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PROSPECTUS SUPPLEMENT Filed Pursuant to Rule 424(B)(5)
- --------------------- Registration File #: 333-72893
(To Prospectus dated August 17, 1999)
[CENTEX LOGO]
$250,000,000
SENIOR MEDIUM-TERM NOTES, SERIES B
SUBORDINATED MEDIUM-TERM NOTES, SERIES B
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
CENTEX CORPORATION
2728 North Harwood Street
Dallas, Texas 75201
(214) 981-5000
------------------------------
THE ISSUER: Centex Corporation is a Nevada corporation.
TERMS: We plan to offer and sell senior and/or subordinated notes
with various terms, including the following:
o Ranking as senior or subordinated indebtedness of Centex
o Stated maturities of nine months or more
o Redemption and/or repayment provisions, if applicable, whether mandatory
or at the option of Centex or noteholders
o Minimum denominations of $1,000, except remarketed notes, that will be
issued in minimum denominations of $100,000
o Interest payments on fixed rate notes on each March 1 and September 1
o Interest payments on floating rate notes on a monthly, quarterly,
semiannual or annual basis
o Issuance at discounts to par, which may be significant. Discount notes
may not bear any interest.
o Interest at fixed or floating rates. The floating interest rate may be
based on one or more of the following indices plus or minus a spread or
spread multiplier:
o CD rate
o CMT rate
o Commercial Paper rate
o Eleventh District Cost of Funds rate
o Federal Funds Rate
o LIBOR
o Prime rate
o Treasury rate
o Book-entry or certificated form
o Interest on remarketed notes at the initial interest rate for the initial
interest rate period specified in the pricing supplement and thereafter at
rates established as described herein
The final terms for each note, which may be different from the terms
described in this prospectus supplement, will be specified in a pricing
supplement.
Investing in the notes involves certain risks. See "Risk Factors" on
page S-5.
------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus supplement or the accompanying
prospectus. Any representation to the contrary is a criminal offense.
We may sell notes to the agents referred to below as principal for
resale at varying or fixed offering prices or through the agents as agent using
their reasonable efforts on our behalf. If we sell all the notes, we expect to
receive proceeds of between $248,125,000 and $249,687,500, after paying the
agent's discounts and commissions of between $312,500 and $1,875,000. We may
also sell notes without the assistance of the agents (whether acting as
principal or as agent).
------------------------------
Banc One Capital Markets, Inc.
Banc of America Securities LLC
Chase Securities Inc.
Credit Suisse First Boston
Morgan Stanley Dean Witter
Warburg Dillon Read LLC
---------------------------
August 17, 1999
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
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Page
<S> <C> <C>
PROSPECTUS SUPPLEMENT
CENTEX .......................................................................................................S-4
Home Building..........................................................................................S-4
Investment Real Estate.................................................................................S-4
Financial Services.....................................................................................S-4
Construction Products..................................................................................S-5
Contracting and Construction Services..................................................................S-5
RISK FACTORS....................................................................................................S-5
Structure Risks........................................................................................S-5
Tax Risks..............................................................................................S-6
Credit Ratings.........................................................................................S-6
DESCRIPTION OF NOTES............................................................................................S-7
Pricing and Other Supplements/Addendums................................................................S-7
General ..............................................................................................S-8
Redemption or Repurchases.............................................................................S-10
Certain Covenants.....................................................................................S-11
Legal Defeasance......................................................................................S-13
Covenant Defeasance...................................................................................S-13
Interest .............................................................................................S-13
Discount Notes........................................................................................S-23
Indexed Notes.........................................................................................S-23
Amortizing Notes......................................................................................S-24
Book-Entry Notes......................................................................................S-24
Multi-Currency and Indexed Notes......................................................................S-28
Remarketed Notes......................................................................................S-28
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS........................................................S-29
U.S. Holders..........................................................................................S-29
Non-U.S. Holders......................................................................................S-36
Backup Withholding....................................................................................S-38
PLAN OF DISTRIBUTION...........................................................................................S-39
LEGAL OPINIONS.................................................................................................S-40
PROSPECTUS
ABOUT THIS PROSPECTUS.............................................................................................2
CENTEX .........................................................................................................2
Home Building............................................................................................2
Investment Real Estate...................................................................................3
Financial Services.......................................................................................3
Construction Products....................................................................................3
Contracting and Construction Services....................................................................3
WHERE YOU CAN FIND MORE INFORMATION...............................................................................3
A WARNING ABOUT FORWARD-LOOKING STATEMENTS........................................................................4
USE OF PROCEEDS...................................................................................................5
SUMMARY OF SELECTED FINANCIAL DATA................................................................................5
Selected Historical Financial Data.......................................................................5
Ratio of Earnings to Fixed Charges.......................................................................7
DESCRIPTION OF DEBT SECURITIES....................................................................................8
General Information About the Debt Securities............................................................8
Covenants Included in the Indentures.....................................................................9
</TABLE>
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<TABLE>
<S> <C> <C>
Payment of Principal, Interest and Premium; Transfer of Securities......................................10
Specific Characteristics of Our Debt Securities.........................................................10
Global Certificates.....................................................................................12
Events of Default.......................................................................................13
Defeasance of Debt Securities...........................................................................15
Consolidation, Merger or Sale of Centex.................................................................15
Modification of the Indentures..........................................................................15
Certificates and Opinions to be Furnished to Trustee....................................................16
Report to Holders of Debt Securities....................................................................16
The Trustee.............................................................................................16
Ratings of Our Debt Securities by Rating Agencies.......................................................17
Method for Calling Meetings of the Holders of Debt Securities...........................................17
Governing Law...........................................................................................17
Notices to Holders of Debt Securities...................................................................17
PLAN OF DISTRIBUTION.............................................................................................18
Sale of Debt Securities By Agents.......................................................................18
Sale of Debt Securities By Underwriters.................................................................18
Direct Sales of Our Debt Securities.....................................................................18
General Information About Our Plan of Distribution......................................................18
LEGAL OPINIONS...................................................................................................19
EXPERTS ........................................................................................................19
</TABLE>
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CENTEX
Through its various subsidiaries, Centex Corporation is one of the
nation's largest home builders and general building contractors. We also provide
retail mortgage lending services through various financial services
subsidiaries. We currently operate in five principal business segments:
o Home Building;
o Investment Real Estate;
o Financial Services;
o Construction Products; and
o Contracting and Construction Services.
HOME BUILDING
The Home Building business has expanded to include both Conventional
Homes and Manufactured Homes.
The Conventional Homes operations currently involve the construction
and sale of single-family homes, town homes and low-rise condominiums and also
include the purchase and development of land.
In March 1997, we entered the Manufactured Homes business when we
acquired approximately 80% of the predecessor of Cavco Industries, LLC.
Manufactured Homes operations include the manufacture of quality residential and
park model homes and their sale through company-owned retail outlets and a
network of independent dealers.
INVESTMENT REAL ESTATE
Investment Real Estate operations involve the acquisition, development
and sale of land, and the development of industrial, office, retail and other
commercial projects and apartment complexes.
FINANCIAL SERVICES
Through our Financial Services operations, we offer financing of
conventional and manufactured homes, home equity and sub-prime lending and the
sale of title and other insurance coverages. These activities include mortgage
origination and other related services for homes sold by our subsidiaries and by
others.
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CONSTRUCTION PRODUCTS
Through our Construction Products operations, we also manufacture
cement, gypsum wallboard and ready-mix concrete for distribution and sale.
CONTRACTING AND CONSTRUCTION SERVICES
Contracting and Construction Services activities involve the
construction of buildings for both private and government interests, including
office, commercial and industrial buildings, hospitals, hotels, museums,
libraries, airport facilities and educational facilities. In April 1994, our
construction products subsidiary, Centex Construction Products, Inc., completed
an initial public offering of 51% of its common stock. Principally as a result
of stock repurchases by Centex Construction Products, our ownership interest in
Centex Construction Products was 61.5% as of June 30, 1999.
Our principal executive office is located at 2728 N. Harwood Street,
Dallas, Texas 75201, and our telephone number is (214) 981-5000.
RISK FACTORS
Your investment in the notes will include certain risks. In
consultation with your own financial and legal advisers, you should carefully
consider, among other matters, the following discussion of risks before deciding
whether an investment in the notes is suitable for you. Notes are not an
appropriate investment for you if you are unsophisticated with respect to the
significant components of the notes.
STRUCTURE RISKS
General
If you invest in notes indexed to one or more interest rate, currency
or other indices or formulas, there will be significant risks not associated
with a conventional fixed rate or floating rate debt security. These risks
include fluctuation of the indices or formulas and the possibility that you will
receive a lower, or no, amount of premium or interest and at different times
than you expected. We have no control over a number of matters, including
economic, financial and political events, that are important in determining the
existence, magnitude and longevity of these risks and their results. In
addition, if an index or formula used to determine any amounts payable in
respect of the notes contains a multiplier or leverage factor, the effect of any
change in that index or formula will be magnified. In recent years, values of
certain indices and formulas have been volatile and volatility in those and
other indices and formulas may be expected in the future. However, past
experience is not necessarily indicative of what may occur in the future.
Redemption
If your notes are redeemable at our option or are otherwise subject to
mandatory redemption, we may, in the case of optional redemption, or must, in
the case of mandatory
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redemption, redeem your notes at times when interest rates may be relatively
low. Accordingly, you generally will not be able to reinvest the redemption
proceeds in a comparable security at an effective interest rate as high as that
of the notes that we redeem.
Uncertain Trading Markets
We cannot assure you that a trading market for your notes will ever
develop or be maintained. Many factors independent of our creditworthiness
affect the trading market. These factors include:
o complexity and volatility of the index or formula applicable to
the notes;
o method of calculating the principal, premium and interest on the
notes;
o time remaining to the maturity of the notes;
o outstanding amount of the notes;
o redemption features of the notes;
o amount of other debt securities linked to the index or formula
applicable to the notes; and
o level, direction and volatility of market interest rates
generally.
In addition, some notes may have a more limited trading market and may
experience more price volatility because they were designed for specific
investment objectives or strategies. There may be a limited number of buyers
when you decide to sell these notes. This may affect the price you receive for
your notes or your ability to sell your notes at all. You should not purchase
notes unless you understand and know you can bear these investment risks.
TAX RISKS
Some of the notes may be issued at a significant discount from their
aggregate principal amount at maturity. If you purchase those notes, you
generally will be required to include amounts in gross income for federal income
tax purposes before you receive cash payments on the notes equal to that income.
See "Certain United States Federal Income Tax Considerations" for a more
detailed discussion of the federal income tax consequences to the holders of
discount notes of the purchase, ownership, and disposition of discount notes.
CREDIT RATINGS
The credit ratings of our medium-term note program may not reflect the
potential impact of all risks related to structure and other factors on the
value of your notes. In addition, real or anticipated changes in our credit
ratings will generally affect the market value of your notes.
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DESCRIPTION OF NOTES
We may sell up to an aggregate of $250,000,000 of senior notes and/or
subordinated notes under this prospectus supplement. We may reduce that amount
in our discretion due to our sale of other securities covered by the prospectus.
The senior notes will be issued under an indenture, dated as of
October 1, 1998, as amended or modified from time to time, between us and Chase
Bank of Texas, National Association, as trustee. The subordinated notes will be
issued under an indenture, dated as of March 12, 1987, as amended or modified
from time to time, between us and Chase Bank of Texas, National Association
(successor to Texas Commerce Bank, National Association), as trustee. The
indentures are subject to, and governed by, the Trust Indenture Act of 1939.
The following description is a summary of the notes, including the
forms of fixed rate notes and floating rate notes, the senior indenture, the
subordinated indenture and other agreements. The description does not restate
those documents. Please read these documents because they, and not this
description, define your rights as holders of the notes. We have filed those
agreements as exhibits to the registration statement of which this prospectus
supplement and the attached prospectus are a part.
In the discussion that follows, whenever we talk about paying principal
on the notes, we mean at maturity, redemption or repurchase. Also, in discussing
the time for notices and how the different interest rates are calculated, all
times, unless we say otherwise, are New York City time.
PRICING AND OTHER SUPPLEMENTS/ADDENDUMS
The pricing supplement for each offering of notes will contain the
specific information and terms for that offering. The pricing supplement will
specify the interest rate or interest rate basis or bases, in addition to other
relevant terms.
The pricing or other supplements or addendums we may issue may add,
update or change information contained in this supplement or the prospectus. For
example, we might issue an addendum or supplement that explains the terms of
indexed or multi-currency notes. The terms of any supplement or addendum,
including the pricing supplement, will supersede the information in this
prospectus supplement and the attached prospectus.
It is important that you consider the information contained in the
prospectus, this prospectus supplement, the pricing supplement and any other
supplements or addendums applicable to the notes in making your investment
decision.
References in this prospectus supplement to the pricing supplement
refer to the pricing supplement for those notes and not other pricing
supplements. The pricing supplement will also indicate whether any other
supplements or addendums are part of that offering.
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GENERAL
All senior debt securities, including the senior notes, will be our
unsecured general obligations and will rank equally with all of our other
unsecured and unsubordinated indebtedness.
All subordinated debt securities, including the subordinated notes,
will be unsecured and will have a junior position to all of our senior debt as
set forth under "Description of Debt Securities--Specific Characteristics of Our
Debt Securities--Subordinated Debt Securities" in the attached prospectus. As of
June 30, 1999, we had approximately $757.7 million principal amount of senior
debt outstanding, including approximately $204.0 million due to our
subsidiaries.
Because we are a holding company that conducts all of our operations
through our subsidiaries, holders of our debt securities will generally have a
junior position to claims of creditors of our subsidiaries, including trade
creditors, debt holders, secured creditors, taxing authorities, guarantee
holders and any preferred stockholders. All of our operating subsidiaries have
ongoing corporate debt programs used to finance their business activities. As of
June 30, 1999, our subsidiaries had approximately $1.3 billion of outstanding
debt. Moreover, our ability to pay principal and interest on our debt securities
is, to a large extent, dependent upon our receiving dividends, interest or other
amounts from our subsidiaries. The indentures under which the debt securities
are to be issued do not contain any limitation on our ability to incur
additional debt or on our subsidiaries' ability to incur additional debt to us
or to unaffiliated third parties. In addition, we borrow funds and lend funds to
our subsidiaries from time to time to manage our working capital needs. Our
indebtedness to our subsidiaries will rank equally in right of payment to our
senior debt securities and senior in right of payment to our subordinated debt
securities.
The indentures do not limit the amount of debt securities that we may
issue, and we may issue debt securities in one or more series up to the
aggregate initial offering price authorized by us for each series. We may,
without the consent of the holders of the notes, provide for the issuance of
notes or other debt securities under the indentures in addition to the
$250,000,000 of notes authorized as of the date of this prospectus supplement.
Our senior indenture includes restrictive covenants with respect to
liens and the sale or lease of our assets. See "Certain Covenants." Our
subordinated indenture does not include similar covenants.
The notes are currently limited to up to $250,000,000 aggregate initial
offering price, or the equivalent thereof in one or more foreign or composite
currencies. Each note will have a stated maturity on a day nine months or more
from the date the notes are issued. The principal may become due and payable
prior to the maturity date stated in the applicable pricing supplement by the
declaration of acceleration of maturity, notice of redemption at our option,
notice of the holder's option to elect repayment or otherwise. Interest-bearing
notes will either be fixed rate notes or floating rate notes, as specified in
the pricing supplement related to the notes. We may also issue discount notes,
indexed notes and amortizing notes.
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The notes may initially bear interest at a fixed rate or floating rate
through the date set forth in the pricing supplement and for each interest rate
period thereafter. Remarketed notes will bear interest at a fixed or floating
rate and will have the terms as described in the applicable pricing supplement.
Except as specified in a pricing supplement, the notes will be
denominated in, and principal and interest payments will be made in United
States dollars.
Interest rates offered by us with respect to the notes may differ
depending on, among other factors, the aggregate principal amount of notes
purchased in any single transaction. We may also offer notes with different
variable terms other than interest rates concurrently to different investors. We
may change interest rates or formulas and other terms of the notes from time to
time, but no change will affect any note previously issued or as to which we
have accepted an offer to purchase.
Except for remarketed notes, each note will be issued as a book-entry
note represented by one or more fully registered global securities or as a fully
registered certificated note. The minimum denominations of each note, other than
a remarketed note, will be $1,000 and integral multiples of $1,000. Remarketed
notes will be issued only as book-entry notes in denominations of $100,000 and
integral multiples of $1,000 in excess thereof.
We will pay principal of, and premium and interest on, book-entry notes
through the trustee to the depositary. See "--Book-Entry Notes." In the case of
certificated notes, we will pay principal and premium due on the maturity date
in immediately available funds when you present and surrender your note, and, in
the case of any repayment on an optional repayment date, when you submit a duly
completed election form in accordance with the provisions described below, at
the office or agency maintained by us for that purpose in the Borough of
Manhattan, The City of New York, currently the corporate trust office of the
trustee located at Chase Global Trust, 450 W. 33rd Street, 15th Floor, New York,
New York 10001. We will pay any interest due on the maturity date of a
certificated note to the person to whom payment of the principal and premium is
made. We will pay interest by check mailed to the address of the holder in our
security register. Notwithstanding the foregoing, a holder of $10,000,000 or
more in aggregate principal amount of certificated notes, whether having
identical or different terms and provisions, may receive interest payments on
any interest payment date other than the maturity date 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 that interest
payment date. Wire transfer instructions received by the trustee shall remain in
effect until revoked by the holder.
As used in this prospectus supplement, "business day" means any day,
other than a Saturday or Sunday, that is neither a legal holiday nor a day on
which banking institutions are authorized or required by law, regulation or
executive order to close in The City of New York or the City of Dallas. However,
with respect to notes on which interest is calculated using the LIBOR rate, that
day is also a London business day. "London business day" means a day on which
dealings in the designated LIBOR currency are transacted in the London interbank
market.
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"Principal financial center" means the capital city of the country to
which the designated LIBOR currency relates (or, in the case of the ECU,
Luxembourg), except that with respect to United States dollars, Australian
dollars, Canadian dollars, Deutsche marks, Dutch guilders, Portuguese escudos,
South African rand and Swiss francs, the "principal financial center" shall be
The City of New York, Sydney, Toronto, Frankfurt, Amsterdam, London,
Johannesburg and Zurich, respectively.
Book-entry notes may be transferred or exchanged only through the
depositary. See "--Book-Entry Notes." Holders of certificated notes can register
the transfer or exchange of those notes at the office or agency maintained by us
for that purpose in the Borough of Manhattan, The City of New York, currently
the corporate trust office of the trustee located at Chase Global Trust, 450 W.
33rd Street, 15th Floor, New York, New York 10001. No service charge will be
made by us or the trustee for the registration of transfer or exchange of the
notes, but we may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with that registration.
REDEMPTION OR REPURCHASES
If we will have the right to redeem the notes, those provisions will be
set forth in the pricing or another supplement. If so specified, we may redeem
the notes on any date on and after the first date specified in the applicable
pricing or another supplement in whole or from time to time in part. If the
supplement does not provide for those terms, then the notes will not be
redeemable. For a discussion of the redemption of discount notes, see
"--Discount Notes."
If you will have the right to cause us to repurchase the notes, those
provisions will be set forth in a pricing or another supplement. If so
specified, you may cause us to repurchase the notes on any date on and after the
first date specified in the applicable pricing or other supplement in whole or
from time to time in part. If you exercise the repayment option, you may not
revoke the exercise. If the supplement does not provide for those terms, then
you will not be able to cause us to repurchase the notes. For a discussion of
the repayment of discount notes, see "--Discount Notes."
Only the depositary may exercise the repayment option in respect of
global securities representing book-entry notes. Accordingly, beneficial owners
of global securities that desire to have all or any portion of the book-entry
notes represented by those global securities repaid must instruct the
participant through which they own their interest to direct the depositary to
exercise the repayment option on their behalf. In order to ensure that the
global security and election form are received by the trustee on a particular
day, the beneficial owner must instruct the participant before the participant's
deadline for accepting instructions for that day. Different firms may have
different deadlines for accepting instructions from their customers.
Accordingly, beneficial owners should consult the participants through which
they own their interest. All instructions given to participants from beneficial
owners of global securities relating to the option to elect repayment will be
irrevocable. In addition, at the time the instructions are given, each
beneficial owner will cause the participant through which it owns its interest
to transfer such beneficial owner's interest in the global security or
securities representing the related book-entry notes, on the depositary's
records, to the trustee. See "--Book-Entry Notes."
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We may at any time purchase notes at any price or prices in the open
market. Notes that we purchase may, in our discretion, be held, resold or
surrendered to the trustee for cancellation.
CERTAIN COVENANTS
The following covenants apply only to the senior notes.
Limitation on Liens. We will not and will not permit any of our
subsidiaries, other than Centex Financial Services, Inc. and its subsidiaries,
to issue, assume or guarantee any indebtedness for borrowed money if that
borrowed money is secured by a mortgage, pledge, security interest, lien or
other encumbrance (a "lien") on or with respect to any of our properties or
assets or the assets or properties of our subsidiaries or on any shares of
capital stock or other equity interests of any subsidiary that owns property or
assets, other than Centex Financial Services, Inc. and its subsidiaries,
whether, in each case, owned at the date of the senior indenture or thereafter
acquired, unless:
(a) we make effective a provision under which the senior notes of
that series are secured equally and ratably with any and all
borrowed money that we secure, or
(b) the aggregate amount of all of our and our subsidiaries'
secured borrowings, together with all attributable debt (as
defined in the senior indenture) in respect of sale and
lease-back transactions existing at that time, with the
exception of transactions that are not subject to the
limitation described in "Limitation on Sale and Lease-Back
Transactions" below, would not exceed 20% of our and our
subsidiaries consolidated net tangible assets (as defined in
the senior indenture), as shown on the audited consolidated
balance sheet contained in the latest annual report to our
stockholders.
The limitation described above will not apply to:
(a) any lien existing on our properties or assets or shares of
capital stock or other equity interests at the date of the
senior indenture,
(b) any lien created by a subsidiary in our favor or in favor of
one of our wholly-owned subsidiaries,
(c) any lien existing on any asset of any corporation or other
entity, or on any accession or improvement to that asset or
any proceeds from that asset or improvement, at the time that
corporation or other entity becomes a subsidiary or at the
time we or one of our subsidiaries merges or is consolidated
with or into us or one of our subsidiaries,
(d) any lien on any asset existing at the time that asset is
acquired, or on any accession or improvement to that asset or
any proceeds from that asset or improvement,
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(e) any lien on any asset, or on any accession or improvement to
that asset or any proceeds from that asset or improvement,
securing indebtedness we incur or assume for the purpose of
financing all or any part of the cost of acquiring or
improving that asset, if that lien attaches to that asset
concurrently with or within 180 days after the acquisition or
improvement of that asset,
(f) any lien incurred in connection with pollution control,
industrial revenue or any similar financing,
(g) any refinancing, extension, renewal or replacement of any of
the liens described above if the principal amount of the
indebtedness secured is not increased and is not secured by
any additional assets, or
(h) any lien imposed by law.
Limitation on Sale and Lease-Back Transactions. Neither we nor any of
our subsidiaries may enter into any arrangement with any person, other than with
ourselves or any of our subsidiaries, under which we or any of our subsidiaries
lease any of our properties or assets, except for temporary leases for a term of
not more than three years and except for sales and leases of model homes, if
that property has been or is to be sold or transferred by us or any of our
subsidiaries to that person (referred to in this prospectus supplement as a
"sale and lease-back transaction").
The limitation described above does not apply to any sale and
lease-back transaction if:
(a) our net proceeds or the net proceeds of our subsidiaries from
the sale or transfer are equal to or exceed the fair value, as
determined by our Board of Directors, Chairman of the Board,
Vice Chairman, President or principal financial officer, of
the property so leased,
(b) we or any of our subsidiaries would be entitled to incur
indebtedness secured by a lien on the property to be leased as
described in "Limitation on Liens" above,
(c) we, within 180 days of the effective date of any sale and
lease-back transaction, apply an amount equal to the fair
value of the property so leased to the retirement of our
"funded indebtedness" (as defined in our senior indenture),
(d) the sale and lease-back transaction relates to a sale which
occurs within 180 days from the date of acquisition of that
property by us or any of our subsidiaries or the date of the
completion of construction or commencement of full operations
on that property, whichever is later, or
(e) the transaction was consummated prior to the date of the
senior indenture.
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LEGAL DEFEASANCE
We will be discharged from our obligations on the notes of any series
at any time if:
(a) we deposit with the trustee sufficient cash or government
securities to pay the principal, interest, any premium and any
other sums due to the stated maturity date or a redemption
date of the note of the series, and
(b) we deliver to the trustee an opinion of counsel stating that
the federal income tax obligations of the holders of the notes
of that series will not change as a result of our performing
the action described above.
If this happens, the holders of the notes of the series will not be
entitled to the benefits of the indenture except for the registration of
transfer and exchange of notes and the replacement of lost, stolen or mutilated
notes.
COVENANT DEFEASANCE
We will be discharged from our obligations under any restrictive
covenant applicable to the notes of a particular series if we perform both
actions described above under the heading "Legal Defeasance." However, if we
cause an event of default apart from breaching a restrictive covenant, there may
not be sufficient money or government obligations on deposit with the trustee to
pay all amounts due on the notes of that series. In that instance, we would
remain liable for these amounts.
INTEREST
General
Each note will bear interest from the date it is issued at the rate per
year, in the case of a fixed rate note, or according to the interest rate
formula set forth in the applicable pricing supplement, in the case of a
floating rate note, until the principal is paid or the note is redeemed or
repurchased. Interest is either fixed or floating, or a combination of the two.
Floating rate notes may be:
o regular floating rate notes;
o inverse floating rate notes; or
o floating rate/fixed rate notes.
Regular floating rate notes are described below. If the notes will be either of
the other two types, we will describe those attributes in a pricing supplement.
Payment of interest on the notes will include interest accrued from the
date of issue to but excluding the maturity, repurchase or redemption date.
Interest is generally payable to the person in whose name the note is registered
at the close of business on the record date before the interest
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payment date. Interest payable at maturity, redemption or repurchase will be
payable to the person to whom the principal is payable.
Interest on the notes is generally payable on each interest payment
date and on the date the note matures. The first payment of interest on any note
originally issued between a record date and the related interest payment date
will be made on the interest payment date after the next record date to the
person in whose name the note is registered on the next record date. The record
dates for fixed rate notes will be February 15, for interest paid on March 1,
and August 15, for interest paid on September 1.
The record date for floating rate notes will be 15 calendar days prior
to each day interest is paid, whether or not that day is a business day.
Fixed Rate Notes
Interest on fixed rate notes will be designated in the pricing
supplement. We will pay interest on March 1 and September 1 of each year and
when the note matures or we redeem or repurchase the note. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
If any interest payment date or the maturity date falls on a day that
is not a business day, we will pay the interest you are owed on the next
business day and no additional interest will be paid for that delay.
Floating Rate Notes
Each floating rate note will have an interest rate formula, which may
be based on the:
o CD rate
o CMT rate
o Commercial Paper rate
o Eleventh District Cost of Funds rate
o Federal Funds rate
o LIBOR
o Prime rate
o Treasury rate
o Another rate noted in a pricing supplement
o Any combination of rates if noted in a pricing supplement
The pricing supplement will specify any other terms of each floating rate note
being delivered.
CALCULATION DATE. Floating interest rates will be calculated not later
than the calculation date by the calculation agent. The calculation date for any
interest determination date, described below, will be the earlier of:
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(a) 10 days after that interest determination date or the next
business day if that tenth day is not a business day; or
(b) the business day before the interest payment date or maturity,
as applicable.
TRUSTEE AND CALCULATION AGENT. Chase Bank of Texas, National
Association will be the trustee and calculation agent. The calculation agent
will provide the current, and when known the next, interest rate effective for
that period. Interest will be calculated on the earlier of:
(a) the tenth calendar day after the interest determination date
or, if that day is not a business day, the next business day;
or
(b) the business day immediately preceding the interest payment
date or the maturity date.
INITIAL INTEREST RATE. The initial interest rate or interest rate
formula on each note until the first interest reset date, described below, will
be indicated in the pricing supplement. Thereafter, the interest rate will be
the rate determined as of the next interest determination date. Each time a new
interest rate is determined, it will become effective on the next interest reset
date.
DATE OF INTEREST RATE CHANGES (THE INTEREST RESET DATE). The interest
rate on each floating rate note may be reset daily, weekly, monthly, quarterly,
semi-annually, or annually. The interest reset date will be stated in the
pricing supplement.
If any interest reset date is not a business day, then the interest
reset date will be postponed to the next business day. For LIBOR notes, however,
if the next business day is in the next calendar month, the interest reset date
will be the immediately preceding business day.
WHEN INTEREST IS DETERMINED (THE INTEREST DETERMINATION DATE). The
interest determination date for CMT, Commercial Paper, Federal Funds and Prime
rate notes is the second business day before the interest reset date.
The interest determination date for LIBOR notes is the second London
business day before the interest reset date.
The interest determination date for Treasury rate notes will be the day
of the week in which the interest reset date falls on which treasury bills would
normally be auctioned. Treasury bills are usually sold at auction on Monday of
each week, unless that day is a legal holiday, in which case the auction is
usually held on Tuesday. The auction, however, may be held on the preceding
Friday. If so, that Friday will be the interest determination date for the
interest reset date occurring in the next week. If an auction date falls on any
interest reset date then the interest reset date will instead be the first
business day following the auction date.
The interest determination date for Eleventh District rate notes is the
last working day of the month just before the interest reset date in which the
Federal Home Loan Bank of San
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Francisco publishes the relevant index noted below under "Interest Rate Formulas
- -- Eleventh District Cost of Funds Rate."
A floating rate note may also have either or both a maximum or minimum
interest rate that may accrue during any period in which interest is earned. The
interest rate on floating rate notes will never be higher than the maximum rate
permitted by Texas law, as the same may be modified by United States law of
general application.
WHEN INTEREST IS PAID (THE INTEREST PAYMENT DATE). We will pay interest
on the dates stated in the pricing supplement. If interest is payable on a day
that is not a business day, payment will be postponed to the next business day
and will include interest through that date. For LIBOR notes, however, if the
next business day is in the next calendar month, interest will be paid on the
preceding business day. If the maturity, repayment or redemption date is not a
business day, interest will be paid on the next business day for all types of
notes, and no interest will accrue after the maturity, repayment or redemption
date.
ROUNDING. 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) being rounded to 9.87655% (or
.0987655)). All amounts used in or resulting from that calculation will be
rounded, in the case of United States dollars, to the nearest cent or, in the
case of a foreign or composite currency, to the nearest unit (with one-half cent
or unit being rounded upwards).
DETERMINING THE AMOUNT OF INTEREST. The interest payable will be the
amount of interest accrued from and including the date of issue or the most
recent date on which interest has been paid, to, but excluding, the interest
payment date or the date the note matures, as applicable. If the interest
payment date is also a day that principal is due, the interest payable will
include interest accrued to, but will exclude, the date of maturity, redemption
or repurchase.
The accrued interest for any period is calculated by multiplying the
principal amount of the note by an accrued interest factor. The accrued interest
factor is computed by adding the interest factors calculated for each day in the
period to the date for which accrued interest is being calculated. The interest
factor, expressed as a decimal rounded upwards if necessary, as described below,
is computed by dividing the interest rate, expressed as a decimal rounded
upwards if necessary, applicable to that date by 360, unless the notes are
Treasury rate notes or CMT rate notes, in which case it will be divided by the
actual number of days in the year.
Interest Rate Formulas
CD RATE. Each CD rate note will bear interest at the rate, calculated
with reference to the CD rate and the spread and/or spread multiplier, if any,
specified in the note and pricing supplement. The CD rate means for the interest
determination date:
o the rate for negotiable United States dollar certificates of
deposit having the index maturity specified in the pricing
supplement as published in H.15(519) under the heading "CDs
(secondary market)",
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o if the CD rate is not published by 3:00 P.M., New York City
time, on the date on which interest is to be calculated, the
rate for negotiable United States dollar certificates of
deposit of the index maturity specified in the pricing
supplement as published in H.15 Daily Update, or
o any other recognized electronic source used for the purpose of
displaying the rate, under the caption "CDs (secondary
market)."
If the rate cannot be set as provided above, then the CD rate will be
calculated by the calculation agent and will be the average of the secondary
market offered rates as of 10:00 A.M., New York City time, of three leading
nonbank dealers in negotiable United States dollar certificates of deposit in
The City of New York selected by the calculation agent for negotiable United
States dollar certificates of deposit of major United States money center banks
for negotiable certificates of deposit with a remaining maturity closest to the
index maturity specified in the pricing supplement in an amount that is
representative for a single transaction in that market at that time. However, if
the dealers selected by the calculation agent are not quoted as provided above,
the CD rate will be the CD rate in effect on the interest determination date.
"H.15(519)" means the weekly statistical release or any successor
publication published by the Board of Governors of the Federal Reserve System.
"H.15 Daily Update" means the daily update of H.15(519), available
through the world-wide-web site of the Board of Governors of the Federal
Reserve System at http://www.bog.frb.fed.us/releases/h15/update, or any
successor site or publication.
CMT RATE. Each CMT rate note will bear interest at the rate, calculated
with reference to the CMT rate and the spread and/or spread multiplier, if any,
specified in the note and pricing supplement. The CMT rate means, for an
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:
o if the designated CMT telerate page is 7051, the rate on that
interest determination date, and
o if the designated CMT telerate page is 7052, the weekly or
monthly average, as specified in the pricing supplement, for
the week or the month ended just before the week or the month
containing the interest determination date.
If the rate cannot be set as described above, the calculation agent
will use the following methods:
If that rate is no longer displayed on the relevant page, or if it is
not displayed by 3:00 P.M. on the related calculation date, then the rate for
that interest determination date will be the treasury constant maturity rate for
the index maturity as published in the relevant H.15(519).
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If that rate is no longer published in H.15(519), or is not published
by 3:00 P.M. on the calculation date, then the rate for that interest
determination date will be the treasury constant maturity rate (or other United
States Treasury rate) for the index maturity for that interest determination
date then published by either the Federal Reserve Board or the United States
Department of the Treasury that the calculation agent determines is comparable
to the rate formerly displayed on the designated CMT telerate page and published
in the relevant H.15(519).
If that information is not provided by 3:00 P.M. on the related
calculation date, then the CMT rate for that interest determination date will be
calculated as a yield to maturity, based on the average of the secondary market
offered rates as of approximately 3:30 P.M. on that interest determination date
reported, according to their written records, by three leading primary United
States government securities dealers (each, a "reference dealer") in New York
selected by the calculation agent. They will be selected from five reference
dealers.
The calculation agent will eliminate the highest and lowest quotations
(or, in the event of equality, one of the highest and/or lowest, as applicable)
for the most recently issued direct noncallable fixed rate obligations of the
United States ("treasury note") with an original maturity approximating the
index maturity and a remaining term to maturity of not less than the index
maturity minus one year.
If the calculation agent cannot obtain three qualified treasury note
quotations, the CMT rate for that interest determination date will be calculated
as a yield to maturity based on the average of the secondary market offer side
prices as of approximately 3:30 P.M. on that interest determination date of
three reference dealers in New York selected by the calculation agent using the
same method described above for treasury notes with an original maturity of the
number of years that is the next highest to the index maturity with a remaining
term to maturity closest to that index maturity and in an amount of at least
$100 million.
If three or four, and not five, of the reference dealers are quoting as
described above, the CMT rate will be based on the average of the offered rates
obtained and neither the highest nor the lowest of those quotes will be
eliminated.
If fewer than three reference dealers are quoting as mentioned above,
the rate of interest in effect for the period will be the same as that in effect
for the prior interest reset period.
Finally, if two treasury notes with an original maturity as described
in the last sentence have remaining terms to maturity equally close to the index
maturity, the quotes for the treasury note with the shorter remaining term to
maturity will be used.
"Designated CMT telerate page" means the display on Bridge Telerate,
Inc., or any successor service, on the page specified in the pricing supplement
for the purpose of displaying Treasury Constant Maturities as reported in
H.15(519) or, if no page is specified in the pricing supplement, page 7052.
"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 pricing supplement, by
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which the CMT rate will be calculated or, if no maturity is specified in the
pricing supplement, 2 years.
COMMERCIAL PAPER RATE. Each Commercial Paper rate note will bear
interest at the rate, calculated with reference to the Commercial Paper rate and
the spread and/or spread multiplier, if any, specified in the note and pricing
supplement.
"Commercial Paper rate" means, for an interest determination date, the
money market yield, calculated as described below, of the rate on that date for
commercial paper having the index maturity as published in H.15(519) under the
heading "Commercial Paper -- Non- financial."
If the rate cannot be set as described above, the calculation agent
will use the following methods:
(a) If that rate is not published in H.15(519) by 3:00 P.M. on the
calculation date, then the rate will be the money market yield of the rate on
that interest determination date for commercial paper having the index maturity
as published in H.15 Daily Update under the heading "Commercial Paper --
Non-financial" or another recognized electronic source. Index maturities of one
month will equal a maturity of 30 days and of three months will equal a maturity
of 90 days.
(b) If the rate is not published in H.15 Daily Update or any other
recognized electronic source by 3:00 P.M. on the calculation date, the
Commercial Paper rate for that interest determination date will be the money
market yield of the average of the offered rates, as of 11:00 A.M., of three
leading dealers of commercial paper in New York City selected by the calculation
agent. The offered rates will be for commercial paper having the index maturity
placed for an industrial issuer whose bond rating is "Aa," or the equivalent,
from a nationally recognized rating agency.
(c) Finally, if fewer than three dealers are quoting as mentioned, the
rate of interest in effect for the applicable period will be the same as that
for the prior interest reset period.
ELEVENTH DISTRICT COST OF FUNDS RATE. Eleventh District rate notes will
bear interest at the rates, calculated with reference to the Eleventh District
rate and the spread and/or spread multiplier, if any, specified in the note and
pricing supplement.
The Eleventh District rate means for an interest determination date the
rate equal to the monthly weighted average cost of funds for the calendar month
before that date set forth under the caption "11th District" of Telerate Page
7058 as of 11:00 A.M. San Francisco time on the interest determination date.
If the rate cannot be set as described above, the calculation agent
will use the following methods:
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(a) If the rate does not appear on Telerate Page 7058 on the
interest determination date, the rate 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 by the Eleventh Federal Home Loan Bank
District of San Francisco as the cost of funds for the
calendar month before the date of that announcement.
(b) If the Eleventh Federal Home Loan Bank District of San
Francisco fails to announce that rate as noted above, the
Eleventh District rate will be that rate in effect for the
prior period.
FEDERAL FUNDS RATE. Each Federal Funds rate note will bear interest at
the rate, calculated with reference to the Federal Funds rate and the spread
and/or spread multiplier, if any, specified in the note and pricing supplement.
"Federal Funds rate" means for an interest determination date, the rate
on that date for United States dollar federal funds as published in H.15(519)
under the heading "Federal Funds (Effective)", as that rate is displayed on
Bridge Telerate, Inc., or any successor service, on page 120 ("Telerate Page
120"). If the rate cannot be set as described above, the calculation agent will
use the following methods:
(a) If that rate is not published in H.15(519) prior to 3:00 P.M. on
the calculation date, then the Federal Funds rate will be the rate on the
interest determination date as published in H.15 Daily Update under the heading
"Federal Funds/Effective Rate" or another recognized electronic source.
(b) If that rate is not published in H.15 Daily Update or any other
recognized electronic source by 3:00 P.M. on the calculation date, the Federal
Funds rate for the interest determination date will be the average of the rates,
as of 9:00 A.M. on that date, for the last transaction in overnight federal
funds arranged by three leading brokers of federal funds transactions in New
York selected by the calculation agent.
(c) Finally, if fewer than three brokers are quoting as mentioned
above, the rate of interest will be the same as that in effect for the prior
interest reset period.
LIBOR. Each LIBOR note will bear interest at the rate, calculated with
reference to LIBOR and the spread and/or spread multiplier, if any, specified in
the note and pricing supplement.
LIBOR will be determined by the calculation agent as follows:
(a) For an interest determination date, LIBOR will be determined as
specified in the pricing supplement by either:
(1) the average of the offered rates for deposits in U.S.
dollars having the index maturity beginning on the second London
business day immediately after that date,
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that appear on the Reuters Screen LIBOR Page as of 11:00 A.M., London
time, on that date, if at least two offered rates appear on the Reuters
Screen LIBOR Page; or
(2) the rate for deposits in U.S. dollars having the index
maturity beginning on the second London business day immediately after
that date, that appears on the Telerate Page 3750 as of 11:00 A.M.,
London time, on that date.
If the pricing supplement does not specify either the Reuters Screen
LIBOR Page or Telerate Page 3750, LIBOR will be determined as if Telerate Page
3750 had been specified.
In the case where (1) above applies, if fewer than two offered rates
appear on the Reuters Screen LIBOR Page, or, in the case where (2) above
applies, if no rate appears on the Telerate Page 3750, LIBOR for that date will
be determined as follows:
(b) LIBOR will be determined based on the rates at approximately 11:00
A.M., London time, on that interest determination date at which deposits in U.S.
dollars having the index maturity and in a principal amount that is
representative for a single transaction in that market at the time (a
"representative amount") are offered to prime banks in the London interbank
market by four major banks in the London interbank market selected by the
calculation agent. The offered rates must begin on the second London business
day immediately after that interest determination date.
The calculation agent will request the principal London office of each
of those banks to provide a quotation of its rate. If at least two quotations
are provided, LIBOR for that date will be the average of those quotations.
(c) If fewer than two quotations are provided, LIBOR for that date will
be the average of the rates quoted at approximately 11:00 A.M., New York City
time, on that date by three major banks in New York selected by the calculation
agent. The rates will be for loans in a representative amount in U.S. dollars to
leading European banks having the index maturity beginning on the second London
business day after that date.
(d) Finally, if the three banks noted in (c) are not quoting as
mentioned, the rate of interest will be the same as that in effect for the prior
interest reset period.
PRIME RATE. Each Prime rate note will bear interest at the rate,
calculated with reference to the Prime rate and the spread and/or spread
multiplier, if any, specified in the note and in the pricing supplement.
"Prime rate" means, with respect to an interest determination date, the
rate set forth on that date in H.15(519) under the heading "Bank Prime Loan." If
that rate is not published by 3:00 P.M., New York City time, the rate shall be
the rate on the interest determination date as published in H.15 Daily Update or
any other recognized electronic source used for the purpose of displaying that
rate.
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The following procedures will occur if the rate cannot be set as
described above:
(a) If the rate is not published in H.15(519) prior to 3:00 P.M. on the
calculation date, then the Prime rate will be the average of the rates of
interest publicly announced by each bank that appears on the Reuters Screen
USPRIME1 Page as its prime rate or base lending rate in effect for that interest
determination date.
(b) If fewer than four, but more than one, rates appear on the Reuters
Screen USPRIME1 Page, the Prime rate will be the average 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 the interest determination date by
four major money center banks in New York selected by the calculation agent.
(c) If fewer than two rates appear on that Reuters screen, the Prime
rate will be determined on the basis of the rates furnished in New York by three
substitute banks or trust companies selected by the calculation agent that are
organized and doing business under the laws of the United States, or any state
thereof, having total equity capital of at least $500 million and being subject
to supervision or examination by a federal or state authority.
(d) Finally, if the banks and substitutes are not quoting as mentioned
above, the rate of interest will be the same as that in effect for the prior
interest reset period.
"Reuters Screen USPRIME1 Page" means the display on the Reuter Monitor
Money Rates Service, or any successor service, on the "USPRIME1" page, or any
other page that may replace the USPRIME1 page on that service, for the purpose
of displaying prime rates or base lending rates of major United States banks.
TREASURY RATE. Each Treasury rate note will bear interest at the rate,
calculated with reference to the Treasury rate and the spread and/or spread
multiplier, if any, specified in the note and in the pricing supplement.
"Treasury rate" means for an interest determination date, the rate from
the auction held on the interest determination date of direct obligations of the
United States ("treasury bills") having the index maturity specified in the
pricing supplement under the caption "AVGE INVEST YIELD" on the display on
Bridge Telerate, Inc., or any successor service, on page 56 ("Telerate Page 56")
or page 57 ("Telerate Page 57") or, if not so published by 3:00 P.M., New York
City time, on the related calculation date, the auction average rate of the
treasury bills, as otherwise announced by the United States Department of the
Treasury.
If the Treasury rate cannot be determined as provided above, the
Treasury rate will be the rate on the interest determination date of treasury
bills having the index maturity specified in the pricing supplement as published
in H.15(519) under the caption "U.S. Government Securities/Treasury
Bills/Secondary Market" or, if not yet published by 3:00 P.M., New York City
time, on the related calculation date, the rate on the interest determination
date of the treasury bills as published in H.15 Daily Update, or any other
recognized electronic source used for the purpose
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of displaying the Treasury rate, under the caption "U.S. Government
Securities/Treasury Bills/Secondary Market."
If the Treasury rate is not published as provided above, then the
Treasury rate will be calculated by the calculation agent and will be a yield to
maturity of the secondary market bid rates, as of approximately 3:30 P.M., New
York City time, on interest determination date, of three leading primary United
States government securities dealers selected by the calculation agent, for the
issue of treasury bills with a remaining maturity closest to the index maturity
specified in the pricing supplement. However, if fewer than three dealers are
quoting as mentioned, the rate of interest will be the same as that in effect
for the prior interest reset period determined as of that interest determination
date.
DISCOUNT NOTES
We may from time to time offer original issue discount notes. The
pricing supplement applicable to the original issue discount notes may provide
that holders of those notes will not receive periodic payments of interest. For
purposes of determining whether holders of the requisite principal amount of
notes outstanding under the indentures have made a demand or given a notice or
waiver or taken any other action, the outstanding principal amount of the
original issue discount notes shall be deemed to be the amount of the principal
that would be due and payable upon declaration of acceleration of the stated
maturity of those notes as of the date of the determination. See "--General."
"Original issue discount note" means:
o a note that has a "stated redemption price at maturity" that
exceeds its "issue price," each as defined for U.S. federal
income tax purposes, by at least 0.25% of its stated
redemption price at maturity multiplied by the number of
complete years from the original issue date to the stated
maturity for the note or, in the case of a note that provides
for payment of any amount other than the qualified stated
interest prior to maturity, the weighted average maturity of
the note; and
o any other note designated by us as issued with original issue
discount for U.S. federal income tax purposes.
INDEXED NOTES
We may from time to time offer notes with the principal amount and/or
interest to be determined with reference to certain indices, including the price
or prices of specified commodities or stocks, or the exchange rate of one or
more designated currencies relative to an indexed currency or to other items. In
some cases, holders of these indexed notes may receive a principal payment on
the maturity date that is greater than or less than the principal amount of the
indexed notes depending upon the relative value on the maturity date of the
specified indexed item. We will provide you with information in a pricing
supplement as to the method for determining the amount of principal, premium, if
any, and/or interest, if any, payable on the
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indexed notes, any historical information relating to the specified indexed item
and any material tax considerations associated with an investment in the indexed
notes. See also "Risk Factors."
AMORTIZING NOTES
We may offer notes with the principal and interest payable in
installments over the term of notes. Interest on each of these amortizing notes
will be calculated on the basis of a 360-day year of twelve 30-day months.
Payments with respect to amortizing notes will be applied first to interest and
then to principal. We will provide you with a table that sets forth repayment
information relating to each amortizing note in the applicable pricing
supplement.
BOOK-ENTRY NOTES
We have established a depositary arrangement with The Depository Trust
Company for the book-entry notes. Any additional or differing terms of the
depositary arrangement for the book-entry notes will be described in the
applicable pricing supplement.
When issued, all book-entry notes of like tenor and terms up to
$200,000,000 aggregate principal amount 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 its nominee to a successor of
the depositary or a nominee of that 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 by the book-entry notes for all
purposes under the indentures. Except as provided below, 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 of certificate notes for any purpose under the
indentures, 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 that beneficial owner is not a
participant, on the procedures of the participant through which that beneficial
owner owns its interest in order to exercise any rights of a holder under the
global security or the indentures. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of securities in
certificated form. These limits and laws may impair the ability to transfer
beneficial interests in a global security representing book-entry notes.
Each global security representing book-entry notes will be exchangeable
for certificated notes of like tenor and terms and of differing authorized
denominations in a like aggregate principal amount, only if:
o the depositary notifies us that it is unwilling or unable to
continue as depositary for the global securities or we become
aware that the depositary has ceased to be a
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clearing agency registered under the Exchange Act and, in any
case, we have not appointed a successor to the depositary
within 60 calendar days thereafter;
o we determine, in our sole discretion, that the global
securities will be exchangeable for certificated notes; or
o an event of default shall have occurred and be continuing with
respect to the notes under the indentures.
If this type of exchange occurs, the certificated notes will be
registered in the names of the beneficial owners of the global security or
securities representing the book-entry notes. The names of the beneficial owners
will 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 that issue, and will be deposited with
the depositary.
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 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 the
participants' accounts, which eliminates the need for physical movement
of securities certificates. Direct participants of the depositary
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. The rules applicable to the depositary and its
participants are on file with the SEC.
Purchases of book-entry notes under the depositary's system
must be made by or through direct participants, which will receive a
credit for those 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 the direct participants and the indirect
participants. Beneficial owners will not
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receive written confirmation from the depositary of their purchase, but
they are expected to receive written confirmations providing details of
the transaction, as well as periodic statements of their holdings, from
the direct participants or the indirect participants through which the
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 the participants acting on
behalf of the beneficial owners. Beneficial owners of a global security
representing book-entry notes will not receive certificated notes
representing their ownership interests therein, except in the event
that use of the book-entry system for the 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 the
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 us 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.
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 us, 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 our responsibility and that of the trustee, disbursement of such
payments to direct participants shall be the responsibility of the
depositary, and disbursement of those payments to the beneficial owners
shall be the responsibility of direct participants and indirect
participants.
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If applicable, redemption notices shall be sent to Cede & Co.
If less than all of the book-entry notes of like tenor and terms are
being redeemed, the depositary's practice is to determine by lot the
amount of the interest of each direct participant in the issue to be
redeemed.
A beneficial owner shall give notice of any option to elect to
have its book-entry notes repaid by us, 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 us and the trustee reasonable notice. Under these
circumstances, in the event that a successor securities depository is
not obtained, certificated notes are required to be printed and
delivered.
We 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.
Management of the depositary is aware that some computer applications,
systems and programs for processing data that are dependent upon calendar dates,
including dates before, on and after January 1, 2000, may encounter "Year 2000
problems." The depositary has informed its participants and other members of the
financial community that it has developed and is implementing a program so that
its computer systems, as they relate to the timely payment of distributions to
securityholders, book-entry deliveries and settlement of trades within the
depositary, continue to function appropriately. This program includes a
technical assessment and a remediation plan, both of which have been completed.
Additionally, the depositary's plan includes a testing phase, which is expected
to be completed within appropriate time frames.
However, the depositary's ability to perform properly its services is
also dependent upon other parties, including but not limited to issuers and
their agents, as well as third party vendors from whom the depositary licenses
software and hardware, and third party vendors on whom the depositary relies for
information or the provision of services, including telecommunication and
electrical utility service providers, among others. The depositary has informed
the financial community that it is contacting, and will continue to contact,
third party vendors from whom it acquires services to:
o impress upon them the importance of these services being Year
2000 compliant; and
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o determine the extent of their efforts for Year 2000
remediation, and, as appropriate, testing, of their services.
In addition, the depositary is in the process of developing
contingency plans as it deems appropriate.
According to the depositary, the foregoing information with respect to
the depositary has been provided to the financial community for informational
purposes only and is not intended to serve as a representation, warranty, or
contract modification of any kind.
The information in this section concerning the depositary and the
depositary's system has been obtained from sources that we believe to be
reliable, but neither we nor any agent takes any responsibility for the accuracy
of the information.
MULTI-CURRENCY AND INDEXED NOTES
If we denominate any note in a currency other than in U.S. dollars,
certain provisions will be set forth in a foreign currency prospectus supplement
(a "multi-currency and indexed note prospectus supplement") and related pricing
supplement, which will specify the currency or currencies, including composite
currencies such as the European Currency Unit, in which the principal, premium,
if any, and interest, if any, with respect to the note are to be paid, along
with any other terms relating to the non-U.S. dollar denomination.
We may also issue the notes with the principal amount payable at
maturity to be determined with reference to the exchange rate of a specified
currency relative to an indexed currency, each as set forth in the
multi-currency and indexed note prospectus supplement and an applicable pricing
supplement. Holders of these notes may receive a principal amount at maturity,
or upon redemption or repayment, if applicable, that is greater than or less
than the face amount of the note depending on the relative value at maturity of
the specified currency compared to the indexed currency. Information as to the
method for determining the principal amount payable at maturity, or upon
redemption or repayment, if applicable, the relative value of the specified
currency compared to the applicable indexed currency and certain additional
risks and tax considerations associated with investment in indexed notes will be
set forth in the multi-currency and indexed note prospectus supplement.
REMARKETED NOTES
If we issue notes with remarketing features, an applicable pricing or
prospectus supplement will describe the terms for the notes including:
o interest rate,
o remarketing provisions,
o our right to redeem notes,
o the holders' right to tender notes, and
o any other provisions.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
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, traders who elect to mark to market, persons holding
notes as a hedge, as a position in a "straddle" or as part of an integrated
transaction 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
o a citizen or resident of the United States;
o a corporation or partnership created or organized in or under
the laws of the United States, any state thereof or the
District of Columbia (other than a partnership that is not
treated as a United States person under any applicable
treasury regulations);
o an estate whose income is subject to United States federal
income tax regardless of its source;
o a trust if a court within the United States is able to
exercise primary supervision over the administration of the
trust and one or more United States persons have the authority
to control all substantial decisions of the trust; or
o 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. Notwithstanding the preceding clause, to
the extent provided in regulations, certain trusts in
existence on August 20, 1996 and treated as United States
persons prior to such date that elect to continue to be so
treated also shall be considered U.S. Holders. 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. Except as provided below, payments of interest on
a note generally will be taxable to a U.S. Holder as ordinary interest income at
the time those payments
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are accrued or are received (in accordance with the U.S. Holder's regular method
of tax accounting).
ORIGINAL ISSUE DISCOUNT NOTES. 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. Original issue discount notes generally will include discount notes
other than discount notes with a fixed maturity of one year or less and,
depending on their maturity dates and payment terms, may include fixed rate
notes, amortizing notes and remarketed notes. The following summary is based
upon final treasury regulations (the "OID Regulations") released by the Internal
Revenue Service on January 27, 1994, as amended on June 11, 1996, under the
original issue discount provisions of 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). Unless issued at a discount, remarketed notes will not be considered
original issue discount notes. For purposes of determining whether remarketed
notes are issued with original issue discount that exceeds the de minimis
amount, although the matter is not free from doubt, we intend to treat
remarketed notes as maturing at the end of the initial interest rate period. The
"issue price" of each note in an issue of notes equals the first price at which
a substantial amount of such notes has been sold to the public for money,
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 that appropriately takes into
account the length of the interval between payments. 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 the 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 an original issue discount note, other than notes
with a fixed maturity of one year or less, 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 an original issue discount note
is the sum of the daily portions of original issue discount with respect to such
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original issue discount note for each day during the taxable year, or portion of
the taxable year, on which the U.S. Holder held the original issue discount
note. The "daily portion" of original issue discount on any original issue
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 original issue 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
o the product of the original issue discount note's adjusted
issue price at the beginning of the accrual period and its
yield to maturity which is to be 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
o the amount of any qualified stated interest payments allocable
to that accrual period.
The "adjusted issue price" of an original issue discount note at the
beginning of any accrual period is the sum of the issue price of the original
issue discount note plus the amount of original issue discount allocable to all
prior accrual periods (disregarding any reduction on account of acquisition
premium, described below) minus the amount of any prior payments on the original
issue discount note that were not qualified stated interest payments. The "yield
to maturity" of an original issue discount note is the interest rate that, when
used in computing the present value of all payments to be made on such note,
produces an amount equal to the issue price of the original issue discount note.
Solely for purposes of calculating the accrual of original issue discount,
remarketed notes will be treated as maturing on the last day of the initial
interest rate period for an amount equal to the reset value and reissued on the
following day for an amount equal to the reset value. 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 an original issue 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 original issue
discount note after the purchase date other than payments of qualified stated
interest, will be considered to have purchased the original issue 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 original issue discount note for any taxable year, or
portion thereof in which the U.S. Holder holds the original issue discount note,
will be reduced (but not below zero) by the portion of the acquisition premium
properly allocable to the period.
VARIABLE NOTES. Under the OID Regulations, floating rate notes and
indexed notes ("variable notes") are subject to special rules whereby they 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 minimum amount and (b) it provides for stated interest,
paid or compounded at least annually, at current values of:
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o one or more qualified floating rates;
o a single fixed rate and one or more qualified floating rates;
o a single objective rate; or
o a single fixed rate and a single objective rate that is a
qualified inverse floating rate.
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 .65 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 .65 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 is subject to one or more restrictions such as a maximum
stated interest rate (i.e., a cap) or a minimum stated interest rate (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 or certain other exceptions are satisfied. An
"objective rate" is a rate that is not itself a qualified floating rate but is
determined using a single fixed formula and that is based on objective financial
or economic information. A rate will not qualify as an objective rate if it is
based on information that is within the control of the issuer (or a related
party) or that is unique to the circumstances of the issuer (or a related
party), such as dividends, profits, or the value of the issuer's stock (although
a rate does not fail to be an objective rate merely because it is based on the
credit quality of the issuer). 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 qualified floating rate. The
OID Regulations also provide that if a variable note provides for stated
interest at a fixed rate for an initial period of one year or less 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 of the
note qualifies as a "variable rate debt instrument" under the OID Regulations
and if the interest on that note is unconditionally payable in cash or property
(other than debt instruments of the issuer) at least annually, then all stated
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interest on the note 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
minimum amount. The amount of qualified stated interest and the amount of
original issue discount, if any, that accrues during an accrual period on such a
variable note is determined under the rules applicable to fixed rate debt
instruments by assuming that the variable rate is a fixed rate equal to:
o 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
o in the case of an objective rate, other than a qualified
inverse floating rates, a fixed rate that reflects the yield
that is reasonably expected for the variable note. The
qualified stated interest allocable to an accrual period is
increased or decreased if the interest actually paid during an
accrual period exceeds or is less than the interest assumed to
be paid during the accrual period pursuant to the foregoing
rules.
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
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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.
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. Final regulations concerning the proper
United States federal income tax treatment of contingent payment debt
instruments (the "CPDI Regulations") generally require a U.S. Holder of such an
instrument to include future contingent and noncontingent interest payments in
income as such interest accrues based upon a projected payment schedule, whether
or not the amount of any payment is fixed or determinable in the taxable year.
If the amount of a contingent interest payment is not equal to the projected
amount, an adjustment to income at the time of the payment must be made to
reflect the difference. Moreover, in general, under the CPDI Regulations, any
gain recognized by a U.S. Holder on the sale, exchange, or retirement of
contingent payment debt instruments that have contingent payments remaining on
their projected payment schedule will be treated as ordinary interest income and
all or a portion of any loss realized could be treated as ordinary loss as
opposed to capital loss (depending upon the circumstances). 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.
SHORT-TERM NOTES
Short-Term notes are notes with a fixed maturity of one year or less.
Short-Term notes will be treated as having been issued with original issued
discount. A U.S. Holder of a Short-Term note that uses the cash method of
accounting generally is not required to accrue original issue discount for
United States federal income tax purposes unless the holder elects to do so for
all Short-Term notes acquired on or after the first day of the first tax year to
which such election applies. U.S. Holders who make such an election, U.S.
Holders who report income for United States federal income tax purposes on an
accrual method and certain other U.S. Holders, including banks and dealers in
securities, are required to include original issue discount in income on
Short-Term notes as it accrues on a straightline basis, unless an election is
made with respect to a particular obligation to accrue the original issue
discount according to a constant yield method based on daily compounding. In the
case of such a taxpayer, original issue discount is determined by including all
payments due on the instrument, including payments of stated interest, in the
stated redemption price at maturity.
In the case of a U.S. Holder who is not required, and does not elect,
to include the original issue discount in income currently, stated interest
generally will be taxable at the time it is received and any gain realized on
the sale, exchange or retirement of the Short-Term note will be ordinary income
to the extent of the original issue discount accrued on a straightline basis
(or, if elected, according to a constant yield method based on daily
compounding) through the date of sale, exchange or retirement. In addition, such
holders will be required to defer deductions for all
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or a portion of any interest paid on indebtedness incurred or continued to
purchase or carry Short-Term notes in an amount not exceeding the sum of the
accrued original issue discount not previously included in income and the amount
of any interest not included in original issue discount that accrues during the
tax year while the taxpayer held the obligation but that is not included in the
taxpayer's income by reason of the taxpayer's method of accounting.
MARKET DISCOUNT. If a U.S. Holder purchases a note, other than an
original issue 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 an original issue 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 minimum amount.
Under the market discount rules, a U.S. Holder will be required to
treat any partial principal payment (or, in the case of an original issue
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:
o the amount of such payment or realized gain; or
o the market discount which has not previously been included in
income and is treated as having accrued on the note at the
time of the 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 a
constant interest rate.
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
market discount. A U.S. Holder may elect to include market discount in income
currently as it accrues, on either a ratable or constant interest rate 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
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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 the 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 stated interest payments, received and amortizable note
premium taken with respect to such note. Such gain or loss generally will be
long-term capital gain or loss if the note is held for more than twelve months.
Non-corporate taxpayers are subject to reduced maximum rates on long-term
capital gains and are generally subject to tax at ordinary income rates on
short-term capital gains. The deductibility of capital losses is subject to
certain limitations. Prospective investors should consult their own tax advisors
concerning these tax law provisions.
Certain notes may be redeemable at our option prior to their stated
maturity (a "call option") and/or may be repayable at the option of the holder
prior to their stated maturity (a "put option"). Notes containing these 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.
Holders of remarketed notes who tender their notes automatically on an
interest rate adjustment date and who repurchase their notes in the remarketing
should consult their own tax advisors regarding the tax consequences of the
tender and the repurchase.
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 note 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.
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.
NON-U.S. HOLDERS
A non-U.S. Holder generally 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
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<PAGE> 37
note, unless such non-U.S. Holder is a direct or indirect 10% or greater
shareholder of Centex, a controlled foreign corporation related to us or a bank
receiving interest described in Section 881(c)(3)(A) of the Internal Revenue
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:
o is signed by the beneficial owner of the note under penalties
of perjury;
o certifies that such owner is not a U.S. Holder; and
o provides the name and address of the beneficial owner.
The statement should be made on an IRS Form W-8 BEN 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 BEN or the substitute form
provided by the beneficial owner to the organization or institution.
A non-U.S. Holder that is not exempt from tax under these rules will be
subject to United States federal income tax withholding at a rate of 30% unless
the interest is effectively connected with the conduct of a United States trade
or business, in which case the interest will be subject to the United States
federal income tax on net income that applies to United States persons
generally. Effectively connected interest received by a corporate non-U.S.
Holder may also, under certain circumstances, be subject to an additional
"branch profits tax" at a 30% rate, or, if applicable, a lower treaty rate. Such
effectively connected interest is not subject to withholding tax if the non-U.S.
Holder delivers to the payor a withholding certificate stating that the income
is effectively connected with a U.S. trade or business.
Final regulations dealing with withholding tax on income paid to
foreign persons and related matters (the "new withholding regulations") and
providing alternative methods for establishing exemptions from withholding on
payments to foreign persons were issued by the Treasury Department on October 6,
1997. The new withholding regulations will generally be effective for payments
made after December 31, 2000 (as recently extended), subject to certain
transition rules. Prospective non-U.S. Holders are strongly urged to consult
their own tax advisors with respect to the new withholding regulations.
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 or in
the case of an individual, such individual is not present in the United States
for 183 days or more. Certain other exceptions may be applicable, and a non-U.S.
Holder should consult its tax advisor in this regard.
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<PAGE> 38
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
Centex Corporation 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.
Non-U.S. Holders should consult applicable income tax treaties, which
may include different rules, subject to compliance with certain requirements to
document entitlement to treaty benefits.
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.
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:
o the broker determines that the seller is a corporation or
other exempt recipient; or
o the seller provides, in the required manner, certain
identifying information and, in the case of a non-U.S. Holder,
certifies that the 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:
o the broker determines that the seller is an exempt recipient;
or
o 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 BEN 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.
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<PAGE> 39
PLAN OF DISTRIBUTION
We will offer the notes on a continuing basis for sale to or through
the following agents:
o Banc One Capital Markets, Inc.
o Banc of America Securities LLC
o Chase Securities Inc.
o Credit Suisse First Boston Corporation
o Morgan Stanley & Co. Incorporated
o Warburg Dillon Read LLC
The agents may purchase the notes, as principal, from us from time to
time for resale to investors and other purchasers at varying prices relating to
prevailing market prices at the time of resale as determined by the agents or,
if so specified in the applicable pricing supplement, for resale at a fixed
offering price. If agreed to by us and a particular agent, that agent may also
utilize its reasonable efforts on an agency basis to solicit offers to purchase
the notes at 100% of the principal amount, unless otherwise specified in a
pricing supplement. We will pay a commission to the agent, ranging from .125% to
.750% of the principal amount of each note, depending upon its stated maturity,
or initial interest rate period, in the case of remarketed notes, sold through
that agent. We will negotiate the commissions to be paid by us to the agents
with respect to notes with stated maturities, or an initial interest rate
period, in the case of remarketed notes, in excess of 30 years that the agents
sell on our behalf.
Unless otherwise stated in the applicable pricing supplement, any note
we sell to an agent as principal will be purchased by that agent at a price
equal to 100% of the principal amount of the note less a percentage of the
principal amount equal to the commission applicable to an agency sale of a note
of identical maturity. The agent may sell notes it purchases from us as
principal to certain dealers less a concession equal to all or any portion of
the discount received in connection with the purchase. The agent may allow, and
the dealers may reallow, a discount to other dealers. After the initial offering
of the notes, the offering price, in the case of the notes to be resold on a
fixed offering price basis, the concession and the reallowance may be changed.
We reserve the right to withdraw, cancel or modify the offer made
hereby without notice and we can reject offers in whole or in part, whether
placed directly with us or through an agent. The agent will have the right, in
its discretion reasonably exercised, to reject in whole or in part any offer to
purchase the notes received by it on an agency basis.
Payment of the purchase price of the notes must be made in immediately
available funds in U.S. dollars in New York on the date of settlement. See
"Description of Notes--General."
After they are issued, there will not be an established trading market
for the notes. The notes will not be listed on any securities exchange. The
agents may from time to time purchase and sell the notes in the secondary
market, but the agents are not obligated to do so, and there can be no assurance
that there will be a secondary market for the notes or that there will be
liquidity in the secondary market if one develops. From time to time, the agents
may make a market in the
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<PAGE> 40
notes, but the agents are not obligated to do so and may discontinue any
market-making activity at any time.
In connection with an offering of the notes purchased by an agent as
principal on a fixed offering price basis, the agent will be permitted to engage
in transactions that stabilize the price of the notes. These transactions may
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of the notes. If the agent creates a short position in the notes,
i.e., if it sells the notes in an aggregate principal amount exceeding that set
forth in the applicable pricing supplement, the agent may reduce that short
position by purchasing the notes in the open market. In general, purchases of
the notes for the purpose of stabilizing or to reducing a short position could
cause the price of the notes to be higher than it might be in the absence of the
purchases.
Neither we nor any agent makes any representation or prediction as to
the direction or magnitude of any effect that the transactions described in the
immediately preceding paragraph may have on the price of our notes. In addition,
neither we nor any agent makes any representation that the agent will engage in
any of the above described transactions or that any of the above described
transactions, once commenced, will not be discontinued without notice.
The agents may be deemed to be an "underwriter" within the meaning of
the Securities Act of 1933. We have 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. We
have also agreed to reimburse the agents for other expenses.
In the ordinary course of its business, the agents and their affiliates
have engaged and may in the future engage in investment and commercial banking
transactions with us and several of our affiliates. Banc One Capital Markets,
Inc. is an affiliate of The First National Bank of Chicago and Bank One, Texas
N.A., Banc of America Securities LLC is an affiliate of Bank of America, N.A.
and Chase Securities Inc. is an affiliate of several of our lenders. Each of
these banking affiliates has several credit facilities in place and may receive
their proportionate share of the proceeds from the sale of the notes should we
use the proceeds to repay these particular credit facilities. If more than 10%
of the net proceeds of any offering are used to repay affiliates of the agents
participating in that offering, then that offering will be made pursuant to Rule
2710(c)(8) of the Conduct Rules of the National Association of Securities
Dealers, Inc. In addition to its lending relationships with us, Chase Bank of
Texas, National Association is the trustee, paying agent and registrar under the
indentures.
From time to time, we may issue and sell other debt securities
described in the accompanying prospectus, and the amount of notes being offered
is subject to reduction as a result of those sales.
LEGAL OPINIONS
Raymond G. Smerge, Esq., our Executive Vice President, Chief Legal
Officer and Secretary, will issue an opinion about the legality of the offered
securities for us. Thompson & Knight L.L.P., Dallas, Texas, our special counsel,
will also issue an opinion about the legality of
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<PAGE> 41
the offered securities and will pass on, among other things, the enforceability
of the indentures. Certain legal matters in connection with the sale of the
notes offered hereby will be passed upon for the agents by Milbank, Tweed,
Hadley & McCloy LLP, New York, New York.
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<PAGE> 42
PROSPECTUS
[CENTEX LOGO]
$250,000,000
DEBT SECURITIES
CENTEX CORPORATION
2728 North Harwood Street
Dallas, Texas 75201
(214) 981-5000
------------------------------
We may offer unsecured general obligations of our company in the form
of either senior or subordinated debt. Senior debt includes both our notes and
debt, and our guarantees of debt incurred by our subsidiaries, all of which are
for money borrowed and not subordinated to any of our other indebtedness.
Subordinated debt is entitled to interest and principal payments after the
senior debt payments.
We will provide the specific terms of these securities in supplements
to this prospectus. You should read this prospectus and the supplements
carefully before you invest.
------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
------------------------------
The date of this prospectus is August 17, 1999.
<PAGE> 43
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with
the SEC utilizing a "shelf" registration process. Under this shelf process, we
may sell any combination of the securities described in this prospectus in one
or more offerings up to a total dollar amount of $250,000,000. This prospectus
provides you with a general description of the securities we may offer. Each
time we sell securities, we will provide a prospectus supplement that will
contain specific information about the terms of that offering. The prospectus
supplement may also add or update information contained in this prospectus.
Together, this prospectus and the related prospectus supplement will set forth
all of the material information regarding any particular offering. However, in
order to get a complete picture of a particular offering, you should read both
this prospectus and any prospectus supplement, together with additional
information, such as the exhibits filed with this registration statement and
described under the heading WHERE YOU CAN FIND MORE INFORMATION.
CENTEX
Through its various subsidiaries, Centex Corporation is one of the
nation's largest home builders and general building contractors. We also provide
retail mortgage lending services through various financial services
subsidiaries. We currently operate in five principal business segments:
o Home Building;
o Investment Real Estate;
o Financial Services;
o Construction Products; and
o Contracting and Construction Services.
HOME BUILDING
The Home Building business has expanded to include both Conventional
Homes and Manufactured Homes.
The Conventional Homes operations currently involve the construction
and sale of single-family homes, town homes and low-rise condominiums and also
include the purchase and development of land.
In March 1997, we entered the Manufactured Homes business when we
acquired approximately 80% of the predecessor of Cavco Industries, LLC.
Manufactured Homes operations include the manufacture of quality residential and
park model homes and their sale through company-owned retail outlets and a
network of independent dealers.
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<PAGE> 44
INVESTMENT REAL ESTATE
Investment Real Estate operations involve the acquisition, development
and sale of land, and the development of industrial, office, retail and other
commercial projects and apartment complexes.
FINANCIAL SERVICES
Through our Financial Services operations, we offer financing of
conventional and manufactured homes, home equity and sub-prime lending and the
sale of title and other insurance coverages. These activities include mortgage
origination and other related services for homes sold by our subsidiaries and by
others.
CONSTRUCTION PRODUCTS
Through our Construction Products operations, we also manufacture
cement, gypsum wallboard and ready-mix concrete for distribution and sale.
CONTRACTING AND CONSTRUCTION SERVICES
Contracting and Construction Services activities involve the
construction of buildings for both private and government interests, including
office, commercial and industrial buildings, hospitals, hotels, museums,
libraries, airport facilities and educational facilities. In April 1994, our
construction products subsidiary, Centex Construction Products, Inc., completed
an initial public offering of 51% of its common stock. Principally as a result
of stock repurchases by Centex Construction Products, our ownership interest in
Centex Construction Products was 61.5% as of June 8, 1999.
Our principal executive office is located at 2728 N. Harwood Street,
Dallas, Texas 75201, and our telephone number is (214) 981-5000.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the SEC's Regional Offices at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511, and at 7 World Trade Center, Suite 1300, New York, New York 10048.
Our SEC filings are also available to the public over the Internet at the SEC's
web site at http://www.sec.gov. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus,
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<PAGE> 45
and information that we file later with the SEC will automatically update and
supersede this information. We incorporate by reference:
o our Joint Annual Report on Form 10-K of Centex Corporation,
3333 Holding Corporation and Centex Development Company, L.P.
for the year ended March 31, 1999;
o our Current Report on Form 8-K dated August 9, 1999;
o our Quarterly Report on Form 10-Q of Centex Corporation; 3333
Holding Corporation and Centex Development Company, L.P. for
the quarter ended June 30, 1999; and
o any future filings made with the SEC (File No. 1-06776) under
Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange
Act of 1934 until we sell all of the securities.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Corporate Secretary
Centex Corporation
2728 North Harwood Street
Dallas, Texas 75201
(214) 981-5000
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of those
documents.
A WARNING ABOUT FORWARD-LOOKING STATEMENTS
Statements contained in this prospectus, including the documents that
are incorporated by reference, that are not historical facts are forward-looking
statements as defined in the Private Securities Litigation Reform Act of 1995.
These forward-looking statements include information about possible or assumed
future results of our operations. Also, when we use any of the words "believes,"
"expects," "anticipates" or similar expressions, we are making forward-looking
statements. Many possible events or factors could affect the future financial
results and performance of our company. This could cause results or performance
to differ materially from those expressed in our forward-looking statements. You
should consider these risks when you purchase securities. These possible events
or factors include the following:
o general economic conditions and interest rates;
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<PAGE> 46
o the cyclical and seasonal nature of our businesses;
o adverse weather;
o changes in property taxes and energy costs;
o changes in federal income tax laws and federal mortgage
financing programs;
o governmental regulation;
o changes in governmental and public policy;
o changes in economic conditions specific to any one or more of
our markets and businesses;
o competition;
o availability of raw materials; and
o unexpected operations difficulties.
USE OF PROCEEDS
Except as otherwise provided in the related prospectus supplement, the
net proceeds from the sale of the offered securities will be used for general
corporate purposes, and substantially all of the proceeds initially will be used
to repay short-term notes payable to banks and commercial paper borrowings.
SUMMARY OF SELECTED FINANCIAL DATA
SELECTED HISTORICAL FINANCIAL DATA
In the table below, we provide you with selected historical
consolidated financial data of Centex Corporation. We prepared this information
using the consolidated financial statements of Centex Corporation for each of
the fiscal years in the five-year period ended March 31, 1999, as well as for
the three-month periods ended June 30, 1999 and 1998. The financial statements
for each of the fiscal years in the five-year period ended March 31, 1999 have
been audited by Arthur Andersen LLP, independent public accountants. The
financial statements for the three-month periods ended June 30, 1999 and 1998
have not been audited.
When you read this selected historical consolidated financial data, you
should also read the historical financial statements and accompanying Notes that
Centex Corporation has included in its joint annual report on Form 10-K for the
year ended March 31, 1999 and its joint quarterly report on Form 10-Q for the
three months ended June 30, 1999. You can obtain these reports by following the
instructions we provide under "Where You Can Find More Information" on page 3.
5
<PAGE> 47
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, FISCAL YEARS ENDED MARCH 31,
-------------------------- -----------------------------------------------------------
1999 1998 1999 1998 1997 1996 1995
----------- ------------ ---------- ----------- ---------- ----------- ----------
(dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues (1)................. $ 1,372,233 $ 1,110,606 $5,154,840 $ 3,975,450 $3,784,991 $ 3,102,987 $3,277,504
Net earnings (2)............. 58,436 48,161 231,962 144,806 106,563 53,365 92,248
Total assets................. 4,471,870 3,854,893 4,334,746 3,416,219 2,678,829 2,336,966 2,049,698
Total long-term debt,
consolidated.............. 335,743 208,431 284,299 237,715 236,769 321,002 222,530
Total debt, consolidated..... 2,043,782 1,736,203 1,910,899 1,390,588 864,287 983,269 798,790
Total debt (with financial
services reflected on the
equity method)............ 769,698 475,877 587,955 311,538 283,769 408,253 427,381
Deferred income tax (asset)
liability................. (34,785) (129,496) (49,107) (147,607) (197,413) 16,620 26,737
Debt as a percentage of
capitalization (3):
Total debt, consolidated.. 58.3% 57.9% 57.6% 53.1% 44.5% 57.1% 53.5%
Total debt (with financial
services reflected on the
equity method)......... 34.6% 27.4% 29.5% 20.3% 20.9% 35.6% 38.1%
Stockholders' equity......... 1,254,181 1,034,460 1,197,639 991,172 835,777 722,836 668,227
Per common share
Earnings per share - Basic
Before Construction
Products' IPO gain. $ 0.98 $ 0.81 $ 3.90 $ 2.45 $ 1.86 $ 0.94 $ 0.93
Construction Products'
IPO gain........... -- -- -- -- -- -- 0.63
----------- ------------ ---------- ----------- ---------- ----------- ----------
$ 0.98 $ 0.81 $ 3.90 $ 2.45 $ 1.86 $ 0.94 $ 1.56
=========== ============ ========== =========== ========== =========== ==========
Earnings per share - Diluted
Before Construction
Products' IPO gain. $ 0.95 $ 0.78 $ 3.75 $ 2.36 $ 1.80 $ 0.91 $ 0.90
Construction Products'
IPO gain........... -- -- -- -- -- -- 0.61
----------- ------------ ---------- ----------- ---------- ----------- ----------
$ 0.98 $ 0.78 $ 3.75 $ 2.36 $ 1.80 $ 0.91 $ 1.51
=========== ============ ========== =========== ========== =========== ==========
Cash Dividends............... $ 0.04 $ 0.04 $ 0.16 $ 0.135 $ 0.10 $ 0.10 $ 0.10
</TABLE>
- ------------------
(1) As a result primarily of repurchases by Centex Construction Products of
its own stock, Centex's ownership interest in Centex Construction Products
increased to 61.5% as of June 30, 1999. Accordingly, beginning with the
quarter ended June 30, 1996, Centex Construction Products' financial
results have been consolidated with those of Centex and are reflected in
Centex's revenues and earnings. If Centex Construction Products' revenues
had been consolidated for the years ended March 31, 1996 and 1995,
Centex's consolidated revenues for those years would have increased by
$222,594 and $194,313, respectively.
(2) Net earnings for the fiscal year ended March 31, 1995 include a
nonrecurring gain of $37.5 million realized in connection with an initial
public offering of 51% of Centex Construction Products' common stock.
(3) Capitalization is composed of total debt, deferred income tax liability,
negative goodwill, minority interest and stockholders' equity.
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<PAGE> 48
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
THREE MONTHS
ENDED JUNE 30, FISCAL YEARS ENDED MARCH 31,
------------------ ------------------------------------------------------
1999 1998 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Total enterprise .................. 4.45x 4.01x 4.31x 4.16x 3.71x 1.82x 2.99x
Centex (excluding financial
services and savings and
loan operations)............. 7.01x 7.51x 7.42x 6.83x 5.22x 1.99x 4.16x
</TABLE>
These computations include Centex Corporation, and except as otherwise
noted, our subsidiaries, and 50% or less owned companies. For these ratios,
fixed charges include:
o Interest on all debt and amortization of debt discount and expense;
o Interest capitalized;
o An interest factor attributable to rentals.
Earnings include the following components:
o Income from continuing operations before adjustment for minority
interests in consolidated subsidiaries or income or loss from
equity investments;
o Fixed charges as defined above, but excluding capitalized interest;
o Amortization of capitalized interest.
The computations that exclude the financial services and savings and loan
operations are included only to provide investors an alternative method of
measuring the ability of our earnings to cover our fixed charges due to the
following:
o The financial services subsidiaries operate in a distinctly
different financial environment that generally requires
significantly less capital to support their higher debt levels
compared to the operations of our other subsidiaries.
o The financial services subsidiaries have structured their financing
programs substantially on a stand-alone basis.
o We have very limited obligations with respect to the indebtedness
of our financial services subsidiaries.
To calculate the ratio of earnings to fixed charges excluding the
financial services and savings and loan operations, the applicable interest
expense was deducted from the fixed charges and the applicable earnings were
deducted from the earnings amount.
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<PAGE> 49
DESCRIPTION OF DEBT SECURITIES
Any debt securities that we offer will be our direct unsecured general
obligations. These debt securities will be either senior debt securities or
subordinated debt securities and will be issued under one or more separate
indentures between us and Chase Bank of Texas, National Association, which is
the successor to Texas Commerce Bank, National Association, as trustee. A debt
security is considered "senior" or "subordinated" depending on how it ranks in
relation to our other debts. Senior debt securities will generally rank equal to
other senior debt securities or unsubordinated debt. Holders of our subordinated
debt securities will only be entitled to payment after we pay our senior debts,
including our senior debt securities.
Any senior debt securities that we offer will be issued under a senior
indenture and subordinated debt securities will be issued under a subordinated
indenture. Unless specifically stated otherwise, all references below to an
article or section refer to that article or section in both indentures.
We have summarized the material provisions of the indentures in this
section, but this is only a summary. The senior indenture and the subordinated
indenture have been filed with the SEC as Exhibit 4.3 and Exhibit 4.5,
respectively, to our registration statement (File No. 333-72893) that contains
this prospectus. You should read the indentures for provisions that may be
important to you. In the summary below, we have included references to section
numbers of the applicable indentures so that you can easily locate these
provisions. You should review the applicable indenture for additional
information before you buy any debt securities. Capitalized terms used in the
following summary have the meanings specified in the indentures unless otherwise
defined below.
GENERAL INFORMATION ABOUT THE DEBT SECURITIES
Because we are a holding company that conducts all of our operations
through our subsidiaries, holders of our debt securities will generally have a
junior position to claims of creditors of our subsidiaries, including trade
creditors, debtholders, secured creditors, taxing authorities, guarantee holders
and any preferred stockholders. All of our operating subsidiaries have ongoing
corporate debt programs used to finance their business activities. As of June
30, 1999, our subsidiaries had approximately $1.3 billion of outstanding debt.
Moreover, our ability to pay principal and interest on our debt securities is,
to a large extent, dependent upon our receiving dividends, interest or other
amounts from our subsidiaries. The indentures under which the debt securities
are to be issued do not contain any limitation on our ability to incur
additional debt or on our subsidiaries' ability to incur additional debt to us
or to unaffiliated third parties. In addition, we borrow funds and lend funds to
our subsidiaries from time to time to manage our working capital needs. Our
indebtedness to our subsidiaries will rank equally in right of payment to our
senior debt securities and senior in right of payment to our subordinated debt
securities.
A prospectus supplement and a supplemental indenture relating to any
series of debt securities being offered will include specific terms relating to
the offering. These terms will include some or all of the following:
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<PAGE> 50
o The title, type and amount of the debt securities;
o The total principal amount and priority of the debt securities;
o The percentage of the principal amount at which the debt securities will
be issued and any payments due if the maturity of the debt securities is
accelerated;
o The dates on which the principal of the debt securities will be payable;
o The interest rate which the debt securities will bear and the interest
payment dates for the debt securities;
o Any optional redemption periods;
o Any sinking fund or other provisions that would obligate us to repurchase
or otherwise redeem the debt securities;
o Any provisions granting special rights to holders when a specified event
occurs;
o Any changes to or additional events of default or covenants;
o Any special tax implications of the debt securities, including provisions
for original issue discount securities, if offered; and
o Any other terms of the debt securities.
None of the indentures limits the amount of debt securities that may be
issued. Each indenture allows debt securities to be issued up to the principal
amount that may be authorized by us and may be in any currency or currency unit
designated by us.
Debt securities of a series may be issued in registered, bearer, coupon
or global form.
COVENANTS INCLUDED IN THE INDENTURES
Under the indentures, we will:
o pay the principal, interest and any premium on the debt securities when
due;
o maintain a place of payment;
o deliver a report to the trustee at the end of each fiscal year reviewing
our obligations under the indentures; and
o deposit sufficient funds with any paying agent on or before the due date
for any principal, interest or any premium.
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PAYMENT OF PRINCIPAL, INTEREST AND PREMIUM; TRANSFER OF SECURITIES
Unless we designate otherwise, we will pay principal, interest and any
premium on fully registered securities in Dallas, Texas. We will make payments
by check mailed to the persons in whose names the debt securities are registered
on days specified in the indentures or any prospectus supplement. We will make
debt securities payments in other forms at a place we designate and specify in a
prospectus supplement. You may transfer or exchange fully registered securities
at the corporate trust office of the trustee or at any other office or agency
maintained by us for such purposes, without having to pay any service charge
except for any tax or governmental charge. (Sections 2.04, 2.06 and 5.02.)
SPECIFIC CHARACTERISTICS OF OUR DEBT SECURITIES
Senior Debt Securities
Generally speaking, our senior debt securities will rank equally with all
of our other senior debt and unsubordinated debt. All series of senior debt
securities issued under the senior indenture will rank equally in right of
payment with each other and with our other senior debt. Any additional senior
debt securities would rank equally in right of payment with the senior debt
securities offered and sold under this prospectus. Further, the senior indenture
does not prohibit us from issuing additional debt securities that may rank
equally in right of payment to the senior debt securities.
Any senior debt securities offered pursuant to the senior indenture will
be senior in right of payment to our subordinated debt securities. The following
table sets forth our senior and subordinated indebtedness as of June 30, 1999:
<TABLE>
<CAPTION>
<S> <C>
Senior debt:
6.40% Senior Notes due October 25, 2002.......................................... $ 14,944,000
Floating Rate Notes due April 28, 2000........................................... 49,904,000
Floating Rate Notes due May 19, 2000............................................. 9,991,000
Floating Rate Notes due June 30, 2000............................................ 44,933,000
Debt to subsidiaries............................................................. 204,000,000
Other senior notes............................................................... 433,955,000
--------------
Total senior debt.......................................................... $ 757,727,000
==============
Subordinated debt:
8.75% Subordinated Notes due March 1, 2007....................................... $ 99,484,000
7-3/8% Subordinated Notes due June 1, 2005....................................... 99,711,000
Convertible Subordinated Note due 2000........................................... 2,100,000
--------------
Total subordinated debt $ 201,295,000
==============
Total debt........................................................... $ 959,022,000
==============
</TABLE>
In addition to the amounts listed above, one of our subsidiaries, CTX
Mortgage, has $1.3 billion of outstanding senior indebtedness, the majority of
which is secured by residential mortgage loans receivable. Because we do not
guarantee CTX Mortgage's indebtedness, it is
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neither senior nor subordinated debt to us. Under two CTX Mortgage credit
facilities, however, we have agreed that, if CTX Mortgage does not replace
ineligible mortgages in the facility, we will purchase the ineligible mortgages
up to a maximum of 10% of the maximum amount of the facility. Under each of the
two facilities, our maximum purchase obligation is $30 million.
"Senior debt" is defined to include all notes or other unsecured evidences
of indebtedness including guarantees of Centex for money borrowed by us, not
expressed to be subordinate or junior in right of payment to any other
indebtedness of Centex.
Subordinated Debt Securities
The subordinated debt securities that may be offered will have a junior
position to all of our senior debt. Under the subordinated indenture, payment of
the principal, interest and any premium on the subordinated debt securities will
generally be subordinated and junior in right of payment to the prior payment in
full of all senior debt. The subordinated indenture provides that no payment of
principal, interest and any premium on the subordinated debt securities may be
made in the event:
o of any insolvency, bankruptcy or similar proceeding involving us or our
property, or
o we fail to pay the principal, interest, any premium or any other amounts
on any senior debt when due.
The subordinated indenture will not limit the amount of senior debt that
we may incur. The subordinated indenture provides that all series of
subordinated debt securities that may be offered are equal in priority to our
subordinated debt securities and will rank equally in right of payment to our
subordinated debt securities. (Subordinated Indenture Section 3.02.)
Except as discussed below, the subordinated indenture prohibits us from
making any payment of principal of or premium, if any, or interest on, or
sinking fund requirements for, any subordinated debt securities during the
continuance of any default in respect of certain senior debt or any default
under any agreement pursuant to which the senior debt was issued beyond the
period of grace, unless and until the default on the senior debt is cured or
waived. (Subordinated Indenture Section 3.02.)
Except as discussed below, upon any distribution of our assets in
connection with any dissolution, winding up, liquidation, reorganization,
bankruptcy or other similar proceeding relative to us, our creditors or our
property, the holders of all senior debt will first be entitled to receive
payment in full of the principal and premium, if any, and interest due on the
senior debt before the holders of any subordinated debt securities are entitled
to receive any payment of the principal of and premium, if any, or interest on
any subordinated debt securities. (Subordinated Indenture Section 3.02.) Because
of this subordination, if we become insolvent, our creditors who are not holders
of senior debt may recover less, ratably, than holders of senior debt but may
recover more, ratably, than holders of our subordinated debt securities.
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<PAGE> 53
GLOBAL CERTIFICATES
The debt securities of a series may be issued in whole or in part in the
form of one or more global certificates that will be deposited with a depository
identified in a prospectus supplement.
The specific terms of the depository arrangements with respect to any debt
securities of a series will be described in a prospectus supplement.
Unless otherwise specified in a prospectus supplement, debt securities
issued in the form of a global certificate to be deposited with a depository
will be represented by a global certificate registered in the name of the
depository or its nominee. Upon the issuance of a global certificate in
registered form, the depository for the global certificate will credit, on its
book-entry registration and transfer system, the respective principal amounts of
the debt securities represented by the global certificate to the accounts of
institutions that have accounts with the depository or its nominee. The accounts
to be credited shall be designated by the underwriters or agents of the debt
securities or by us, if the debt securities are offered and sold directly by us.
Ownership of beneficial interests in a global certificate will be limited to
participants or persons that may hold interests through participants. Ownership
of beneficial interests by participants in a global certificate will be shown
on, and the transfer of that ownership interest will be effected only through,
records maintained by the depository or its nominee for the global certificate.
Ownership of beneficial interests in a global certificate by persons that hold
through participants will be shown on, and the transfer of that ownership
interest within the participant will be effected only through, records
maintained by the participant. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of the securities in
definitive form. These limits and laws may impair the ability to transfer
beneficial interests in a global certificate.
So long as the depository for a global certificate in registered form, or
its nominee, is the registered owner of the global certificate, the depository
or its nominee, as the case may be, will be considered the sole owner or holder
of the debt securities of the series represented by the global certificate for
all purposes under the indentures. Except as set forth below, owners of
beneficial interests in a global certificate will not be entitled to have debt
securities of the series represented by the global certificate registered in
their names, will not receive or be entitled to receive physical delivery of
debt securities in definitive form, and will not be considered the owners or
holders of the global certificate under the applicable indenture.
Payment of principal of, premium, if any, and any interest on debt
securities of a series registered in the name of or held by a depository or its
nominee will be made to the depository or its nominee, as the case may be, as
the registered owner or the holder of a global certificate representing the debt
securities. None of Centex, the trustee, any paying agent, or the applicable
debt security registrar for the debt securities will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in a global certificate for the debt
securities or for maintaining, supervising or reviewing any records relating to
those beneficial ownership interests.
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<PAGE> 54
We expect that the depository for debt securities of a series, upon
receipt of any payment of principal, premium or interest in respect of a
permanent global certificate, will credit immediately participants' accounts
with payments in amounts proportionate to their respective beneficial interests
in the principal amount of the global certificate as shown on the records of the
depository. We also expect that payments by participants to owners of beneficial
interests in a global certificate held through the participants will be governed
by standing instructions and customary practices, as is now the case with
securities held for the accounts of customers in bearer form or registered in
"street name," and the payments will be the responsibility of the participants.
However, we have no control over the practices of the depository and/or the
participants and there can be no assurance that these practices will not be
changed.
Unless it is exchanged in whole or in part for debt securities in
definitive form, a global certificate may generally be transferred only as a
whole unless it is being transferred to certain nominees of the depository.
Unless otherwise stated in any prospectus supplement, The Depository Trust
Company, New York, New York will act as depository. Beneficial interests in
global certificates will be shown on, and transfers of global certificates will
be effected only through, records maintained by The Depository Trust Company and
its participants.
EVENTS OF DEFAULT
"Event of default" when used in an indenture will mean any of the
following:
o failure to pay the principal or any premium on any debt security when
due;
o failure to deposit any sinking fund payment when due;
o failure to pay interest on any debt security for 30 days;
o failure to perform any other covenant in the indenture that continues for
60 days after being given written notice;
o certain events in bankruptcy, insolvency or reorganization of Centex; or
o any other event of default included in any indenture or supplemental
indenture. (Section 7.01.)
An event of default for a particular series of debt securities does not
necessarily constitute an event of default for any other series of debt
securities issued under an indenture. The trustee may withhold notice to the
holders of debt securities of any default, except in the payment of principal or
interest, if it considers such withholding of notice to be in the best interests
of the holders.
If an event of default for any series of debt securities occurs and
continues, the trustee or the holders of at least 25% of the total principal
amount of the debt securities of the series may
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<PAGE> 55
declare the entire principal of that series due and payable immediately.
(Section 7.01.) If this happens, subject to certain conditions, the holders of a
majority of the aggregate principal amount of the debt securities of that series
can void the declaration. (Section 7.01.) The trustee will not be charged with
knowledge of any event of default other than our failure to make principal and
interest payments unless actual written notice is received by the trustee.
(Section 7.01.)
The indentures limit the right to institute legal proceedings. No holder
of any debt securities will have the right to bring a claim under an indenture
unless
o the holder has given written notice of default to the trustee;
o the holders of not less than 25% of the aggregate principal amount of
debt securities of a particular series shall have made a written request
to the trustee to bring the claim and furnished the trustee reasonable
indemnification as it may require;
o the trustee has not commenced an action within 60 days of receipt of that
notice and indemnification; and
o no direction inconsistent with the request has been given to the trustee
by the holders of not less than a majority of the aggregate principal
amount of the debt securities of the series then outstanding. Subject to
applicable law and any applicable subordination provisions, the holders
of debt securities may enforce payment of the principal of or premium, if
any, or interest on their debt securities. No holder of debt securities
of a particular series has the right to prejudice the rights or obtain
priority or preference over the rights of any other holder of debt
securities of that series. (Section 7.04.)
The holders of a majority of the aggregate principal amount of any series
of debt securities may direct the time, method and place of conducting any
proceeding for any remedy available to the trustee or exercising any power
conferred on the trustee. The trustee, however, may decline to follow that
direction if, being advised by counsel, the trustee determines that the action
is not lawful. In addition, the trustee may refuse to act if it in good faith
determines that the action would unduly prejudice the holders of the debt
securities not taking part in the action or would impose personal liability on
the trustee. (Section 7.06.)
Each indenture provides that, in case an event of default in respect of a
particular series of debt securities has occurred, the trustee is to use the
degree of care of a prudent man in the conduct of his own affairs. (Section
8.01.) Subject to those provisions, the trustee is under no obligation to
exercise any of its rights or power under the indentures at the request of any
of the holders of the debt securities of a particular series unless they have
furnished to the trustee security or indemnity in reasonable amounts against the
costs, expenses and liabilities which may be incurred by the trustee. (Section
8.02.)
We will be required to furnish to the trustee an annual statement as to
the fulfillment by Centex of all of our obligations under the relevant
indenture. (Section 5.06.)
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DEFEASANCE OF DEBT SECURITIES
We will be discharged from our obligations on the debt securities of any
series at any time we deposit with the trustee sufficient cash or government
securities to pay the principal, interest, any premium and any other sums due to
the stated maturity date or a redemption date of the debt securities of the
series. If this happens, the holders of the debt securities of the series will
not be entitled to the benefits of the indenture except for registration of
transfer and exchange of debt securities and replacement of destroyed, lost,
stolen or mutilated debt securities. (Section 13.01.)
Under federal income tax law as of the date of this prospectus, a
discharge may be treated as an exchange of the related debt securities. Each
holder might be required to recognize a gain or loss equal to the difference
between the holder's cost or other tax basis for the debt securities and the
value of the holder's interest in the trust. Holders might be required to
include as income a different amount than would be includable without the
discharge. We urge you to consult your tax adviser as to the consequences of a
discharge, including the applicability and effect of tax laws other than the
federal income tax law.
CONSOLIDATION, MERGER OR SALE OF CENTEX
Each indenture generally permits us to consolidate or merge with another
corporation. The indentures also permit us to sell all or substantially all of
our property and assets. If this happens, the remaining or acquiring corporation
will assume all of our responsibilities and liabilities under the indentures
including the payment of all amounts due on the debt securities of each series
outstanding and performance of the covenants in the indentures.
However, we will only consolidate or merge with or into any other
corporation or sell all or substantially all of our assets according to the
terms and conditions of the indentures. The remaining or acquiring corporation
will be substituted for us in the indentures with the same effect as if it had
been an original party to the indentures. Thereafter, the successor corporation
may exercise our rights and powers under any indenture, in our name or in its
own name. Any act or proceeding required or permitted to be done by our Board of
Directors or any of our officers may be done by the board or officers of the
successor corporation. (Article Twelve.)
MODIFICATION OF THE INDENTURES
Under each indenture we may modify rights and obligations and the rights
of the holders with the consent of the holders of a majority in aggregate
principal amount of the outstanding debt securities of each series affected by
the modification. We cannot, however, modify the principal or interest payment
terms, or reduce the percentage required for modification, against any holder
without its consent. We may also enter into supplemental indentures with the
trustee, without obtaining the consent of the holders of any series of debt
securities, to cure any ambiguity or to correct or supplement any provision of
an indenture or any supplemental indenture which may be defective or
inconsistent with any other provision, to pledge any property to or with the
trustee or to make any other provisions with respect to matters or questions
arising under the indentures, provided that such action does not adversely
affect the interests of the holders of the debt securities. We may also enter
into supplemental indentures
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without the consent of holders of any series of debt securities to set forth the
terms of additional series of debt securities, to evidence the succession of
another person to our obligations under the indenture or to add to our
covenants. (Article Eleven.)
CERTIFICATES AND OPINIONS TO BE FURNISHED TO TRUSTEE
Each indenture provides that, in addition to other certificates or
opinions that may be specifically required by other provisions of an indenture,
every time we ask the trustee to take action under such indenture, we must
provide a certificate of certain of our officers and an opinion of counsel, who
may be our counsel, stating that, in the opinion of the signers, all conditions
precedent to such action have been complied with. (Section 15.07.)
REPORT TO HOLDERS OF DEBT SECURITIES
We will provide audited financial statements annually to holders of debt
securities. (Section 6.03.) The trustee is required to submit an annual report
to the holders of the debt securities regarding, among other things, the
trustee's eligibility to serve as trustee, the priority of the trustee's claims
regarding certain advances made by it, and any action taken by the trustee
materially affecting the debt securities.
THE TRUSTEE
Chase Bank of Texas, National Association, whose Corporate Trust Office is
located at 2200 Ross Avenue, Fifth Floor, Dallas, Texas 75201, is the trustee
under the subordinated indenture and the senior indenture. Chase Bank of Texas,
National Association also serves as trustee with respect to our $100,000,000
8.75% subordinated notes due March 1, 2007 and our $100,000,000 7-3/8%
subordinated notes due June 1, 2005, all previously issued under the
subordinated indenture, as supplemented by a subordinated indenture supplement
dated as of March 12, 1987 and a subordinated indenture supplement dated as of
June 9, 1995, respectively. Chase Bank of Texas, National Association also
serves as trustee with respect to our $15,000,000 6.40% senior notes due October
25, 2002, our $50,000,000 floating rate senior notes due April 28, 2000, our
$10,000,000 floating rate senior notes due May 19, 2000, our $55,000,000
floating rate senior notes due June 30, 2000 and our $62,000,000 floating rate
senior notes due July 27, 2000, all previously issued under the senior
indenture, as supplemented by a senior indenture supplement dated as of October
1, 1998.
Pursuant to the indentures and the Trust Indenture Act of 1939, any
uncured event of default with respect to any series of debt securities will
force the trustee to resign as trustee under the applicable indenture. If the
trustee resigns, a successor trustee will be appointed in accordance with the
terms and conditions of the applicable indenture.
Centex and its affiliates maintain other banking relationships in the
ordinary course of business with the trustee and its affiliates.
The trustee may resign or be removed by us with respect to one or more
series of debt securities and a successor trustee may be appointed to act with
respect to any such series. The
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holders of a majority in aggregate principal amount of the debt securities of
any series may remove the trustee with respect to the debt securities of that
series. (Section 8.10.)
Each indenture contains limitations on the right of the trustee, in the
event that the trustee becomes our creditor, 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. (Section 8.13.)
RATINGS OF OUR DEBT SECURITIES BY RATING AGENCIES
Particular series of debt securities may be rated by one or more
nationally recognized statistical rating agencies. The rating agency or agencies
and rating or ratings to be assigned with respect to a series of debt securities
will be specified in the prospectus supplement for the series of debt
securities.
METHOD FOR CALLING MEETINGS OF THE HOLDERS OF DEBT SECURITIES
Each indenture contains provisions describing how meetings of the holders
of debt securities of a series may be convened. A meeting may be called at any
time by the trustee, and also, upon request, by us or the holders of at least
10% in principal amount of the outstanding debt securities of a series. A notice
of the meeting must always be given in the manner described under "-Notices to
Holders of Debt Securities" below. Generally speaking, except for any consent
that must be given by all holders of a series as described under "-Modification
of the Indentures" above, any resolution presented at a meeting of the holders
of a series of debt securities may be adopted by the affirmative vote of the
holders of a majority in principal amount of the outstanding debt securities of
that series, unless the indenture allows the action to be voted upon to be taken
with the approval of the holders of a different specific percentage of principal
amount of outstanding debt securities of a series. In that case, the holders of
outstanding debt securities of at least the specified percentage must vote in
favor of the action. Any resolution passed or decision taken at any meeting of
holders of debt securities of any series in accordance with the applicable
indenture will be binding on all holders of debt securities of that series and
any related coupons, unless, as discussed in "-Modification of the Indentures"
above, the action is only effective against holders that have approved it. The
quorum at any meeting called to adopt a resolution, and at any reconvened
meeting, will be holders holding or representing a majority in principal amount
of the outstanding debt securities of a series.
GOVERNING LAW
Each indenture and each series of debt securities will be governed by and
construed in accordance with the laws of the State of Texas.
NOTICES TO HOLDERS OF DEBT SECURITIES
Notices to holders of debt securities will be mailed to the addresses of
the holders listed in the senior debt security register or the subordinated debt
security register, as applicable.
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PLAN OF DISTRIBUTION
We may sell the offered securities (a) through agents; (b) through
underwriters or dealers; or (c) directly to one or more purchasers.
SALE OF DEBT SECURITIES BY AGENTS
Offered securities may be sold through agents designated by us. The agents
agree to use their reasonable best efforts to solicit purchases for the period
of their appointment.
SALE OF DEBT SECURITIES BY UNDERWRITERS
If underwriters are used in the sale, the offered securities will be
acquired by the underwriters for their own account. The underwriters may resell
the securities 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 obligations of the underwriters to purchase the securities will be
subject to certain conditions. The underwriters will be obligated to purchase
all the securities of the series offered if any of the securities are purchased.
Any initial public offering price and any discounts or concessions allowed or
re-allowed or paid to dealers may be changed from time to time.
DIRECT SALES OF OUR DEBT SECURITIES
Offered securities may also be sold directly by us. In this case, no
underwriters or agents would be involved.
GENERAL INFORMATION ABOUT OUR PLAN OF DISTRIBUTION
Underwriters, dealers and agents that participate in the distribution of
the offered securities may be underwriters as defined in the Securities Act of
1933, and any discounts or commissions received by them from us and any profit
on the resale of the offered securities by them may be treated as underwriting
discounts and commissions under the Securities Act. Any underwriters or agents
will be identified and their compensation described in a prospectus supplement.
We may have agreements with the underwriters, dealers and agents to
indemnify them against certain civil liabilities, including liabilities under
the Securities Act, or to contribute with respect to payments which the
underwriters, dealers or agents may be required to make. If we enter into any
indemnification agreements of this nature, we will describe each of those
agreements in the prospectus supplement.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, us or our subsidiaries in the ordinary course of their
businesses.
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LEGAL OPINIONS
Raymond G. Smerge, Esq., our Executive Vice President, Chief Legal Officer
and Secretary, will issue an opinion about the legality of the offered
securities for us. Thompson & Knight L.L.P., Dallas, Texas, our special counsel,
will also issue an opinion about the legality of the offered securities. We will
describe in any prospectus supplement any additional opinions to be given as
determined through negotiations between us and any underwriters. Any
underwriters will be advised about other issues relating to any offering by
their own legal counsel.
EXPERTS
Arthur Andersen LLP, independent accountants, audited our financial
statements and schedules incorporated by reference in this prospectus and
elsewhere in the registration statement. These documents are incorporated by
reference herein in reliance upon the authority of Arthur Andersen as experts in
accounting and auditing in giving the report.
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================================================================================
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT
WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS SUPPLEMENT IS NOT AN OFFER TO
SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN
ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER
THAN THE DATE ON THE FRONT COVER.
[CENTEX LOGO]
$250,000,000
SENIOR MEDIUM-TERM NOTES, SERIES B
SUBORDINATED MEDIUM-TERM NOTES, SERIES B
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
------------------------------
Prospectus Supplement
------------------------------
BANC ONE CAPITAL MARKETS, INC.
BANC OF AMERICA SECURITIES LLC
CHASE SECURITIES INC.
CREDIT SUISSE FIRST BOSTON
MORGAN STANLEY DEAN WITTER
WARBURG DILLON READ LLC
AUGUST 17, 1999
================================================================================
