Pricing Supplement No. 723 Dated 3/04/94 Rule 424(b)(3)
(To Prospectus dated December 14, 1993 and File No. 33-51269,
Prospectus Supplement dated December 14, 1993) 33-57922 and 33-49136
SALOMON INC
Medium-Term Notes, Series D
(Registered Notes - Fixed Rate)
Due More Than Nine Months from Date of Issue
Principal Amount or Face Amount: $10,000,000.00
Issue Price: 93.9500000000% plus accrued interest from February 1, 1994
Proceeds to Company on original issuance: $9,450,555.56
Commission or Discount on original issuance: $.00
Salomon Brothers Inc.'s capacity on original issuance: |X| As agent
| | As principal
If as principal:
| | The Registered Notes are being offered at varying prices related
to prevailing market prices at the time of resale.
| | The Registered Notes are being offered at a fixed initial public
offering price of % of Principal Amount or Face Amount.
Original Issue Date: 3/11/94
Stated Maturity: 2/01/96
Specified Currency:
(If other than U.S. Dollars)
Authorized Denominations:
(If other than as set forth in the Prospectus Supplement)
Interest Payment Dates: February 1 & August 1. 1st cpn 08/01/94.
(If other than as set forth in the Prospectus Supplement)
Indexed Principal Note: |X| Yes (see attached) | | No
Interest Rate: 5.0000000%
Interest Rate Reset: |X| The Interest Rate may not be changed prior to Stated
Maturity.
| | The Interest Rate may be changed prior to Stated
Maturity (see attached).
Optional Reset Dates (if applicable):
Amortizing Note: | | Yes |X| No
Amortization Schedule:
Optional Redemption: | | Yes |X| No
Optional Redemption Dates:
Redemption Prices:
Optional Repayment: | | Yes |X| No
Optional Repayment Dates:
Optional Repayment Prices:
Optional Extension of Stated Maturity: | | Yes |X| No
Final Maturity:
Discount Note: | | Yes |X| No
Total Amount of OID:
Yield to Maturity:
Pricing Supplement dated March 11, 1994
(to Prospectus Supplement dated December 14, 1993,
to Prospectus dated December 14, 1993)
DESCRIPTION OF THE NOTE
General
The description in this Pricing Supplement of the
particular terms of the Registered Note offered hereby (the
"Note") supplements, and to the extent inconsistent therewith
replaces, the descriptions of the general terms and provisions of
the Registered Notes set forth in the accompanying Prospectus and
Prospectus Supplement, to which description reference is hereby
made. Capitalized terms used but not otherwise defined herein
shall have the meanings specified in the Prospectus and
Prospectus Supplement.
Indexed Principal Amount
The Note is an Indexed Principal Note. The principal
amount payable at Stated Maturity of the Note (the "Indexed
Principal Amount") will be a variable amount equal to the greater
of (i) 80% of the Face Amount of the Note and (ii) the result of
the formula set out below:
FA x ((100 + 5 x (6.92 - Basket Rate))/100), where
"FA" means the Face Amount of the Note; and
"Basket Rate" means the arithmetic average, on January
25, 1996 (the "Determination Date") of the "Three-Year Peseta
Swap Rate," the "Three-Year Lira Swap Rate" and the "Three-Year
Kronor Swap Rate" (collectively, the "Swap Rates") as each such
Swap Rate is defined.
In general, the Swap Rates, the arithmetic average of
which make up the Basket Rate, are fixed rates of interest in
respect of a hypothetical interest rate swap or exchange
agreement, denominated in the subject currency, having a term
beginning on the Determination Date and maturing in three years,
that a fixed-rate payor would be prepared to pay annually in
exchange for a floating rate of interest, payable semi-annually,
equal to the six-month LIBOR rate for the subject currency. Each
of the Swap Rates is more specifically defined below.
"Three-Year Peseta Swap Rate" means the three-year mean
swap rate for the Spanish Peseta, as published on Telerate Page
42285, at 12:00 noon London time on the Determination Date. If
such rate does not appear on Telerate Page 42285 at 12:00 noon
London time on the Determination Date, the Calculation Agent
will, as soon as practicable on such Determination Date, request
each of five leading market-makers in fixed for floating Spanish
Peseta interest rate swap transactions to provide the Calculation
Agent with a mid-market quotation (which is the average of the
bid and offer swap quotations) for a fixed for floating six-month
Spanish Peseta LIBOR interest rate swap transaction with a three-
year maturity, as of 3:00 P.M. Greenwich Meridian Time ("GMT") on
such Determination Date. If five such quotations are provided,
the Three-Year Peseta Swap Rate shall be the arithmetic mean of
such quotations after disregarding the highest and lowest
quotations. If fewer than five quotations are provided to the
Calculation Agent, the Three-Year Peseta Swap Rate shall be the
arithmetic mean of such quotations provided.
"Three-Year Lira Swap Rate" means the three-year mean
swap rate for the Italian Lira, as published on Telerate Page
42284, at 12:00 noon London time on the Determination Date. If
such rate does not appear on Telerate Page 42284 at 12:00 noon
London time on the Determination Date, the Calculation Agent
will, as soon as practicable on such Determination Date, request
each of five leading market-makers in fixed for floating Italian
Lira interest rate swap transactions to provide the Calculation
Agent with a mid-market quotation (which is the average of the
bid and offer swap quotations) for a fixed for floating six-month
Italian Lira LIBOR interest rate swap transaction with a three-
year maturity, as of 3:00 P.M. GMT on such Determination Date.
If five such quotations are provided, the Three-Year Lira Swap
Rate shall be the arithmetic mean of such quotations after
disregarding the highest and lowest quotations. If fewer than
five quotations are provided to the Calculation Agent, the Three-
Year Lira Swap Rate shall be the arithmetic mean of such
quotations provided.
"Three-Year Kronor Swap Rate" means the three-year mean
swap rate for the Swedish Kronor, which is the average of the bid
and the offer rates, as published on Reuters Screen ICAT page, at
12:00 noon London time on the Determination Date. If such rate
does not appear on Reuters Screen ICAT page at 12:00 noon London
time on the Determination Date, the Calculation Agent will, as
soon as practicable on such Determination Date, request each of
five leading market-makers in fixed for floating Swedish Kronor
interest rate swap transactions to provide the Calculation Agent
with a mid-market quotation (which is the average of the bid and
offer swap quotations) for a fixed for floating six-month Swedish
Kronor LIBOR interest rate swap transaction with a three-year
maturity, as of 3:00 P.M. GMT on such Determination Date. If
five such quotations are provided, the Three-Year Kronor Swap
Rate shall be the arithmetic mean of such quotations after
disregarding the highest and lowest quotations. If fewer than
five quotations are provided to the Calculation Agent, the Three-
Year Kronor Swap Rate shall be the arithmetic mean of such
quotations provided.
As a result of the formula set forth above, the holder
of the Note could receive an Indexed Principal Amount that is
less than or equal to the Face Amount thereof; provided, however,
that in no event shall the Indexed Principal Amount be less than
80% of the Face Amount thereof. Specifically, if the Basket Rate
on the Determination Date is greater than 6.92%, the Indexed
Principal Amount payable in respect of the Note will be less than
the Face Amount thereof. Purchasers of the Note should be
prepared to sustain a loss of principal.
The table below sets forth the Indexed Principal Amount
as a percentage of the Face Amount that will be payable to the
holder of the Note at Stated Maturity for certain hypothetical
Basket Rates. The Basket Rates set out below are for
illustrative purposes only and no representation is made or
intended that the Basket Rate determined as of the Determination
Date will be equal to or within the hypothetical rates set forth
below.
Indexed Principal Amount as
Hypothetical Basket Rate Percentage of Face Amount
10.92%, and above 80.00%
10.50% 82.10%
10.00% 84.60%
9.50% 87.10%
9.00% 89.60%
8.50% 92.10%
8.00% 94.60%
7.50% 97.10%
7.00% 99.60%
6.92% 100.00%
6.50% 102.10%
6.00% 104.60%
5.75% 105.85%
The Calculation Agent for the Note will be Salomon
Brothers Inc, a wholly-owned subsidiary of the Company.
TAXATION
The following summary supplements, and to the extent inconsistent
therewith replaces, the discussion of United States taxation set
forth in the accompanying Prospectus Supplement under the heading
"United States Tax Considerations," to which discussion reference
is hereby made.
The following is a summary of certain anticipated U.S.
Federal income tax consequences to a holder of an investment in
the Note. It does not purport to address every U.S. federal
income tax issue raised by ownership of the Note. In particular,
this summary applies only to a person that holds the Note as a
capital asset and does not deal with a person in a special tax
situation or a person that holds the Note as part of an
integrated investment (including a "straddle") comprised of the
Note and one or more other positions. Prospective purchasers of
the Note are urged to consult their own tax advisors regarding
the U.S. Federal (as well as state and local) tax consequences to
them of owning the Note in light of their particular
circumstances.
There are no regulations, published rulings or judicial
decisions addressing the characterization for federal income tax
purposes of securities with terms substantially the same as the
Note. The Company intends to treat the Note for U.S. federal
income tax purposes as a debt instrument of the Company, and will
report interest paid on the Note to the Internal Revenue Service
in accordance with such treatment. Under the Company's treatment
of the Note, interest on the Note will be includable in a U.S.
holder's income in accordance with the U.S. holder's regular
method of tax accounting. Upon the sale, exchange, retirement or
other disposition of a Note, a U.S. holder generally will
recognize gain or loss equal to the difference between the amount
realized on the sale, exchange, retirement or other disposition
(less any accrued but unpaid interest, which will be taxable as
such) and the amount of the U.S. holder's investment in the Note,
which gain or loss generally will be long-term capital gain or
loss if the U.S. holder has held the Note for more than one year.
In 1986, the Department of the Treasury released
certain proposed regulations relating to debt instruments with
contingent payments (the "1986 Proposed Regulations"), which
regulations, if adopted in final form as proposed, would apply to
the Note. Under the 1986 Proposed Regulations, a payment of
interest on a Note would be treated as a non-taxable return of
the holder's investment in the Note. The amount payable at
maturity of the Note would be treated first as a non-taxable
return of the holder's investment in the Note until, after taking
into account the amount of any previous payments treated as a
return of the holder's investment, the holder has recovered the
full amount of its investment, and thereafter would be taxable as
interest income to the holder. If a holder receives total
payments in respect of an Note in an amount less than the amount
of its investment in the Note, the holder generally would
recognize a capital loss, which would be a long-term capital loss
if the holder has held the Note for more than one year. It is
unclear, under the 1986 Proposed Regulations, whether gain from
the sale of the Note would be ordinary income or capital gain.
Any loss recognized by the holder of the Note, however, would
generally be a capital loss, which would be a long-term capital
loss if the holder has held the Note for more than one year.
The 1986 Proposed Regulations have not yet been adopted
and have been the subject of considerable comment. In January
1993, the Internal Revenue Service submitted proposed regulations
to the Federal Register ("the 1993 Proposed Regulations") that
would have replaced the 1986 Proposed Regulations. The 1993
Proposed Regulations, which were proposed to be effective for
contingent payment debt instruments issued on or after the date
60 days after the date the regulations were finalized, would have
substantially revised the treatment of such debt instruments.
The 1993 Proposed Regulations were withdrawn from the Federal
Register prior to publication, however, pursuant to an order of
the Director of the Office of Management and Budget.
Accordingly, it is impossible to predict whether, or in what
manner, the 1986 Proposed Regulations may be modified and whether
any modifications would apply to the Note.
