Index Currency for the period of the Index
Maturity specified in the applicable Pricing Supplement, commencing on the
applicable Interest Reset Date, to prime banks in the London interbank
market at approximately 11:00 A.M., London time, on such LIBOR Interest
Determination Date and in a principal amount that is representative for a
single transaction in such Index Currency in such market at such time. If at
least two such quotations are provided, then LIBOR on such LIBOR Interest
Determination Date will be the arithmetic mean of such quotations. If fewer
than two such quotations are provided, then LIBOR on such LIBOR Interest
Determination Date will be the arithmetic mean of the rates quoted at
approximately 11:00 A.M., in the applicable Principal Financial Center, on
such LIBOR Interest Determination Date by three major banks in such
Principal Financial Center selected by the Calculation Agent for loans in
the Index Currency to leading European banks, having the Index Maturity
designated in the applicable Pricing Supplement and in a principal
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amount that is representative for a single transaction in such Index
Currency in such market at such time; provided, however, that if the banks
so selected by the Calculation Agent are not quoting as mentioned in this
sentence, LIBOR determined as of such LIBOR Interest Determination Date will
be LIBOR in effect on such LIBOR Interest Determination Date.
"Index Currency" means the currency (including composite currencies)
specified in the applicable Pricing Supplement as the currency for which LIBOR
shall be calculated. If no such currency is specified in the applicable Pricing
Supplement, the Index Currency will be United States dollars.
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified in the
applicable Pricing Supplement, the display on the Reuter Monitor Money Rates
Service (or any successor service) on the page specified in such Pricing
Supplement (or any other page as may replace such service (or any successor
service)) for the purpose of displaying the London interbank rates of major
banks for the applicable Index Currency, or (b) if "LIBOR Telerate" is specified
in the applicable Pricing Supplement or neither "LIBOR Reuters" nor "LIBOR
Telerate" is specified in the applicable Pricing Supplement as the method for
calculating LIBOR, the display on the Dow Jones Telerate Service (or any such
successor service) on the page specified in such Pricing Supplement (or any
other page as may replace such service (or any successor service)) for the
purpose of displaying the London interbank rates of major banks for the
applicable Index Currency.
"Principal Financial Center" means the capital city of the country issuing
the currency (or composite currency) in which any payment in respect of the
related Notes is to be made, or, solely with respect to the calculation of
LIBOR, the Index Currency, except that with respect to United States dollars,
Australian dollars, Deutsche marks, Dutch guilders, Italian lire, Swiss francs
and ECUs, the Principal Financial Center shall be The City of New York, Sydney,
Frankfurt, Amsterdam, Milan, Zurich and Luxembourg, respectively.
Prime Rate. Prime Rate Notes will bear interest at the rates (calculated
with reference to the Prime Rate and the Spread and/or Spread Multiplier, if
any) specified in such Prime Rate Notes and in any applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Prime
Rate" means, with respect to any Interest Determination Date relating to a Prime
Rate Note or any Floating Rate Note for which the interest rate is determined
with reference to the Prime Rate (a "Prime Rate Interest Determination Date"),
the rate on such date as published in H.15(519) under the heading "Bank Prime
Loan." If such rate is not published prior to 3:00 P.M., New York City time, on
the related Calculation Date, the Prime Rate will be the arithmetic mean of the
rates of interest publicly announced by each bank that appears on the Reuters
Screen USPRIME1 Page (as defined below) as such bank's prime rate or base
lending rate as in effect for such Prime Rate Interest Determination Date. If
fewer than four such rates appear on such Reuters Screen USPRIME1 Page for such
Prime Rate Interest Determination Date, the Prime Rate will be the arithmetic
mean of the prime rates quoted on the basis of the actual number of days in the
year divided by a 360-day year as of the close of business on such Prime Rate
Interest Determination Date by four major money center banks in The City of New
York selected by the Calculation Agent. If fewer than four such quotations are
so provided, the Prime Rate will be the arithmetic mean of four prime rates
quoted on the basis of the actual number of days in the year divided by a
360-day year as of the close of business on such Prime Rate Interest
Determination Date as furnished in The City of New York by the major money
center banks, if any, that have provided such quotations and by a reasonable
number of substitute banks or trust companies to obtain four such prime rate
quotations, provided such substitute banks or trust companies are organized and
doing business under the laws of the United States, or any State thereof, each
having total equity capital of at least $500 million and being subject to
supervision or examination by a federal or state authority, selected by the
Calculation Agent to provide such rate or rates; provided, however, that if the
banks or trust companies so selected by the Calculation Agent are not quoting as
mentioned in this sentence, the Prime Rate determined as
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of such Prime Rate Interest Determination Date will be the Prime Rate in effect
on such Prime Rate Interest Determination Date.
"Reuters Screen USPRIME1 Page" means the display designated as page
"USPRIME1" on the Reuter Monitor Money Rates Service (or any successor service)
(or such other page as may replace the USPRIME1 page on such service (or any
successor service)) for the purpose of displaying prime rates or base lending
rates of major United States banks.
Treasury Rate. Treasury Rate Notes will bear interest at the rates
(calculated with reference to the Treasury Rate and the Spread and/or Spread
Multiplier, if any) specified in such Treasury Rate Notes and in any applicable
Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Interest Determination Date relating to a
Treasury Rate Note or any Floating Rate Note for which the interest rate is
determined by reference to the Treasury Rate (a "Treasury Rate Interest
Determination Date"), the rate from the auction held on such Treasury Rate
Interest Determination Date (the "Auction") of direct obligations of the United
States ("Treasury Bills") having the Index Maturity specified in the applicable
Pricing Supplement, as such rate is published in H.15 (519) under the heading
"Treasury Bills--auction average (investment)" or, if not published by 3:00
P.M., New York City time, on the related Calculation Date, the auction average
rate of such Treasury Bills (expressed as a bond equivalent on the basis of a
year of 365 or 366 days, as applicable, and applied on a daily basis) as
otherwise announced by the United States Department of Treasury. In the event
that the results of the auction of Treasury Bills having the Index Maturity
specified in the applicable Pricing Supplement are not reported as provided by
3:00 P.M., New York City time, on the related Calculation Date, or if no such
Auction is held, then the Treasury Rate will be calculated by the Calculation
Agent and will be a yield to maturity (expressed as a bond equivalent on the
basis of a year of 365 or 366 days, as applicable, and applied on a daily basis)
of the arithmetic mean of the secondary market bid rates, as of approximately
3:30 P.M., New York City time, on such Treasury Rate Interest Determination Date
of three leading primary United States government securities dealers (which may
include the Agents and their respective affiliates) as selected by the
Calculation Agent, for the issue of Treasury Bills with a remaining maturity
closest to the Index Maturity designated in the applicable Pricing Supplement;
provided, however, that if the dealers so selected by the Calculation Agent are
not quoting as mentioned in this sentence, the Treasury Rate with respect to
such Treasury Rate Interest Determination Date will be the Treasury Rate in
effect on such Treasury Rate Interest Determination Date.
OTHER PROVISIONS; ADDENDA
Any provisions with respect to the Notes, including the specification and
determination of one or more Interest Rate Bases, the calculation of the
interest rate applicable to a Floating Rate Note, the determination of the
Interest Payment Dates, the Maturity or any other matter relating thereto may be
modified by the terms as specified under "Other Provisions" on the face thereof
or in an Addendum relating thereto, if so specified on the face thereof and in
the applicable Pricing Supplement.
ORIGINAL ISSUE DISCOUNT NOTES
Notes may be issued at a price less than 100% of the principal amount
thereof resulting in such Notes being treated as if they were issued with
original issue discount for federal income tax purposes ("Original Issue
Discount Notes"). Such Original Issue Discount Notes may currently pay no
interest or interest at a rate which at the time of issuance is below market
rates. Certain additional considerations relating to any Original Issue Discount
Notes will be described in the Pricing Supplement relating thereto.
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MULTI-CURRENCY NOTES
If the principal of any Note is not to be denominated in U.S. dollars, or
the interest thereon is not to be paid in U.S. dollars, certain provisions with
respect thereto will be set forth in a Multi-Currency Supplement hereto which
will specify the currency or currencies, including composite currencies such as
the ECU, in which the principal and interest with respect to such Note are to be
paid (the "Specified Currencies" or the "Specified Currency"), along with any
other terms relating to the non-U.S. dollar denomination.
INDEXED NOTES
Notes also may be issued with the principal amount hereto and premium, if
any, payable at Maturity, and/or interest to be paid thereon, to be determined
with reference to the price or prices of specified commodities or stocks, the
exchange rate of one or more Specified Currencies (including a composite
currency such as the ECU) relative to an indexed currency, or such other
price(s) or exchange rate(s) or other index as may be specified in such Note
("Indexed Notes"), as set forth in an Indexed Note Supplement hereto. Holders of
such Notes may receive a principal amount at Maturity that is greater than or
less than the face amount of the Notes depending upon the relative value at
Maturity of the specified indexed item. Information as to the method for
determining the principal amount and premium, if any, payable at Maturity,
and/or interest to be paid on such Notes, certain historical information with
respect to the specified indexed item and any material tax considerations
associated with investment in Indexed Notes will be set forth in the applicable
Indexed Note Supplement.
BOOK-ENTRY NOTES
The Company has established a depositary arrangement with The Depository
Trust Company with respect to the Book-Entry Notes, the terms of which are
summarized below. Any additional or differing terms of the depositary
arrangement with respect to the Book-Entry Notes will be described in the
applicable Pricing Supplement.
Upon issuance, all Book-Entry Notes up to $200,000,000 aggregate principal
amount bearing interest (if any) at the same rate or pursuant to the same
formula and having the same date of issue, Specified Currency, Interest Payment
Dates (if any), Stated Maturity, redemption provisions (if any), repayment
provisions (if any) and other terms will be represented by a single Global
Security. Each Global Security representing Book-Entry Notes will be deposited
with, or on behalf of, the Depositary and will be registered in the name of the
Depositary or a nominee of the Depositary. No Global Security may be transferred
except as a whole by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or such nominee to a successor
of the Depositary or a nominee of such successor.
So long as the Depositary or its nominee is the registered owner of a Global
Security, the Depositary or its nominee, as the case may be, will be the sole
Holder of the Book-Entry Notes represented thereby for all purposes under the
Indenture. Except as otherwise provided in this section, the Beneficial Owners
of the Global Security or Securities representing Book-Entry Notes will not be
entitled to receive physical delivery of Certificated Notes and will not be
considered the Holders thereof for any purpose under the Indenture, and no
Global Security representing Book-Entry Notes shall be exchangeable or
transferable. Accordingly, each Beneficial Owner must rely on the procedures of
the Depositary and, if such Beneficial Owner is not a Participant, on the
procedures of the Participant through which such Beneficial Owner owns its
interest in order to exercise any rights of a Holder under such Global Security
or the Indenture. The laws of some jurisdictions require that certain purchasers
of securities take physical delivery of such securities in certificated form.
Such limits and such laws may impair the ability to transfer beneficial
interests in a Global Security representing Book-Entry Notes.
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Unless otherwise specified in the applicable Pricing Supplement, each Global
Security representing Book-Entry Notes will be exchangeable for Definitive Notes
of like tenor and terms and of differing authorized denominations aggregating a
like principal amount, only if (i) the Depositary notifies the Company that it
is unwilling or unable to continue as Depositary for the Global Securities, (ii)
the Depositary ceases to be a clearing agency registered under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (iii) the Company in its
sole discretion determines that the Global Securities shall be exchangeable for
Definitive Notes or (iv) there shall have occurred and be continuing an Event of
Default under the Indenture with respect to the Notes. Upon any such exchange,
the Definitive Notes shall be registered in the names of the Beneficial Owners
of the Global Security or Securities representing Book-Entry Notes, which names
shall be provided by the Depositary's relevant Participants (as identified by
the Depositary) to the Trustee.
The following is based on information furnished by the Depositary:
The Depositary will act as securities depository for the Book-Entry
Notes. The Book-Entry Notes will be issued as fully registered securities
registered in the name of Cede & Co. (the Depositary's partnership nominee).
One fully registered Global Security will be issued for each issue of
Book-Entry Notes, each in the aggregate principal amount of such issue, and
will be deposited with the Depositary. If, however, the aggregate principal
amount of any issue exceeds $200,000,000, one Global Security will be issued
with respect to each $200,000,000 of principal amount and an additional
Global Security will be issued with respect to any remaining principal
amount of such issue.
The Depositary is a limited-purpose trust company organized under the
New York Banking Law, a "banking organization" within the meaning of the New
York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and
a "clearing agency" registered pursuant to the provisions of Section 17A of
the Exchange Act. The Depositary holds securities that its participants
("Participants") deposit with the Depositary. The Depositary 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 Depositary ("Direct Participants") include
securities brokers and dealers (including the Agents), banks, trust
companies, clearing corporations and certain other organizations. The
Depositary 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 Depositary'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
("Indirect Participants"). The rules applicable to the Depositary and its
Participants are on file with the Securities and Exchange Commission.
Purchases of Book-Entry Notes under the Depositary's system must be made
by or through Direct Participants, which will receive a credit for such
Book-Entry Notes on the Depositary's records. The ownership interest of each
actual purchaser of each Book-Entry Note represented by a Global Security
("Beneficial Owner") is in turn to be recorded on the records of Direct
Participants and Indirect Participants. Beneficial Owners will not receive
written confirmation from the Depositary of their purchase, but Beneficial
Owners are expected to receive written confirmations providing details of
the transaction, as well as periodic statements of their holdings, from the
Direct or Indirect Participants through which such Beneficial Owner entered
into the transaction. Transfers of ownership interests in a Global Security
representing Book-Entry Notes are to be accomplished by entries made on the
books of Participants acting on behalf of Beneficial Owners. Beneficial
Owners of a Global Security representing Book-Entry Notes will not receive
Certificated
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Notes representing their ownership interests therein, except in the event
that use of the book-entry system for such Book-Entry Notes is discontinued.
To facilitate subsequent transfers, all Global Securities representing
Book-Entry Notes which are deposited with, or on behalf of, the Depositary
are registered in the name of the Depositary's nominee, Cede & Co. The
deposit of Global Securities with, or on behalf of, the Depositary and their
registration in the name of Cede & Co. effect no change in beneficial
ownership. The Depositary has no knowledge of the actual Beneficial Owners
of the Global Securities representing the Book-Entry Notes; the Depositary's
records reflect only the identity of the Direct Participants to whose
accounts such Book-Entry Notes are credited, which may or may not be the
Beneficial Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by the Depositary to
Direct Participants, by Direct Participants to Indirect Participants, and by
Direct Participants and Indirect Participants to Beneficial Owners will be
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Neither the Depositary nor Cede & Co. will consent or vote with respect
to the Global Securities representing the Book-Entry Notes. Under its usual
procedures, the Depositary mails an Omnibus Proxy to the Company as soon as
possible after the applicable record date. The Omnibus Proxy assigns Cede &
Co.'s consenting or voting rights to those Direct Participants to whose
accounts the Book-Entry Notes are credited on the applicable record date
(identified in a listing attached to the Omnibus Proxy).
Principal, premium, if any, and/or interest, if any, payments on the
Global Securities representing the Book-Entry Notes will be made in
immediately available funds to the Depositary. The Depositary's practice is
to credit Direct Participants' accounts on the applicable payment date in
accordance with their respective holdings shown on the Depositary's records
unless the Depositary has reason to believe that it will not receive payment
on such date. Payments by Participants to Beneficial Owners will be governed
by standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered
in "street name", and will be the responsibility of such Participant and not
of the Depositary, the Trustee or the Company, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
principal, premium, if any, and/or interest, if any, to the Depositary is
the responsibility of the Company or the Trustee, disbursement of such
payments to Direct Participants shall be the responsibility of the
Depositary, and disbursement of such payments to the Beneficial Owners shall
be the responsibility of Direct Participants and Indirect Participants.
If applicable, redemption notices shall be sent to Cede & Co. If less
than all of the Book-Entry Notes within an issue are being redeemed, the
Depositary's practice is to determine by lot the amount of the interest of
each Direct Participant in such issue to be redeemed.
A Beneficial Owner shall give notice of any option to elect to have its
Book-Entry Notes repaid by the Company, through its Participant, to the
Trustee, and shall effect delivery of such Book-Entry Notes by causing the
Direct Participant to transfer the Participant's interest in the Global
Security or Securities representing such Book-Entry Notes, on the
Depositary's records, to the Trustee. The requirement for physical delivery
of Book-Entry Notes in connection with a demand for repayment will be deemed
satisfied when the ownership rights in the Global Security or Securities
representing such Book-Entry Notes are transferred by Direct Participants on
the Depositary's records.
The Depositary may discontinue providing its services as securities
depository with respect to the Book-Entry Notes at any time by giving
reasonable notice to the Company or the Trustee.
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Under such circumstances, in the event that a successor securities
depository is not obtained, Certificated Notes are required to be printed
and delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through the Depositary (or a successor securities depository). In
that event, Certificated Notes will be printed and delivered.
The information in this section concerning the Depositary and the
Depositary's system has been obtained from sources that the Company believes to
be reliable, but the Company takes no responsibility for the accuracy thereof.
CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
The following summary of certain United States Federal income tax
consequences of the purchase, ownership and disposition of the Notes is based
upon laws, regulations, rulings and decisions now in effect, all of which are
subject to change (including changes in effective dates) or possible differing
interpretations. It deals only with Notes held as capital assets and does not
purport to deal with persons in special tax situations, such as financial
institutions, insurance companies, regulated investment companies, dealers in
securities or currencies, persons holding Notes as a hedge against currency
risks or as a position in a "straddle" for tax purposes, or persons whose
functional currency is not the United States dollar. It also does not deal with
holders other than original purchasers (except where otherwise specifically
noted). Persons considering the purchase of the Notes should consult their own
tax advisors concerning the application of United States Federal income tax laws
to their particular situations as well as any consequences of the purchase,
ownership and disposition of the Notes arising under the laws of any other
taxing jurisdiction.
As used herein, the term "U.S. Holder" means a beneficial owner of a Note
that is for United States Federal income tax purposes (i) a citizen or resident
of the United States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or of any political
subdivision thereof, (iii) an estate or trust the income of which is subject to
United States Federal income taxation regardless of its source or (iv) any other
person whose income or gain in respect of a Note is effectively connected with
the conduct of a United States trade or business. As used herein, the term
"non-U.S. Holder" means a beneficial owner of a Note that is not a U.S. Holder.
U.S. HOLDERS
Payments of Interest. Payments of interest on a Note generally will be
taxable to a U.S. Holder as ordinary interest income at the time such payments
are accrued or are received (in accordance with the U.S. Holder's regular method
of tax accounting).
Original Issue Discount. The following summary is a general discussion of
the United States Federal income tax consequences to U.S. Holders of the
purchase, ownership and disposition of Notes issued with original issue discount
("Discount Notes"). The following summary is based upon final Treasury
regulations (the "OID Regulations") released by the Internal Revenue Service
("IRS") on January 27, 1994 under the original issue discount provisions of the
Internal Revenue Code of 1986, as amended (the "Code").
For United States Federal income tax purposes, original issue discount is
the excess of the stated redemption price at maturity of a Note over its issue
price, if such excess equals or exceeds a de minimis amount (generally 1/4 of 1%
of the Note's stated redemption price at maturity multiplied by the number of
complete years to its maturity from its issue date or, in the case of a Note
providing for the payment of any amount other than qualified stated interest (as
defined below) prior to maturity, multiplied by the weighted average maturity of
such Note). The issue price of each Note in an issue of Notes equals the
S-19
first price at which a substantial amount of such Notes has been sold (ignoring
sales to bond houses, brokers, or similar persons or organizations acting in the
capacity of underwriters, placement agents, or wholesalers). The stated
redemption price at maturity of a Note is the sum of all payments provided by
the Note other than "qualified stated interest" payments. The term "qualified
stated interest" generally means stated interest that is unconditionally payable
in cash or property (other than debt instruments of the issuer) at least
annually at a single fixed rate. In addition, under the OID Regulations, if a
Note bears interest for one or more accrual periods at a rate below the rate
applicable for the remaining term of such Note (e.g., Notes with teaser rates or
interest holidays), and if the greater of either the resulting foregone interest
on such Note or any "true" discount on such Note (i.e., the excess of the Note's
stated principal amount over its issue price) equals or exceeds a specified de
minimis amount, then the stated interest on the Note would be treated as
original issue discount rather than qualified stated interest.
Payments of qualified stated interest on a Note are taxable to a U.S. Holder
as ordinary interest income at the time such payments are accrued or are
received (in accordance with the U.S. Holder's regular method of tax
accounting). A U.S. Holder of a Discount Note must include original issue
discount in income as ordinary interest for United States Federal income tax
purposes as it accrues under a constant yield method in advance of receipt of
the cash payments attributable to such income, regardless of such U.S. Holder's
regular method of tax accounting. In general, the amount of original issue
discount included in income by the initial U.S. Holder of a Discount Note is the
sum of the daily portions of original issue discount with respect to such
Discount Note for each day during the taxable year (or portion of the taxable
year) on which such U.S. Holder held such Discount Note. The "daily portion" of
original issue discount on any Discount Note is determined by allocating to each
day in any accrual period a ratable portion of the original issue discount
allocable to that accrual period. An "accrual period" may be of any length and
the accrual periods may vary in length over the term of the Discount Note,
provided that each accrual period is no longer than one year and each scheduled
payment of principal or interest occurs either on the final day of an accrual
period or on the first day of an accrual period. The amount of original issue
discount allocable to each accrual period is generally equal to the difference
between (i) the product of the Discount Note's adjusted issue price at the
beginning of such accrual period and its yield to maturity (determined on the
basis of compounding at the close of each accrual period and appropriately
adjusted to take into account the length of the particular accrual period) and
(ii) the amount of any qualified stated interest payments allocable to such
accrual period. The "adjusted issue price" of a Discount Note at the beginning
of any accrual period is the sum of the issue price of the Discount Note plus
the amount of original issue discount allocable to all prior accrual periods
minus the amount of any prior payments on the Discount Note that were not
qualified stated interest payments. Under these rules, U.S. Holders generally
will have to include in income increasingly greater amounts of original issue
discount in successive accrual periods.
A U.S. Holder who purchases a Discount Note for an amount that is greater
than its adjusted issue price as of the purchase date and less than or equal to
the sum of all amounts payable on the Discount Note after the purchase date
other than payments of qualified stated interest, will be considered to have
purchased the Discount Note at an "acquisition premium." Under the acquisition
premium rules, the amount of original issue discount which such U.S. Holder must
include in its gross income with respect to such Discount Note for any taxable
year (or portion thereof in which the U.S. Holder holds the Discount Note) will
be reduced (but not below zero) by the portion of the acquisition premium
properly allocable to the period.
Under the OID Regulations, Floating Rate Notes and Indexed Notes
(hereinafter "Variable Notes") are subject to special rules whereby a Variable
Note will qualify as a "variable rate debt instrument" if (a) its issue price
does not exceed the total noncontingent principal payments due under the
Variable Note by more than a specified de minimis amount and (b) it provides for
stated interest, paid or compounded at least annually, at current values of (i)
one or more qualified floating rates, (ii) a single fixed rate and one or more
qualified floating rates, (iii) a single objective rate, or (iv) a single fixed
rate and a single objective rate that is a qualified inverse floating rate.
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A "qualified floating rate" is any variable rate where variations in the
value of such rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the
Variable Note is denominated. Although a multiple of a qualified floating rate
will generally not itself constitute a qualified floating rate, a variable rate
equal to the product of a qualified floating rate and a fixed multiple that is
greater than zero but not more than 1.35 will constitute a qualified floating
rate. A variable rate equal to the product of a qualified floating rate and a
fixed multiple that is greater than zero but not more than 1.35, increased or
decreased by a fixed rate, will also constitute a qualified floating rate. In
addition, under the OID Regulations, two or more qualified floating rates that
can reasonably be expected to have approximately the same values throughout the
term of the Variable Note (e.g., two or more qualified floating rates with
values within 25 basis points of each other as determined on the Variable Note's
issue date) will be treated as a single qualified floating rate. Notwithstanding
the foregoing, a variable rate that would otherwise constitute a qualified
floating rate but which is subject to one or more restrictions such as a maximum
numerical limitation (i.e., a cap) or a minimum numerical limitation (i.e., a
floor) may, under certain circumstances, fail to be treated as a qualified
floating rate under the OID Regulations unless such cap or floor is fixed
throughout the term of the Note. An "objective rate" is a rate that is not
itself a qualified floating rate but which is determined using a single fixed
formula and which is based upon (i) one or more qualified floating rates, (ii)
one or more rates where each rate would be a qualified floating rate for a debt
instrument denominated in a currency other than the currency in which the
Variable Note is denominated, (iii) either the yield or changes in the price of
one or more items of actively traded personal property (other than stock or debt
of the issuer or a related party) or (iv) a combination of objective rates. The
OID Regulations also provide that other variable interest rates may be treated
as objective rates if so designated by the IRS in the future. Despite the
foregoing, a variable rate of interest on a Variable Note will not constitute an
objective rate if it is reasonably expected that the average value of such rate
during the first half of the Variable Note's term will be either significantly
less than or significantly greater than the average value of the rate during the
final half of the Variable Note's term. A "qualified inverse floating rate" is
any objective rate where such rate is equal to a fixed rate minus a qualified
floating rate, as long as variations in the rate can reasonably be expected to
inversely reflect contemporaneous variations in the cost of newly borrowed
funds. The OID Regulations also provide that if a Variable Note provides for
stated interest at a fixed rate for an initial period of less than one year
followed by a variable rate that is either a qualified floating rate or an
objective rate and if the variable rate on the Variable Note's issue date is
intended to approximate the fixed rate (e.g., the value of the variable rate on
the issue date does not differ from the value of the fixed rate by more than 25
basis points), then the fixed rate and the variable rate together will
constitute either a single qualified floating rate or objective rate, as the
case may be.
If a Variable Note that provides for stated interest at either a single
qualified floating rate or a single objective rate throughout the term thereof
qualifies as a "variable rate debt instrument" under the OID Regulations, then
any stated interest on such Note which is unconditionally payable in cash or
property (other than debt instruments of the issuer) at least annually will
constitute qualified stated interest and will be taxed accordingly. Thus, a
Variable Note that provides for stated interest at either a single qualified
floating rate or a single objective rate throughout the term thereof and that
qualifies as a "variable rate debt instrument" under the OID Regulations will
generally not be treated as having been issued with original issue discount
unless the Variable Note is issued at a "true" discount (i.e., at a price below
the Note's stated principal amount) in excess of a specified de minimis amount.
Original issue discount on such a Variable Note arising from "true" discount is
allocated to an accrual period using the constant yield method described above
by assuming that the variable rate is a fixed rate equal to (i) in the case of a
qualified floating rate or qualified inverse floating rate, the value as of the
issue date, of the qualified floating rate or qualified inverse floating rate,
or (ii) in the case of an objective rate (other than a qualified inverse
floating rate), a fixed rate that reflects the yield that is reasonably expected
for the Variable Note.
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In general, any other Variable Note that qualifies as a "variable rate debt
instrument" will be converted into an "equivalent" fixed rate debt instrument
for purposes of determining the amount and accrual of original issue discount
and qualified stated interest on the Variable Note. The OID Regulations
generally require that such a Variable Note be converted into an "equivalent"
fixed rate debt instrument by substituting any qualified floating rate or
qualified inverse floating rate provided for under the terms of the Variable
Note with a fixed rate equal to the value of the qualified floating rate or
qualified inverse floating rate, as the case may be, as of the Variable Note's
issue date. Any objective rate (other than a qualified inverse floating rate)
provided for under the terms of the Variable Note is converted into a fixed rate
that reflects the yield that is reasonably expected for the Variable Note. In
the case of a Variable Note that qualifies as a "variable rate debt instrument"
and provides for stated interest at a fixed rate in addition to either one or
more qualified floating rates or a qualified inverse floating rate, the fixed
rate is initially converted into a qualified floating rate (or a qualified
inverse floating rate, if the Variable Note provides for a qualified inverse
floating rate). Under such circumstances, the qualified floating rate or
qualified inverse floating rate that replaces the fixed rate must be such that
the fair market value of the Variable Note as of the Variable Note's issue date
is approximately the same as the fair market value of an otherwise identical
debt instrument that provides for either the qualified floating rate or
qualified inverse floating rate rather than the fixed rate. Subsequent to
converting the fixed rate into either a qualified floating rate or a qualified
inverse floating rate, the Variable Note is then converted into an "equivalent"
fixed rate debt instrument in the manner described above.
Once the Variable Note is converted into an "equivalent" fixed rate debt
instrument pursuant to the foregoing rules, the amount of original issue
discount and qualified stated interest, if any, are determined for the
"equivalent" fixed rate debt instrument by applying the general original issue
discount rules to the "equivalent" fixed rate debt instrument and a U.S. Holder
of the Variable Note will account for such original issue discount and qualified
stated interest as if the U.S. Holder held the "equivalent" fixed rate debt
instrument. Each accrual period appropriate adjustments will be made to the
amount of qualified stated interest or original issue discount assumed to have
been accrued or paid with respect to the "equivalent" fixed rate debt instrument
in the event that such amounts differ from the actual amount of interest accrued
or paid on the Variable Note during the accrual period.
U.S. Holders should be aware that on December 15, 1994, the IRS released
proposed amendments to the OID Regulations which would broaden the definition of
an objective rate and would further clarify certain other provisions contained
in the OID Regulations. If ultimately adopted, these amendments to the OID
Regulations generally would be effective for debt instruments issued 60 days or
more after the date on which such proposed amendments are finalized.
If a Variable Note does not qualify as a "variable rate debt instrument"
under the OID Regulations, then the Variable Note would be treated as a
contingent payment debt obligation. It is not entirely clear under current law
how a Variable Note would be taxed if such Note were treated as a contingent
payment debt obligation. The proper United States Federal income tax treatment
of Variable Notes that are treated as contingent payment debt obligations will
be more fully described in the applicable Pricing Supplement. Furthermore, any
other special United States Federal income tax considerations, not otherwise
discussed herein, which are applicable to any particular issue of Notes will be
discussed in the applicable Pricing Supplement.
Certain of the Notes (i) may be redeemable at the option of the Company
prior to their stated maturity (a "call option") and/or (ii) may be repayable at
the option of the holder prior to their stated maturity (a "put option"). Notes
containing such features may be subject to rules that differ from the general
rules discussed above. Investors intending to purchase Notes with such features
should consult their own tax advisors, since the original issue discount
consequences will depend, in part, on the particular terms and features of the
purchased Notes.
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U.S. Holders may generally, upon election, include in income all interest
(including stated interest, acquisition discount, original issue discount, de
minimis original issue discount, market discount, de minimis market discount,
and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium) that accrues on a debt instrument by using the constant
yield method applicable to original issue discount, subject to certain
limitations and exceptions.
Market Discount. If a U.S. Holder purchases a Note, other than a Discount
Note, for an amount that is less than its issue price (or, in the case of a
subsequent purchaser, its stated redemption price at maturity) or, in the case
of a Discount Note, for an amount that is less than its adjusted issue price as
of the purchase date, such U.S. Holder will be treated as having purchased such
Note at a "market discount," unless such market discount is less than a
specified de minimis amount.
Under the market discount rules, a U.S. Holder will be required to treat any
partial principal payment (or, in the case of a Discount Note, any payment that
does not constitute qualified stated interest) on, or any gain realized on the
sale, exchange, retirement or other disposition of, a Note as ordinary income to
the extent of the lesser of (i) the amount of such payment or realized gain or
(ii) the market discount which has not previously been included in income and is
treated as having accrued on such Note at the time of such payment or
disposition. Market discount will be considered to accrue ratably during the
period from the date of acquisition to the maturity date of the Note, unless the
U.S. Holder elects to accrue market discount on the basis of semiannual
compounding.
A U.S. Holder may be required to defer the deduction of all or a portion of
the interest paid or accrued on any indebtedness incurred or maintained to
purchase or carry a Note with market discount until the maturity of the Note or
certain earlier dispositions, because a current deduction is only allowed to the
extent the interest expense exceeds an allocable portion of the market discount.
A U.S. Holder may elect to include market discount in income currently as it
accrues (on either a ratable or semiannual compounding basis), in which case the
rules described above regarding the treatment as ordinary income of gain upon
the disposition of the Note and upon the receipt of certain cash payments and
regarding the deferral of interest deductions will not apply. Generally, such
currently included market discount is treated as ordinary interest for United
States Federal income tax purposes. Such an election will apply to all debt
instruments acquired by the U.S. Holder on or after the first day of the first
taxable year to which such election applies and may be revoked only with the
consent of the IRS.
Premium. If a U.S. Holder purchases a Note for an amount that is greater
than the sum of all amounts payable on the Note after the purchase date other
than payments of qualified stated interest, such U.S. Holder will be considered
to have purchased the Note with "amortizable bond premium" equal in amount to
such excess. A U.S. Holder may elect to amortize such premium using a constant
yield method over the remaining term of the Note and may offset interest
otherwise required to be included in respect of the Note during any taxable year
by the amortized amount of such excess for the taxable year. However, if the
Note may be optionally redeemed after the U.S. Holder acquires it at a price in
excess of its stated redemption price at maturity, special rules would apply
which could result in a deferral of the amortization of some bond premium until
later in the term of the Note. Any election to amortize bond premium applies to
all taxable debt instruments acquired by the U.S. Holder on or after the first
day of the first taxable year to which such election applies and may be revoked
only with the consent of the IRS.
Disposition of a Note. Except as discussed above, upon the sale, exchange or
retirement of a Note, a U.S. Holder generally will recognize taxable gain or
loss equal to the difference between the amount realized on the sale, exchange
or retirement (other than amounts representing accrued and unpaid interest) and
such U.S. Holder's adjusted tax basis in the Note. A U.S. Holder's adjusted tax
basis in a Note generally will equal such U.S. Holder's initial investment in
the Note increased by any original issue discount included in income (and
accrued market discount, if any, if the U.S. Holder has included such market
discount in income) and decreased by the amount of any payments, other than
qualified
S-23
stated interest payments, received and amortizable bond premium taken with
respect to such Note. Such gain or loss generally will be long-term capital gain
or loss if the Note were held for more than one year.
FOREIGN CURRENCY NOTES
Any special United States Federal income tax considerations applicable to
Notes denominated, or on which interest is payable, in a foreign currency will
be discussed in the applicable Multi-Currency Supplement.
NON-U.S. HOLDERS
A non-U.S. Holder will not be subject to United States Federal income taxes
on payments of principal, premium (if any) or interest (including original issue
discount, if any) on a Note, unless such non-U.S. Holder is a direct or indirect
10% or greater shareholder of the Company, a controlled foreign corporation
related to the Company or a bank receiving interest described in section
881(c)(3)(A) of the Code. To qualify for the exemption from taxation, the last
United States payor in the chain of payment prior to payment to a non-U.S.
Holder (the "Withholding Agent") must have received in the year in which a
payment of interest or principal occurs, or in either of the two preceding
calendar years, a statement that (i) is signed by the beneficial owner of the
Note under penalties of perjury, (ii) certifies that such owner is not a U.S.
Holder and (iii) provides the name and address of the beneficial owner. The
statement may be made on an IRS Form W-8 or a substantially similar form, and
the beneficial owner must inform the Withholding Agent of any change in the
information on the statement within 30 days of such change. If a Note is held
through a securities clearing organization or certain other financial
institutions, the organization or institution may provide a signed statement to
the Withholding Agent. However, in such case, the signed statement must be
accompanied by a copy of the IRS Form W-8 or the substitute form provided by the
beneficial owner to the organization or institution. The Treasury Department is
considering implementation of further certification requirements aimed at
determining whether the issuer of a debt obligation is related to holders
thereof.
Generally, a non-U.S. Holder will not be subject to Federal income taxes on
any amount which constitutes capital gain upon retirement or disposition of a
Note, provided the gain is not effectively connected with the conduct of a trade
or business in the United States by the non-U.S. Holder. Certain other
exceptions may be applicable, and a non-U.S. Holder should consult its tax
advisor in this regard.
The Notes will not be includible in the estate of a non-U.S. Holder unless
the individual is a direct or indirect 10% or greater shareholder of the Company
or, at the time of such individual's death, payments in respect of the Notes
would have been effectively connected with the conduct by such individual of a
trade or business in the United States.
BACKUP WITHHOLDING
Backup withholding of United States Federal income tax at a rate of 31% may
apply to payments made in respect of the Notes to registered owners who are not
"exempt recipients" and who fail to provide certain identifying information
(such as the registered owner's taxpayer identification number) in the required
manner. Generally, individuals are not exempt recipients, whereas corporations
and certain other entities generally are exempt recipients. Payments made in
respect of the Notes to a U.S. Holder must be reported to the IRS, unless the
U.S. Holder is an exempt recipient or establishes an exemption. Compliance with
the identification procedures described in the preceding section would establish
an exemption from backup withholding for those non-U.S. Holders who are not
exempt recipients.
S-24
In addition, upon the sale of a Note to (or through) a broker, the broker
must withhold 31% of the entire purchase price, unless either (i) the broker
determines that the seller is a corporation or other exempt recipient or (ii)
the seller provides, in the required manner, certain identifying information
and, in the case of a non-U.S. Holder, certifies that such seller is a non-U.S.
Holder (and certain other conditions are met). Such a sale must also be reported
by the broker to the IRS, unless either (i) the broker determines that the
seller is an exempt recipient or (ii) the seller certifies its non-U.S. status
(and certain other conditions are met). Certification of the registered owner's
non-U.S. status would be made normally on an IRS Form W-8 under penalties of
perjury, although in certain cases it may be possible to submit other
documentary evidence.
Any amounts withheld under the backup withholding rules from a payment to a
beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States Federal income tax provided the required
information is furnished to the IRS.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis for sale by the Company
through the Agents, who have agreed to use their reasonable efforts to solicit
offers to purchase the Notes, and the Company may also sell Notes to any Agent,
as principal, for resale to investors and other purchasers at varying prices
related to prevailing market prices at the time of resale to be determined by
such Agent or, if so agreed, at a fixed public offering price. The Company has
reserved the right to sell Notes directly on its own behalf or to appoint other
agents from time to time, which will be named in the applicable Pricing
Supplement, and to use other distribution agreements containing substantially
the same terms as the distribution agreement with the Agents. There will not be
any commission for direct sales by the Company. The Company reserves the right
to withdraw, cancel or modify the offer made hereby without notice and may
reject orders in whole or in part whether placed directly with the Company or
through one of the Agents. The Agents will have the right, in their discretion
reasonably exercised, to reject in whole or in part any offer to purchase Notes
received by them. The Company will pay the related Agent, in the form of a
discount or otherwise, a commission, ranging from .150% to .750% of the
principal amount of any Note sold through such Agent, depending on the Stated
Maturity of the Note.
In addition, the Agents may offer the Notes they have purchased as principal
to other dealers. The Agents may sell Notes to any dealer at a discount and,
unless otherwise specified in the applicable Pricing Supplement, such discount
allowed to any dealer will not be in excess of the discount to be received by
such Agent from the Company. Unless otherwise indicated in the applicable
Pricing Supplement, any Note sold to an Agent as principal will be purchased by
such Agent at a price equal to 100% of the principal amount thereof less a
percentage equal to the commission applicable to any agency sale of a Note of
identical maturity, and may be resold by the Agent to investors and other
purchasers 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 or may be resold to certain dealers as described above.
After the initial public offering of Notes to be resold to investors and other
purchasers, the public offering price (in the case of Notes to be resold at a
fixed public offering price), the concession and discount may be changed.
Unless otherwise specified in an applicable Pricing Supplement, payment of
the purchase price of the Notes will be required to be made in immediately
available funds in The City of New York on the date of settlement.
No Note will have an established trading market when issued. The Notes will
not be listed on any securities exchange. Each of the Agents may from time to
time purchase and sell Notes in the secondary market, but no Agent is obligated
to do so, and there can be no assurance that there will be a secondary market
for the Notes or liquidity in the secondary market if one develops. From time to
time, each of the
S-25
Agents may make a market in the Notes, but none of the Agents is obligated to do
so and any such Agent may discontinue any market-making activity at any time.
Each Agent may be deemed to be an "underwriter" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). The Company has
agreed to indemnify the Agents against certain liabilities, including
liabilities under the Securities Act, or to contribute to payments the Agents
may be required to make in respect thereof. The Company has agreed to reimburse
each of the Agents for certain expenses.
In the ordinary course of their respective businesses, certain of the Agents
listed herein or affiliates of such Agents have in the past engaged, and may in
the future engage, in commercial banking transactions with the Company and each
of the Agents or affiliates of such Agents have in the past engaged, and may in
the future engage, in investment banking transactions with the Company.
Concurrently with the offering of the Notes described herein, the Company
may issue and sell other Debt Securities described in the accompanying
Prospectus and such sales may reduce the aggregate initial offering price of the
Notes offered hereby.
S-26
$700,000,000
[LOGO COLGATE-PALMOLIVE COMPANY]
DEBT SECURITIES
-------------------
Colgate-Palmolive Company (the "Company") intends from time to time to sell
up to $700,000,000 aggregate initial offering price (or, if the principal of
Debt Securities is payable in foreign or composite currencies, the equivalent
thereof at the time of offering) of Debt Securities (the "Debt Securities") in
one or more series on terms to be determined at the time of offering. The
specific designation, aggregate principal amount, maturity, rate and times of
payment of interest, redemption and sinking fund terms, currency and other
specific terms of each series of the Debt Securities in respect of which this
Prospectus is being delivered will be set forth in a Prospectus Supplement (the
"Prospectus Supplement"), together with the terms of offering of the Debt
Securities.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
-------------------
The Company may sell the Debt Securities in any of the following ways: (i)
to or through underwriters or dealers; (ii) directly to one or more other
purchasers; (iii) through agents; or (iv) through a combination of any such
methods of sale. The names of any such underwriters or agents and any applicable
commissions or discounts will be set forth in an accompanying Prospectus
Supplement. Pricing information and net proceeds to the Company from the sale of
each series of Debt Securities will also be set forth in such Prospectus
Supplement. See "Plan of Distribution" herein.
-------------------
THE DATE OF THIS PROSPECTUS IS APRIL 1, 1996.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy and information statements and other information
with the Securities and Exchange Commission (the "Commission") which may be
inspected and copied at the public reference facilities maintained by the
Commission at its principal offices at 450 Fifth Street, N.W., Washington, D.C.
20549; and at its regional offices at the Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade
Center, Suite 1300, New York, New York 10048; and copies of such material can be
obtained from the Public Reference Section of the Commission, Washington, D.C.
20549, at prescribed rates. Such reports, proxy and information statements and
other information also may be inspected at the office of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005, on which certain of the
Company's securities are listed.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 31,
1995 ("1995 Form 10-K"), filed by the Company with the Commission under the
Exchange Act (File No. 1-644-2), is incorporated in this Prospectus by reference
as of its date of filing and shall be deemed to be a part hereof.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the securities offered hereby shall be deemed to
be incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified and superseded, to constitute a part of
this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus has been delivered, upon the written or oral request of any such
person, a copy of any or all of the documents incorporated in this Prospectus by
reference, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into the information that this Prospectus
incorporates). Requests for such copies should be directed to Investor Relations
Department, Colgate-Palmolive Company, 300 Park Avenue, New York, New York 10022
(telephone 212-310-3207).
THE COMPANY
Colgate-Palmolive Company, founded in 1806, is one of the world's leading
global consumer products companies. It has operating companies in approximately
75 countries and markets its products in approximately 200 countries and
territories. The Company has been operating outside the United States for more
than 70 years. The Company is a Delaware corporation with its principal
executive offices located at 300 Park Avenue, New York, New York 10022
(telephone (212) 310-2000).
The Company manufactures and markets a wide variety of products in the
United States and around the world in two distinct business segments: Oral,
Personal and Household Care, and Pet Nutrition. Oral, Personal and Household
Care products include toothpastes, oral rinses and toothbrushes, bar and liquid
soaps, shampoos, conditioners, deodorants and antiperspirants, baby and shave
products, laundry and dishwashing detergents, fabric softeners, cleansers and
cleaners, bleaches, and other similar items. Pet Nutrition products include pet
food products manufactured and marketed by
2
Hill's Pet Nutrition. The principal consumers for Pet Nutrition products are
veterinarians and large format specialty pet retailers. Principal global
trademarks include Colgate, Palmolive, Mennen, Kolynos, Ajax, Fab,
Soupline/Suavitel, Science Diet, and Prescription Diet, in addition to various
regional trademarks.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the Company and its consolidated subsidiaries for the periods shown.
YEAR ENDED DECEMBER 31,
-----------------------------------------
1991** 1992 1993 1994 1995***
------ ---- ---- ---- -------
Ratio of Earnings to Fixed Charges* 2.4 7.2 8.2 6.4 2.2
- ------------
* For the purpose of calculating the ratio of earnings to fixed charges,
"earnings" consists of earnings from continuing operations before income
taxes, cumulative effect on prior years of accounting changes recorded in
1993, and fixed charges. "Fixed charges" consists of interest costs and that
portion of rentals estimated to be representative of the interest factor.
** Included in 1991 is the before-tax provision for restructuring of $340.0
million; excluding this charge, the ratio of earnings to fixed charges was
4.8.
*** Included in 1995 is the before-tax provision for restructuring of $460.5
million; excluding this charge, the ratio of earnings to fixed charges was
3.8.
USE OF PROCEEDS
Unless otherwise indicated in an applicable Prospectus Supplement, the net
proceeds from the sale of the Debt Securities will be used by the Company for
general corporate purposes, which may include repayment or refinancing of
short-term indebtedness, working capital and acquisitions. As of March 15, 1996,
the Company's outstanding commercial paper had a weighted average interest rate
of 5.45% with maturities ranging from 3 to 90 days.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities may be issued from time to time as a single series or in
two or more separate series. The following description of the terms of the Debt
Securities sets forth certain general terms and provisions of the Debt
Securities to which any Prospectus Supplement may relate. The particular terms
of the Debt Securities offered by any Prospectus Supplement (the "Offered Debt
Securities"), and the extent to which such general provisions may apply to the
Offered Debt Securities, will be described in a Prospectus Supplement relating
to such Offered Debt Securities.
The Debt Securities will be issued under an indenture, as such indenture may
be amended from time to time, between the Company and The Bank of New York, as
trustee (the "Trustee"), dated as of November 15, 1992 (the "Indenture").
The terms of the Debt Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"), and holders of the Debt Securities
are referred to the Indenture and the Trust Indenture Act for a statement
thereof. The following summary of certain provisions of the Debt Securities and
of the Indenture does not purport to be complete and is qualified in its
entirety by reference to the Indenture, a copy of which has been filed as an
exhibit to the Registration Statement (by incorporation by reference)
3
of which this Prospectus is a part. Capitalized terms used but not defined
herein have the meanings given to them in the Indenture.
The Debt Securities will be obligations solely of the Company.
GENERAL
The Indenture does not limit the aggregate principal amount of Debt
Securities which may be issued thereunder and Debt Securities may be issued
thereunder from time to time as a single series or in two more separate series
up to the aggregate principal amount from time to time authorized by the Company
for each series. As of the date of this Prospectus, the Company has issued and
outstanding $820.2 million aggregate principal amount of Debt Securities under
the Indenture. The Company may, from time to time, without the consent of the
Holders of the Notes, provide for the issuance of Notes or other Debt Securities
under the Indenture in addition to the $700,000,000 aggregate initial offering
price of Notes offered hereby.
The Debt Securities will be unsecured general obligations of the Company and
will rank pari passu with all other unsecured and unsubordinated indebtedness of
the Company from time to time outstanding.
The applicable Prospectus Supplement or Prospectus Supplements will describe
the terms of the Offered Debt Securities, including: (i) the aggregate principal
amount and denominations of such Debt Securities; (ii) the date on which Debt
Securities will mature; (iii) the date or dates on which the principal of such
Debt Securities is payable, if other than at maturity, or the method of
determination thereof; (iv) the rate or rates per annum (which may be fixed or
variable), or formula for determining such rate or rates, at which such Debt
Securities will bear interest, if any; (v) the dates on which such interest, if
any, will be payable; (vi) the Place of Payment or transfer with respect to such
Debt Securities; (vii) the provisions for redemption or repayment of such Debt
Securities, if any, including the redemption and/or repayment price or prices
and any remarketing arrangements relating thereto; (viii) the sinking fund
requirements or amortization provisions, if any, with respect to such Debt
Securities; (ix) whether such Debt Securities are denominated or provide for
payment in United States dollars or in one or more currencies or units of two or
more currencies; (x) the form (registered or bearer or both) in which such Debt
Securities may be issued and any restrictions applicable to the exchange of one
form for another and to the offer, sale and delivery of Debt Securities in
either form; (xi) if the Company will pay additional amounts ("Additional
Amounts") in respect of Debt Securities held by a person who is not a United
States person in respect of specified taxes, assessments or other governmental
charges, under what circumstances the Company will pay such Additional Amounts
and whether the Company has the option to redeem the affected Debt Securities
rather than pay such Additional Amounts; (xii) whether such Debt Securities will
be issued in whole or in part in the form of one or more global securities and,
in such case, the Depositary for such global securities; (xiii) the title of
such Debt Securities; the series of which such Debt Securities shall be a part
and the Trustee with respect to such Debt Securities; and (xiv) any other terms
of such Debt Securities. Reference is made to the applicable Prospectus
Supplement for the terms of the Debt Securities being offered thereby. The
variable terms of the Debt Securities are subject to change from time to time,
but no such change will adversely affect any Debt Security already issued or as
to which an offer to purchase has been accepted by the Company.
The provisions of the Indenture described above provide the Company with the
ability, in addition to the ability to issue Debt Securities with terms
different from those of Debt Securities previously issued, to "reopen" a
previous issue or a series of Debt Securities and issue additional Debt
Securities of such issue or series.
4
The Indenture does not contain any provisions which would provide protection
to holders of Debt Securities against a sudden and dramatic decline in credit
quality resulting from a takeover, a recapitalization or other highly leveraged
transaction involving the Company.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and premium and interest, if any, on Debt Securities will be
made at the office of such Paying Agent or Paying Agents as the Company may
designate from time to time, except that at the option of the Company payment of
any interest may be made (i) by check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register or (ii)
by wire transfer to an account maintained by the Person entitled thereto as
specified in the Security Register. Unless otherwise indicated in an applicable
Prospectus Supplement, payment of any installment of interest on Debt Securities
will be made to the Person in whose name such Debt Security is registered at the
close of business on the Regular Record Date for such interest.
Unless otherwise indicated in an applicable Prospectus Supplement, the
Trustee with respect to the Debt Securities of the related series, acting
through its Corporate Trust Office, will be designated as the Company's sole
Paying Agent for payments with respect to Debt Securities of such series. The
Company may at any time designate additional Paying Agents or rescind the
designation of any Paying Agent or approve a change in the office through which
any Paying Agent acts, except that the Company will be required to maintain a
Paying Agent in each Place of Payment for such series. All moneys paid by the
Company to a Paying Agent for the payment of principal of or premium or
interest, if any, on any Debt Security which remain unclaimed at the end of one
year after such principal, premium or interest shall have become due and payable
will be repaid to the Company, and the holder of such Debt Security or any
coupon will thereafter look only to the Company for payment thereof.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in global
form. A Debt Security in global form will be deposited with, or on behalf of, a
Depositary, which will be identified in an applicable Prospectus Supplement. A
global Debt Security may be issued in either registered or bearer form and in
either temporary or permanent form. A Debt Security in global form may not be
transferred except as a whole by the Depositary for such Debt Security to a
nominee of such Depositary or by a nominee of such Depositary to such Depositary
or another nominee of such Depositary or by such Depositary or any such nominee
to a successor of such Depositary or a nominee of such successor. If any Debt
Securities of a series are issuable in global form, the applicable Prospectus
Supplement will describe the circumstances, if any, under which beneficial
owners of interests in any such global Debt Security may exchange such interests
for definitive Debt Securities of such series and of like tenor and principal
amount in any authorized form and denomination, the manner of payment of
principal of, premium and interest, if any, on any such global Debt Security and
the material terms of the depositary arrangement with respect to any such global
Debt Security.
LIMITATIONS ON LIENS COVENANT
The Debt Securities will not be secured by mortgage, pledge or other lien.
Unless a Prospectus Supplement with respect to a particular series of Debt
Securities states otherwise, the covenant described below will apply to each
series of Debt Securities.
The Company covenants in the Indenture not to create or suffer to exist, or
permit any of its Principal Domestic Subsidiaries to create or suffer to exist,
any Lien on any Restricted Property, whether owned on the date of the Indenture
or thereafter acquired, without making effective provision (and the Company
covenants and agrees in the Indenture that it will make or cause to be made
effective
5
provision) whereby the Debt Securities shall be directly secured by such Lien
equally and ratably with (or prior to) all other indebtedness secured by such
Lien as long as such other indebtedness shall be so secured; provided, however,
that there shall be excluded from the foregoing restrictions:
(i) Liens securing Debt not exceeding $10,000,000 which are existing on
the date of the Indenture on Restricted Property; and, if any property owned
or leased as of the date of the Indenture by the Company or by a Principal
Domestic Subsidiary at any time thereafter becomes a Principal Domestic
Manufacturing Property, any Liens existing on the date of the Indenture on
such property securing the Debt secured or evidenced thereby on the date of
the Indenture;
(ii) Liens on Restricted Property of a Principal Domestic Subsidiary as
a security for Debt of such Subsidiary to the Company or to another
Principal Domestic Subsidiary;
(iii) in the case of any corporation which becomes a Principal Domestic
Subsidiary after the date of the Indenture, Liens on Restricted Property of
such Principal Domestic Subsidiary which are in existence at the time it
becomes a Principal Domestic Subsidiary and which were not incurred in
contemplation of it becoming a Principal Domestic Subsidiary;
(iv) any Lien existing prior to the time of acquisition of any Principal
Domestic Manufacturing Property acquired by the Company or a Principal
Domestic Subsidiary after the date of the Indenture through purchase,
merger, consolidation or otherwise;
(v) any Lien on any Principal Domestic Manufacturing Property (other
than a Major Domestic Manufacturing Property) acquired or constructed by the
Company or a Principal Domestic Subsidiary after the date of the Indenture,
which is placed on such Property at the time of or within 180 days after the
acquisition thereof or prior to, at the time of or within 180 days after
completion of construction thereof to secure all or a portion of the price
of such acquisition or construction or funds borrowed to pay all or a
portion of the price of such acquisition or construction;
(vi) extensions, renewals or replacements of any Lien referred to in
clause (i), (iii), (iv) or (v) above to the extent that the principal amount
of the Debt secured or evidenced thereby is not increased, provided that the
Lien is not extended to any other Restricted Property;
(vii) Liens imposed by law, such as carriers', warehousemen's,
mechanics', materialmen's, vendors' and landlords' liens, and liens arising
out of judgments or awards against the Company or any Principal Domestic
Subsidiary with respect to which the Company or such Subsidiary at the time
shall currently be prosecuting an appeal or proceedings for review and with
respect to which it shall have secured a stay of execution pending such
appeal or proceedings for review;
(viii) Liens securing the payment of taxes, assessments and governmental
charges or levies, either (i) not delinquent or (ii) being contested in good
faith by appropriate legal or administrative proceedings and as to which the
Company or a Principal Domestic Subsidiary, as the case may be, to the
extent required by generally accepted accounting principles applied on a
consistent basis, shall have set aside on its books adequate reserves;
(ix) minor survey exceptions, minor encumbrances, easements or
reservations of, or rights of others for, rights of way, sewers, electric
lines, telegraph and telephone lines and other similar purposes, and zoning
or other restrictions as to the use of any Principal Domestic Manufacturing
Property, which exceptions, encumbrances, easements, reservations, rights
and restrictions do not, in the opinion of the Company, in the aggregate
materially detract from the value of such Principal Domestic Manufacturing
Property or materially impair its use in the operation of the business of
the Company and its Principal Domestic Subsidiaries; and
6
(x) any Lien on Restricted Property not referred to in clauses (i)
through (ix) above if, at the time such Lien is created, incurred, assumed
or suffered to be created, incurred or assumed, and after giving effect
thereto and to the Debt secured or evidenced thereby, the aggregate amount
of all outstanding Debt of the Company and its Principal Domestic
Subsidiaries secured or evidenced by Liens on Restricted Property which are
not referred to in clauses (i) through (ix) above and which do not equally
and ratably secure the Debt Securities, shall not exceed 15% of Consolidated
Net Tangible Assets.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consolidated Net Tangible Assets" means the aggregate amount of assets
(less applicable reserves and other properly deductible items) after deducting
therefrom (i) all current liabilities and (ii) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like
intangibles of the Company and its consolidated subsidiaries, all as set forth
on the most recent balance sheet of the Company and its consolidated
subsidiaries prepared in accordance with generally accepted accounting
principles as practiced in the United States.
"Debt" means (i) indebtedness for borrowed money, (ii) obligations evidenced
by bonds, debentures, notes or other similar instruments, (iii) obligations to
pay the deferred purchase price of property or services (other than accounts
payable in the ordinary course of business), (iv) obligations as a lessee under
leases which shall have been or should be, in accordance with generally accepted
accounting principles, recorded as capital leases, and (v) obligations under
direct or indirect guaranties in respect of, and obligations (contingent or
otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor
against loss in respect of, indebtedness or obligations of others of the kinds
referred to in clauses (i) through (iv) above.
"Domestic Subsidiary" means any Subsidiary a majority of the business of
which is conducted within the United States of America, or a majority of the
properties and assets of which are located within the United States of America,
except (i) any Subsidiary substantially all of the assets of which consist of
the securities of Subsidiaries which are not Domestic Subsidiaries, (ii) any
Subsidiary which is a FSC as defined in Section 992 of the Code and (iii) any
Subsidiary for any period during which an election under Section 936 of the Code
applies to such Subsidiary.
"Instruments" of any corporation means and includes (i) all capital stock of
all classes of and all other equity interests in such corporation and all
rights, options or warrants to acquire the same, and (ii) all promissory notes,
debentures, bonds and other evidences of Debt of such corporation.
"Lien" means any mortgage, lien, pledge, security interest, encumbrance or
charge of any kind, any conditional sale or other title retention agreement or
any lease in the nature thereof, provided that the term "Lien" shall not include
any lease involved in a sale and lease-back transaction.
"Major Domestic Manufacturing Property" means any Principal Domestic
Manufacturing Property the net depreciated book value of which on the date as of
which the determination is made exceeds 3% of the Consolidated Net Tangible
Assets.
"Principal Domestic Manufacturing Property" means any building, structure or
facility (including the land on which it is located and the improvements and
fixtures constituting a part thereof) used primarily for manufacturing or
processing which is owned or leased by the Company or any of its Subsidiaries,
is located in the United States of America and the net depreciated book value of
which on the date as of which the determination is made exceeds 1% of
Consolidated Net Tangible Assets, except any such building structure or facility
which the Board of Directors of the Company by resolution declares is not of
material importance to the total business conducted by the Company and its
Subsidiaries as an entirety.
7
"Principal Domestic Subsidiary" means (i) each Subsidiary which owns or
leases a Principal Domestic Manufacturing Property, (ii) each Domestic
Subsidiary the consolidated net worth of which exceeds 3% of Consolidated Net
Tangible Assets (as set forth in the most recent financial statements delivered
pursuant to the Indenture) and (iii) each Domestic Subsidiary of each Subsidiary
referred to in the foregoing clause (i) or (ii) except any such Subsidiary the
accounts receivable and inventories of which have an aggregate net book value of
less than $5,000,000.
"Restricted Property" means and includes (i) all Principal Domestic
Manufacturing Properties, (ii) all Instruments of all Principal Domestic
Subsidiaries and (iii) all inventories and accounts receivable of the Company
and its Principal Domestic Subsidiaries.
"Subsidiary" means any Corporation of which at the time of determination the
Company or one or more Subsidiaries owns or controls directly or indirectly more
than 50% of the shares of Voting Stock.
"Voting Stock" means stock of a Corporation of the class or classes having
general voting power under ordinary circumstances to elect at least a majority
of the board of directors, managers or trustees of such Corporation, provided
that, for the purpose hereof, stock which carries only the right to vote
conditionally on the happening of an event shall not be considered voting stock
whether or not such event shall have happened.
SUCCESSOR CORPORATION
The Indenture provides that the Company may consolidate with, or sell, lease
or convey all or substantially all of its assets to, or merge with or into, any
other corporation, provided that in any such case: (i) either the Company shall
be the continuing corporation, or the successor corporation shall be a
corporation organized and existing under the laws of the United States or any
state thereof and shall expressly assume, by a supplemental indenture, executed
and delivered to the Trustee, in form satisfactory to the Trustee, all of the
obligations of the Company under the Debt Securities and the Indenture; and (ii)
the Company or such successor corporation, as the case may be, shall not,
immediately after such merger or consolidation, or such sale, lease or
conveyance, be in default in the performance of any such obligations. Subject to
certain limitations in the Indenture, the Trustee may receive from the Company
an officer's certificate and an opinion of counsel and conclusive evidence that
any such consolidation, merger, sale, lease or conveyance, and any such
assumption, complies with the provisions of the Indenture.
SUPPLEMENTAL INDENTURES
Supplemental indentures may be made by the Company and the Trustee with the
consent of the holders of a majority in principal amount of any series of
outstanding Debt Securities adversely affected thereby, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of the Indenture or of modifying in any manner the rights of the
holders of each such series affected by such modification or amendment, provided
that no supplemental indenture may, among other things, reduce the principal
amount of or interest on any Debt Securities, change the maturity date of the
principal, the interest payment dates or other terms of payment or reduce the
percentage in principal amount of outstanding Debt Securities of any series the
consent of whose holders is necessary to modify or alter the Indenture, without
the consent of each holder of Debt Securities affected thereby. Under certain
circumstances, supplemental indentures may also be made without the consent of
the holders.
EVENTS OF DEFAULT
Except as may be otherwise provided in a Prospectus Supplement with respect
to a particular series, the Indenture defines an Event of Default with respect
to any series of Debt Securities as being
8
any one of the following events and such other events as may be established for
the Debt Securities of a particular series: (i) default in payment of principal
on the Debt Securities of such series; (ii) default in payment of any interest
on the Debt Securities of such series and continuance of such default for a
period of 30 days; (iii) default in the deposit of any sinking fund payment with
respect to such series when and as due; (iv) default in the performance or
breach, of any other covenant or warranty of the Company in the Indenture (other
than a covenant or warranty included in the Indenture solely for the benefit of
a series of Debt Securities other than such series) continued for 60 days after
appropriate notice; and (v) certain events of bankruptcy, insolvency or
reorganization. No Event of Default with respect to a particular series of Debt
Securities issued under the Indenture necessarily constitutes an Event of
Default with respect to any other series of Debt Securities issued thereunder.
If an Event of Default occurs and is continuing, the Trustee or the holders of
at least 25% in aggregate principal amount of Debt Securities of each series
affected thereby may declare the Debt Securities of such series to be due and
payable. Any past default with respect to a particular series of Debt Securities
may be waived by the holders of a majority of aggregate principal amount of the
outstanding Debt Securities of such series, except in the case of failure to pay
principal of, or premium, if any, or interest on such Debt Securities for which
payment has not been subsequently made or a default in respect of a covenant or
provision of the Indenture which cannot be modified or amended with the consent
of the holder of each outstanding Debt Security of such series. The Trustee may
withhold notice to holders of any series of Debt Securities of any default with
respect to such series (except in payment of principal, premium, if any, or
interest) if it in good faith determines that it is in the interest of such
holders to do so.
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the Holders, unless such Holders
have offered to the Trustee reasonable indemnity or security against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction. Subject to provisions in the Indenture for the
indemnification of the Trustee and to certain other limitations, the Holders of
a majority in principal amount of the outstanding Debt Securities of any series
will have the right to 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 the Trustee with respect to the Debt Securities of such
series.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Debt Securities of a series may be defeased in accordance with their terms
and as set forth below. The Company at any time may terminate as to a series all
of its obligations (except for certain obligations with respect to the
defeasance trust and obligations to register the transfer or exchange of a Debt
Security, to replace destroyed, lost or stolen Debt Securities and Coupons and
to maintain agencies with respect to the Debt Securities) with respect to the
Debt Securities of the series and any related Coupons and the Indenture ("legal
defeasance"). The Company at any time may terminate as to a series its
obligations with respect to the Debt Securities and Coupons of the series under
the covenant described under "Limitations on Liens Covenant" or under any other
covenants or conditions set forth in a series of Debt Securities ("covenant
defeasance").
The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its
legal defeasance option, a series may not be accelerated because of an Event of
Default. If the Company exercises its covenant defeasance option, a series may
not be accelerated by reference to the defeased covenant or covenants or
condition or conditions.
To exercise either option as to a series, the Company must deposit in trust
with the trustee cash or United States government obligations sufficient to pay
the principal of, and premium, if any, and interest on the Debt Securities of
such series and their maturity or redemption and must comply with
9
certain other conditions. In particular, the Company must obtain an opinion of
tax counsel that the defeasance will not result in recognition for federal
income tax purposes of any gain or loss to holders of the series. Such opinion
of counsel, in the case of legal defeasance, must refer to and be based upon a
ruling of the Internal Revenue Service or a change in applicable federal income
tax law occurring after the date of the Indenture.
REGARDING THE TRUSTEE
The Indenture contains certain limitations on the right of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee is permitted to engage in other
transactions with the Company; provided, however, that if the Trustee acquires
any conflicting interest it must eliminate such conflict or resign.
The Indenture provides that, in case an Event of Default has occurred and is
continuing, the Trustee is required to use the degree of care and skill of a
prudent person in the conduct of his or her own affairs in the exercise of its
powers.
The Company has conducted, and anticipates that it will continue to conduct,
other banking transactions with the Trustee in the normal course of the
Company's business.
GOVERNING LAW
The Indenture and the Debt Securities will be governed by and construed in
accordance with the laws of the State of New York.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities in any of the following ways: (i)
to or through underwriters or dealers; (ii) directly to one or more other
purchasers; (iii) through agents; or (iv) through a combination of any such
methods of sale. The Prospectus Supplement with respect to the series of Debt
Securities being offered thereby will set forth the terms of the offering of
such Debt Securities, including the name or names of any underwriters or agents,
the purchase price of such Debt Securities and the proceeds to the Company from
such sale, any underwriting discounts, commissions and other items constituting
underwriters' compensation, any initial public offering price and any discounts
or concessions allowed or reallowed or paid to dealers and any securities
exchanges on which such Debt Securities may be listed. Only underwriters named
in a Prospectus Supplement are deemed to be underwriters, as such term is
defined under the Securities Act of 1933, as amended (the "Securities Act"), in
connection with the Debt Securities offered thereby. In addition, agents and
dealers may be deemed to be underwriters as such term is defined under the
Securities Act.
If underwriters are used in the sale of a series of Debt Securities, such
Debt Securities will be acquired by the underwriters for their own account and
may be resold 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. The Debt Securities may be either offered to the
public through underwriting syndicates (which may be represented by managing
underwriters designated by the Company), or directly by one or more underwriters
acting alone and may be offered on a delayed delivery basis. Unless otherwise
set forth in the Prospectus Supplements, the obligations of the underwriters to
purchase the Debt Securities of the series offered thereby will be subject to
certain conditions precedent, and the underwriters will be obligated to purchase
all such Debt Securities if they are purchased. Any initial public offering
price and any discounts or concessions allowed or reallowed or paid to dealers
may be changed from time to time.
10
Debt Securities may be sold directly by the Company or through agents
designated by the Company from time to time. The Prospectus Supplement with
respect to any series of Debt Securities sold in this manner will set forth the
name(s) of any agent(s) involved in the offer or sale of such series of Debt
Securities as well as any commissions payable by the Company to such agent.
Unless otherwise indicated in an applicable Prospectus Supplement, any such
agent is acting on a best efforts basis for the period of its appointment.
If dealers are utilized in the sale of any series of Debt Securities, the
Company will sell such Debt Securities to the dealers, as principal. Any dealer
may then resell such Debt Securities to the public at varying prices to be
determined by such dealer at the time of resale. The name of any dealer and the
terms of the transaction will be set forth in the Prospectus Supplement with
respect to such Debt Securities being offered thereby.
It has not been determined whether any series of the Debt Securities will be
listed on a securities exchange. Underwriters will not be obligated to make a
market in any series of Debt Securities. The Company cannot predict the activity
of trading in, or liquidity of, any series of the Debt Securities.
Agents, underwriters and dealers may be entitled, under agreements entered
into with the Company, to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments which the agents, underwriters or dealers may be
required to make in respect thereof. Agents, underwriters and dealers may be
customers of, engage in transactions with, or perform services for the Company
in the ordinary course of business.
LEGAL MATTERS
Certain legal matters in connection with the Debt Securities will be passed
upon for the Company by Andrew D. Hendry, Esq., Senior Vice President, General
Counsel and Secretary of the Company, and for the underwriters or agents, if
any, by Brown & Wood, One World Trade Center, New York, New York. As of March 7,
1996, Mr. Hendry held 7,041 shares of Common Stock of the Company, 12,328
restricted shares of Common Stock of the Company, options to purchase 80,546
shares of Common Stock of the Company and 247 shares of Series B Convertible
Preference Stock.
EXPERTS
The financial statements and schedules of the Company, incorporated in this
Prospectus by reference to the 1994 Form 10-K have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports with
respect thereto, and are included herein in reliance upon the authority of said
firm as experts in auditing and accounting.
11
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NO DEALER, SALESMAN, OR ANY OTHER
PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS
SUPPLEMENT (INCLUDING THE PRICING
SUPPLEMENT) OR THE ACCOMPANYING [LOGO COLGATE-PALMOLIVE COMPANY]
PROSPECTUS, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY
UNDERWRITER, DEALER OR AGENT. THIS
PROSPECTUS SUPPLEMENT (INCLUDING THE
PRICING SUPPLEMENT) AND THE
ACCOMPANYING PROSPECTUS DO NOT
CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OTHER THAN THE SECURITIES
TO WHICH IT RELATES OR ANY OFFER TO
SELL OR THE SOLICITATION OF AN OFFER
TO BUY SUCH SECURITIES IN ANY MEDIUM-TERM NOTES,
CIRCUMSTANCES IN WHICH SUCH OFFER OR SERIES C
SOLICITATION IS UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT
(INCLUDING THE PRICING SUPPLEMENT) AND
THE ACCOMPANYING PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THEREOF OR THAT THE -------------------------
INFORMATION CONTAINED HEREIN OR
THEREIN IS CORRECT AS OF ANY TIME PROSPECTUS SUPPLEMENT
SUBSEQUENT TO THE DATE OF THIS
PROSPECTUS SUPPLEMENT (INCLUDING THE -------------------------
PRICING SUPPLEMENT) OR THE
ACCOMPANYING PROSPECTUS.
-------------------
TABLE OF CONTENTS
PAGE
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PROSPECTUS SUPPLEMENT
The Company..................... S-2
Use of Proceeds................. S-2 CHASE SECURITIES INC.
Description of Notes............ S-2 CITICORP SECURITIES, INC.
Certain United States Federal GOLDMAN, SACHS & CO.
Tax Consequences.............. S-19 LAZARD FRERES & CO. LLC
Plan of Distribution............ S-25 MERRILL LYNCH & CO.
J.P. MORGAN & CO.
PROSPECTUS
Available Information........... 2
Incorporation of Certain
Documents by Reference........ 2
The Company..................... 2
Ratio of Earnings to Fixed
Charges....................... 3
Use of Proceeds................. 3
Description of Debt Securities.. 3
Plan of Distribution............ 10
Legal Matters................... 11
Experts......................... 11 Dated April 1, 1996
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