Pricing Supplement No. 668 Dated 1/24/94 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: $15,000,000.00
Issue Price: 100.0000000000%
Proceeds to Company on original issuance: $15,000,000.00
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: 2/01/94
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: 8/1/94; 2/1/95; 8/1/95; 2/1/96.
(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 January 27, 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.
