<PAGE> 1
Pursuant to Rule 424(b)(2)
Registration No. 333-38931
PROSPECTUS
SALOMON SMITH BARNEY HOLDINGS INC.
$150,000,000 principal amount of 5 5/8% Notes due November 15, 1998
$200,000,000 principal amount of 5 1/2% Notes due January 15, 1999
$150,000,000 principal amount of 7 7/8% Notes due October 1, 1999
$148,500,000 principal amount of 6 5/8% Notes due June 1, 2000
$200,000,000 principal amount of 7.98% Notes due March 1, 2000
$150,000,000 principal amount of 7% Notes due May 15, 2000
$250,000,000 principal amount of 5 7/8% Notes due February 1, 2001
$40,072,410 principal amount of S&P 500 Equity Linked Notes due August 13, 2001
$150,000,000 principal amount of 6 1/2% Notes due October 15, 2002
$150,000,000 principal amount of 7.50% Notes due May 1, 2002
$200,000,000 principal amount of 6 5/8% Notes due November 15, 2003
$175,000,000 principal amount of 6 7/8% Notes due June 15, 2005
$200,000,000 principal amount of 7 1/8% Notes due October 1, 2006
$65,987,535 principal amount of S&P 500 Equity Linked Notes due March 11, 2002
$250,000,000 principal amount of 7% Notes due March 15, 2004
$200,000,000 principal amount of 7 3/8% Notes due May 15, 2007
$250,000,000 principal amount of 6 5/8% Notes due July 1, 2002
$25,000,000 principal amount of Floating Rate Medium-Term Notes due September
10, 2002
$62,318,445 principal amount of S&P 500 Equity Linked Notes due October 3, 2003
$200,000,000 principal amount of 6 3/8% Notes due October 1, 2004
------------------
Salomon Smith Barney Holdings Inc. (the successor by merger to Smith Barney
Holdings Inc.) (the "Company") has outstanding $150,000,000 principal amount of
5 5/8% Notes due November 15, 1998, $200,000,000 principal amount of 5 1/2%
Notes due January 15, 1999, $150,000,000 principal amount of 7 7/8% Notes due
October 1, 1999, $148,500,000 principal amount of 6 5/8% Notes due June 1, 2000,
$200,000,000 principal amount of 7.98% Notes due March 1, 2000, $150,000,000
principal amount of 7% Notes due May 15, 2000, $250,000,000 principal amount of
5 7/8% Notes due February 1, 2001, $40,072,410 principal amount of S&P 500
Equity Linked Notes due August 13, 2001, $150,000,000 principal amount of 6 1/2%
Notes due October 15, 2002, $150,000,000 principal amount of 7.50% Notes due May
1, 2002, $200,000,000 principal amount of 6 5/8% Notes due November 15, 2003,
$175,000,000 principal amount of 6 7/8% Notes due June 15, 2005, $200,000,000
principal amount of 7 1/8% Notes due October 1, 2006, $65,987,535 principal
amount of S&P 500 Equity Linked Notes due March 11, 2002, $250,000,000 principal
amount of 7% Notes due March 15, 2004, $200,000,000 principal amount of 7 3/8%
Notes due May 15, 2007, $250,000,000 principal amount of 6 5/8% Notes due July
1, 2002, $25,000,000 principal amount of Floating Rate Medium-Term Notes due
September 10, 2002, $62,318,445 principal amount of S&P 500 Equity Linked Notes
due October 3, 2003 and $200,000,000 principal amount of 6 3/8% Notes due
October 1, 2004 (collectively, the "Outstanding Securities") which have been
registered under the Securities Act of 1933, as amended (the "Act"). This
Prospectus relates solely to the Outstanding Securities.
The Outstanding Securities are represented by global notes registered in the
name of The Depository Trust Company ("DTC") or its nominee. Beneficial
interests in the Outstanding Securities will be shown on, and transfers thereof
will be effected only through, records maintained by DTC and its participants.
Owners of beneficial interests in the Outstanding Securities will be entitled to
physical delivery of Outstanding Securities in certificated form equal in
principal amount to their respective beneficial interests only under the limited
circumstances described herein. See "Description of the Outstanding
Securities--Book-Entry Notes."
The Outstanding Securities will trade in the Same-Day Funds Settlement
System of DTC, and, to the extent that secondary market trading activity in the
Outstanding Securities is effected through the facilities of DTC, such trades
will be settled in immediately available funds. All payments of principal and
interest will be made by the Company in immediately available funds.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------
This Prospectus is to be used by Smith Barney Inc., Salomon Brothers Inc
and/or other affiliates of the Company and/or their respective successors (the
"SSBH Subsidiaries") in connection with offers and sales of the Outstanding
Securities in market-making transactions at negotiated prices related to
prevailing market prices at the time of sale. Any of the SSBH Subsidiaries may
act as principal or agent in such transactions.
------------------
SALOMON SMITH BARNEY
December 1, 1997
<PAGE> 2
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY SSBH SUBSIDIARY. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER OF ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH THIS PROSPECTUS
RELATES, OR AN OFFER TO ANY PERSON IN ANY JURISDICTION WHERE SUCH OFFER WOULD BE
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN
ANY CHANGE IN THE AFFAIRS OF THE COMPANY OR ITS SUBSIDIARIES SINCE THE DATE
HEREOF.
------------------------
AVAILABLE INFORMATION
Salomon Smith Barney Holdings Inc. (the "Company") is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith files reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). Reports, proxy statements and other information concerning
the Company can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's Regional Offices at Seven World Trade
Center, 13th Floor, New York, New York 10048, and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can
be obtained upon written request addressed to the Commission, Public Reference
Section, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Commission also maintains a site on the World Wide Web, the address of which
is http://www.sec.gov that contains reports, proxy and information statements
and other information concerning issuers, such as the Company, that file
electronically with the Commission. Such reports and other information may also
be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad
Street, New York, New York 10005 and the American Stock Exchange, 86 Trinity
Place, New York, New York 10006.
------------------------
The Company has filed with the Commission a Registration Statement on Form
S-3 (the "Registration Statement," which term shall include all amendments,
exhibits, annexes and schedules thereto) pursuant to the Act with respect to the
Outstanding Securities. This Prospectus does not contain all the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the Outstanding Securities,
reference is made to the Registration Statement and exhibits thereto. Statements
contained in this Prospectus as to the contents of any contract or other
document are not necessarily complete, and in each instance reference is made to
the copy of such contract or document filed as an exhibit to the Company's
Registration Statement, each such statement being qualified in all respects by
such reference.
------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed by the Company with the Commission pursuant
to Section 13 of the Exchange Act (File No. 1-4346), are incorporated herein by
reference (i) the Annual Report on Form 10-K for the year ended December 31,
1996, (ii) the Quarterly Reports on Form 10-Q for the quarters ended March 31,
1997, June 30, 1997 and September 30, 1997 and (iii) the Current Reports on Form
8-K filed on January 21, 1997, March 17, 1997, April 15, 1997, July 17, 1997,
September 24, 1997, September 29, 1997 (as amended by the Current Report on Form
8-K/A filed on October 28, 1997 and the Current Report on Form 8-K/A2 filed on
December 1, 1997), October 21, 1997, October 28, 1997 (as amended by the Current
Report on Form 8-K/A filed on December 1, 1997), November 21, 1997 (as amended
by the Current Report on Form 8-K/A filed on December 1, 1997) and November 28,
1997.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Outstanding Securities shall be deemed to
be incorporated by reference in the Prospectus.
Any statements contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent
2
<PAGE> 3
that a statement contained herein or in any subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
THE COMPANY
Pursuant to an agreement and plan of merger dated as of September 24, 1997,
a newly-formed wholly owned subsidiary of Travelers Group Inc. ("Travelers
Group") merged with and into Salomon Inc ("Salomon") on November 28, 1997;
Salomon then became a wholly owned subsidiary of Travelers Group and was renamed
Salomon Smith Barney Holdings Inc. (the "Company"). Immediately thereafter,
Smith Barney Holdings Inc., another wholly owned subsidiary of Travelers Group,
was merged into the Company. The Company is a holding company primarily engaged
in investment banking, proprietary trading, retail brokerage and asset
management activities through its two broker-dealer subsidiaries, Smith Barney
Inc. ("Smith Barney") and Salomon Brothers Inc ("Salomon Brothers").
The principal offices of the Company are located at 388 Greenwich Street,
New York, New York 10013 (telephone number: (212) 816-6000).
SMITH BARNEY
Smith Barney provides investment banking, asset management, brokerage and
other financial services for United States and foreign corporations, governments
and institutional and individual investors. These activities include securities,
options and commodities brokerage of domestic and international institutional
and individual clients; underwriting and distribution of securities; arranging
for the private placement of securities; assisting in mergers and acquisitions
and providing financial advisory services; market making and trading in
corporate debt and equity, United States government and agency, mortgage-related
and municipal securities and foreign exchange, futures and forward contracts;
consumer financing activities; securities lending activities; investment
management and advisory services; securities research; and other related
activities.
SALOMON
Together with Salomon Brothers Holding Company Inc and its subsidiaries
(which subsidiaries include Salomon Brothers), Salomon Brothers engages in
global investment banking and global securities trading activities; provides
capital raising, advisory, trading and risk management services to its
customers; and executes proprietary trading strategies on its own behalf.
Certain of the Company's commodities trading activities are conducted by the
Company's wholly owned subsidiary, Phibro Inc., and its subsidiaries.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED DECEMBER 31,
ENDED ----------------------------------------
SEPTEMBER 30, 1997 1996 1995 1994 1993 1992
------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges..... 1.29 1.37 1.20 0.98* 1.32 1.27
</TABLE>
- ---------------
* For the year ended December 31, 1994, earnings as defined were inadequate to
cover fixed charges. The amounts by which fixed charges exceeded earnings as
defined for the year was $173 million.
The ratio of earnings to fixed charges has been computed by dividing earnings
before income taxes and fixed charges by the fixed charges. For the purpose of
this ratio, fixed charges consist of interest expense and that portion of
rentals deemed representative of the appropriate interest factor.
DESCRIPTION OF THE OUTSTANDING SECURITIES
The Outstanding Securities were issued under an Indenture dated as of May
15, 1993, between Smith Barney Holdings Inc. ("Smith Barney Holdings") and
Citibank N.A., as Trustee (the "Trustee"), as supplemented by the First
Supplemental Indenture dated as of September 1, 1993, between Smith Barney
Holdings and the Trustee, the Second Supplemental Indenture dated as of December
12, 1996, between Smith Barney Holdings and the Trustee, and the Third
Supplemental Indenture dated as of November 26,
3
<PAGE> 4
1997 among Smith Barney Holdings, the Company and the Trustee pursuant to which
the Company assumed all obligations of Smith Barney Holdings with respect to the
Outstanding Securities (the indenture as so supplemented is hereinafter referred
to as the "Indenture"). The following summary of certain provisions of the
Indenture does not purport to be complete and is subject to, and qualified in
its entirety by reference to, the Indenture, a copy of which has been
incorporated by reference or filed as an exhibit to the Registration Statements
of which this Prospectus forms a part. Capitalized terms used and not otherwise
defined in this section shall have the meanings assigned to them in the
Indenture. Parenthetical section references refer to sections of the Indenture.
GENERAL
The Outstanding Securities are unsecured general obligations of the
Company. As a holding company, the Company's sources of funds are derived
principally from advances and dividends from subsidiaries, certain of which are
subject to regulatory restrictions, and from sales of assets and investments.
The Indenture provides that unsecured debt securities of the Company, without
limitation as to aggregate principal amount, may be issued in one or more
series, and a single series may be issued at various times, with different
maturity dates and different interest rates, in each case as authorized from
time to time by the Company. The provisions of the Indenture provide the Company
with the ability, in addition to the ability to issue securities with terms
different from those of securities previously issued, to "reopen" a previous
issue of a series of securities and to issue additional securities of such
series.
The Outstanding Securities were issued only in registered form and may only
be issued in denominations of $1,000 and integral multiples thereof. No service
charge will be made for any registration of transfer or exchange of Outstanding
Securities, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
BOOK-ENTRY NOTES
The Outstanding Securities were issued in the form of one or more global
notes (each, a "Book-Entry Note"), which were deposited with, or on behalf of,
DTC and registered in the name of DTC or its nominee. Except as set forth below,
Book-Entry Notes may not be transferred except as a whole by DTC to a nominee of
DTC, or by a nominee of DTC to DTC or another nominee of DTC, or by DTC or any
nominee to a successor of DTC, or a nominee of such successor.
DTC has advised the Company that it 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. DTC holds securities that its participants
("Participants") deposit with DTC. DTC also facilitates the settlement among
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations ("Direct Participants"). DTC is owned by a number of its Direct
Participants and by the New York Stock Exchange, the American Stock Exchange,
Inc. and the National Association of Securities Dealers, Inc. (the "NASD").
Access to the DTC system is also available to others, such as securities brokers
and dealers, banks and trust companies that clear transactions through or
maintain a direct or indirect custodial relationship with a Direct Participant,
either directly or indirectly. The rules applicable to DTC and its Participants
are on file with the Commission.
Upon the issuance by the Company of a Book-Entry Note, DTC will credit, on
its book-entry registration and transfer system, the respective principal
amounts of the Outstanding Securities represented by such Book-Entry Note to the
accounts of Participants. Ownership of beneficial interests in a Book-Entry Note
will be limited to Participants or persons that may hold interests through
Participants. Ownership of beneficial interests in Book-Entry Notes will be
shown on, and the transfer of such interests will be effected only through,
records maintained by DTC or its nominee (with respect to beneficial interests
of Participants), or by Participants or persons that may hold interests through
Participants (with respect to beneficial interests of beneficial ownership). The
laws of some states may require that certain purchasers of securities take
physical
4
<PAGE> 5
delivery of such securities in certificated form. Such limits and such law may
impair the ability to transfer beneficial interests in Book-Entry Notes.
So long as DTC or its nominee is the registered owner of the Book-Entry
Notes, DTC or its nominee, as the case may be, will be considered the sole owner
or holder of the Outstanding Securities represented by such Book-Entry Notes for
all purposes under the Indenture. Except as provided below, owners of beneficial
interests in Book-Entry Notes will not be entitled to have Outstanding
Securities represented by such Book-Entry Notes registered in their names, will
not receive or be entitled to receive physical delivery of such Outstanding
Securities in certificated form and will not be considered the owners or holders
thereof under the Indenture.
Principal and interest payments on the Outstanding Securities represented
by one or more Book-Entry Notes will be made by the Company to DTC or its
nominee, as the case may be, as the registered owner of the related Book-Entry
Note or Notes. The Company expects that DTC or its nominee, upon receipt of any
payment of principal or interest in respect of Book-Entry Notes, will credit
immediately the accounts of the related Participants with payment in amounts
proportionate to their respective holdings in principal amount of beneficial
interests in such Book-Entry Notes as shown on the records of DTC. Neither the
Company nor the Trustee or any Paying Agent will have any responsibility or
liability for any aspect of the records relating to, or payments made on account
of, beneficial ownership interests of Book-Entry Notes, or for maintaining,
supervising or reviewing any records relating to such beneficial interests. The
Company also expects that payments by Participants to owners of beneficial
interests in Book-Entry Notes held through such Participants will be governed by
standing customer instructions and customary practices, as is now the case with
securities registered in "street name." Such payments will be the responsibility
of such Participants.
If DTC is at any time unwilling, unable or ineligible to continue as
depository and a successor depositary is not appointed by the Company within 90
days, the Company will issue Outstanding Securities in certificated form in
exchange for beneficial interests in the Book-Entry Notes. In addition, the
Company may at any time determine not to have its Outstanding Securities
represented by one or more Book-Entry Notes, and, in such event, will issue
Outstanding Securities in certificated form in exchange for beneficial interests
in Book-Entry Notes. In any such instance, an owner of a beneficial interest in
a Book-Entry Note will be entitled to physical delivery in certificated form of
Outstanding Securities equal in principal amount to such beneficial interests
and to have such Outstanding Securities registered in its name. Outstanding
Securities so issued in certificated form will be issued in denominations of
$1,000 or any amount in excess thereof that is an integral multiple of $1,000
and will be issued in registered form only, without coupons.
Any certificated Outstanding Securities presented for registration of
transfer or exchange shall (if so required by the Company or the Trustee) be
duly endorsed by, or accompanied by a written instrument or instruments of
transfer (in a form satisfactory to the Company and the Trustee) duly executed
by, the registered holder or his attorney duly authorized in writing.
SAME-DAY SETTLEMENT AND PAYMENT
All payments of principal and interest on Outstanding Securities
represented by Book-Entry Notes will be made by the Company in immediately
available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing-house or next-day funds. In contrast, the
Outstanding Securities are expected to trade in the Same-Day Funds Settlement
System of DTC, and, to the extent that secondary market trading activity in the
Outstanding Securities is effected through the facilities of DTC, such trades
will be settled in immediately available funds. No assurance can be given as to
the effect, if any, of settlement in immediately available funds on trading
activity in the Outstanding Securities.
PAYMENTS OF PRINCIPAL AND INTEREST
Principal of and interest on the Outstanding Securities will be payable at
the office or agency of the Company to be maintained in the Borough of
Manhattan, The City of New York, initially at the principal corporate trust
office of the Trustee, 111 Wall Street, Fifth Floor, New York, New York;
provided, however, that at the option of the Company, payment of interest may be
made by check mailed to the address of the
5
<PAGE> 6
person entitled thereto as such address shall appear in the register of holders
of Outstanding Securities. Notwithstanding the foregoing, payments of principal
and interest on Book-Entry Notes will be made as described above.
REDEMPTION
The Outstanding Securities offered hereby are not redeemable by the Company
at any time prior to maturity and are not subject to any sinking fund or other
analogous provision.
SUMMARY OF CERTAIN PROVISIONS OF INDENTURE
Payment and Paying Agents. Payment of principal of and premium, if any, on
the Outstanding Securities will be made in United States dollars against
surrender of such Outstanding Securities at the principal corporate trust office
of the Trustee in The City of New York. Payment of any installment of interest
on the Outstanding Securities will be made to the person in whose name such
Outstanding Securities are registered at the close of business on the Record
Date for such interest payment. Payments of such interest will be made at the
principal corporate trust office of the Trustee in The City of New York, or by a
check mailed to the holder at such holder's registered address (SECTIONS 307 AND
901). Notwithstanding the foregoing, payments of principal and interest on
Book-Entry Notes will be made as described above.
Limitations on Liens. The Company has agreed that it will not, and will
not permit any Subsidiary to, incur, issue, assume or guarantee any indebtedness
for money borrowed if such indebtedness is secured by a pledge of, lien on, or
security interest in, any shares of Voting Stock of any Significant Subsidiary,
whether such Voting Stock is now owned or is hereafter acquired, without
providing that each series of Securities issued under the Indenture (together
with, if the Company shall so determine, any other indebtedness or obligations
of the Company or any Subsidiary ranking equally with such Securities and then
existing or thereafter created) shall be secured equally and ratably with such
indebtedness. The foregoing limitation shall not apply to indebtedness secured
by a pledge of, lien on, or security interest in, any shares of Voting Stock of
any corporation at the time it becomes a Significant Subsidiary (SECTION 905).
Limitations on Mergers and Sales of Assets. The Company may not
consolidate or merge with or into any other corporation or sell, lease, transfer
or otherwise dispose of all or substantially all its assets to another Person
unless (a) the successor Person (if other than the Company) is organized and
existing under the laws of the United States of America or a State thereof or
the District of Columbia and assumes payment of the principal of and interest on
the Securities and the performance and the observance of the Indenture and (b)
such successor Person (or the Company) shall not, immediately after such merger
or consolidation, be in default in the performance of any covenant or condition
of the Indenture (SECTION 701).
Limitation on Indebtedness of a Subsidiary. As of September 1, 1993, the
First Supplemental Indenture, among other things, added a covenant of the
Company to the effect that for so long as any Securities are Outstanding, the
Company will not permit Smith Barney (Delaware) Inc. (formerly Smith Barney
Inc.), one of its Subsidiaries, to incur or suffer to exist any Indebtedness
(SECTION 908).
Certain Definitions. The term "Indebtedness" means any and all obligations
of a corporation for money borrowed which in accordance with generally accepted
accounting principles would be reflected on the balance sheet of such
corporation as a liability on the date as of which Indebtedness is to be
determined. The term "Significant Subsidiary" means a Subsidiary, including its
Subsidiaries, which meets any of the following conditions: (a) the Company's and
its other Subsidiaries' investments in and advances to the Subsidiary exceed 10
percent of the total assets of the Company and its Subsidiaries consolidated as
of the end of the most recently completed fiscal year; (b) the Company's and its
other Subsidiaries' proportionate share of the total assets (after intercompany
eliminations) of the Subsidiary exceeds 10 percent of the total assets of the
Company and its Subsidiaries consolidated as of the end of the most recently
completed fiscal year; or (c) the Company's and its other Subsidiaries' equity
in the income from continuing operations before income taxes, extraordinary
items and cumulative effect of a change in accounting principles of the
Subsidiary exceeds 10 percent of such income of the Company and its Subsidiaries
consolidated for the most recently completed fiscal year. The term "Subsidiary"
means a corporation more than 50% of the outstanding Voting Stock of which is
owned, directly or indirectly, by the Company or by one or more other
Subsidiaries, or by the
6
<PAGE> 7
Company and one or more other Subsidiaries. The term "Voting Stock" means
capital stock the holders of which have general voting power under ordinary
circumstances to elect at least a majority of the board of directors of a
corporation, provided that, for the purposes of such definition, capital stock
which carries only the right to vote conditioned on the happening of an event
shall not be considered voting stock whether or not such event shall have
happened (SECTIONS 101 AND 905).
The use of the term "all or substantially all" in Indenture provisions such
as the covenant regarding the limitations on mergers and sales of assets has not
been interpreted under New York law (which is the governing law of the
Indenture) to represent a specific quantitative test. Accordingly, there may be
a degree of uncertainty in ascertaining whether a particular transaction would
involve a disposition of "all or substantially all" of the assets of a person,
which uncertainty should be considered by prospective purchasers of Outstanding
Securities.
Modification and Waiver of the Indenture. Modifications and amendments to
the Indenture may be made by the Company and the Trustee with the consent of the
Holders of a majority in principal amount of the Outstanding securities of each
series affected thereby; provided, however, that no such modification or
amendment may, without the consent of the Holder of each Outstanding security
affected thereby, (a) change the stated maturity date of the principal of, or
any installment of principal of or interest on, any Security issued under the
Indenture, (b) reduce the principal amount of, or the premium, if any, or
interest, if any, on, any Security, (c) reduce the amount of principal of any
Original Issue Discount Security payable upon acceleration of the Maturity
thereof, (d) change the coin or currency in which any Securities or premium, if
any, or interest, if any, thereon is payable, or (e) reduce the percentage in
principal amount of Outstanding securities of any series, the consent of the
Holders of which is required for modification or amendment of the Indenture or
for waiver of compliance with certain provisions of the Indenture or for waiver
of certain defaults (SECTION 802).
Modifications and amendments of the Indenture may be made by the Company
and the Trustee without the consent of any Holder to evidence a successor to the
Company, to add to the Company's covenants or Events of Default, to permit or
facilitate Securities to be issued by book-entry or in bearer form or relating
to the place of payment thereof, to provide for a successor trustee, to
establish forms or terms of Securities, to change or eliminate any provision not
adversely affecting any interests of Holders of Outstanding securities in any
material respect or to cure any ambiguity or inconsistency (SECTION 801).
The Holders of a majority in principal amount of the Outstanding securities
of any series may on behalf of the Holders of all Securities of that series
waive, insofar as that series is concerned, compliance by the Company with
certain restrictive provisions of the Indenture (SECTION 906). The Holders of a
majority in principal amount of the Outstanding securities of any series may on
behalf of the Holders of all Securities of that series waive any past default
under the Indenture with respect to Securities of that series, except a default
in the payment of the principal of, or premium, if any, or interest, if any, on,
any Security of that series or in respect of any provision which under the
Indenture cannot be modified or amended without the consent of the Holder of
each Outstanding security of that series affected (SECTION 511).
Events of Default. The following are Events of Default under the Indenture
with respect to Securities of any series: (a) failure to pay principal of or
premium, if any, on any Security of that series at its Maturity; (b) failure to
pay any interest on any Security of that series when due, continued for 30 days;
(c) failure to deposit any sinking fund payment, when due, in respect of any
Security of that series; (d) any other defaults in the performance, or breach,
of any covenant of the Company in the Indenture, continued for 60 days after
written notice of such default or breach from the Trustee or the Holders of at
least 25% in principal amount of the Outstanding securities of that series; (e)
the occurrence of a default in payment of any debt that results from borrowing
in excess of $50,000,000, or any interest thereon, for a period longer than the
specified period of grace, which default shall have resulted in acceleration of
the maturity of such debt without such acceleration having been rescinded after
due notice in writing to the Company of such default by the Trustee or by such
notice to the Company and the Trustee by Holders of at least 10% of the
principal amount of the Outstanding securities of that series; (f) certain
events of bankruptcy, insolvency or reorganization; and (g) any other Event of
Default provided with respect to Securities of that series (SECTION 501).
7
<PAGE> 8
In accordance with applicable provisions of the Trust Indenture Act of
1939, as amended (the "TIA"), the Trustee is required to give the Holders notice
of all defaults known to the Trustee within 90 days after the occurrence
thereof, in the manner and to the extent provided by the TIA. The TIA further
provides that except in the case of default in the payment of the principal of
or interest on any indenture security, or in the payment of any sinking fund or
purchase fund installment, the Trustee shall not be required to give such notice
if it determines that withholding the notice is in the interests of the
indenture security holders.
If an Event of Default with respect to Outstanding securities of any series
shall occur and be continuing, either the Trustee or the Holders of at least 25%
in principal amount of the Outstanding securities of that series may declare the
principal amount (or, if the Securities of that series are Original Issue
Discount Securities, such portion of the principal amount as may be specified in
the terms of that series) of all Securities of that series to be due and payable
immediately. However, at any time after a declaration of acceleration with
respect to Securities of any series has been made, but before a judgment or
decree based on such acceleration has been obtained, the Holders of a majority
in principal amount of Outstanding securities of that series may, under certain
circumstances, rescind and annul such acceleration (SECTION 502). For
information as to waiver of defaults, see "Modification and Waiver of the
Indenture."
The Indenture provides that, subject to the provisions of the TIA, the
Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request or direction of any of the Holders, unless
such Holders shall have offered to the Trustee reasonable indemnity (SECTION
601). Subject to such provisions for indemnification of the Trustee, the Holders
of a majority in principal amount of the Outstanding securities of any series
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee, with respect to the Securities of that series
(SECTION 510).
The Company will be required to furnish to the Trustee annually a statement
as to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance (SECTION 907).
Defeasance. The Indenture provides that, if specified with respect to the
Securities of a particular series, the Company (a) shall be discharged from its
obligations in respect of the Securities of such series ("defeasance and
discharge"), or (b) may cease to comply with the restrictive covenants
("covenant defeasance") in Article Seven (Consolidation, Merger or Sale),
Section 905 (Limitations on Liens) and Section 908 (Limitation on Indebtedness
of Smith Barney (Delaware) Inc. (formerly Smith Barney Inc.)), and any such
omission shall not be an Event of Default with respect to the Securities of such
series, in each case at any time prior to the Stated Maturity or redemption
thereof, when the Company has irrevocably deposited with the Trustee, in trust,
(i) sufficient funds in the currency or currency unit in which the Securities
are denominated to pay the principal of (and premium, if any), and interest to
Stated Maturity (or redemption) on, the Securities of such series, or (ii) such
amount of direct obligations of, or obligations the principal of and interest on
which are fully guaranteed by, the government which issued the currency in which
the Securities are denominated, and which are not subject to prepayment,
redemption or call, as will, together with the predetermined and certain income
to accrue thereon without consideration of any reinvestment thereof, be
sufficient to pay when due the principal of (and premium, if any), and interest
to Stated Maturity (or redemption) on, the Securities of such series. Such
defeasance and discharge and covenant defeasance are conditioned upon the
Company's delivery of an opinion of counsel that the Holders of the Securities
of such series will have no federal income tax consequences as a result of such
deposit, and will be taxed in the same manner as if no defeasance and discharge
or covenant defeasance, as the case may be, had occurred. Upon such defeasance
and discharge, the Holders of the Securities of such series shall no longer be
entitled to the benefits of the Indenture, except for the purposes of
registration of transfer and exchange of the Securities of such series and
replacement of lost, stolen or mutilated Securities and shall look only to such
deposited funds or obligations for payment (SECTION 403).
Under current Federal income tax law, there is a substantial risk that the
defeasance and discharge contemplated in the preceding paragraph could be
treated as a taxable exchange of the Outstanding Securities for an interest in
the trust. As a consequence, each holder of the Outstanding Securities would
recognize gain or loss equal to the difference between the value of the holder's
interest in the trust and the holder's tax basis
8
<PAGE> 9
for the securities deemed exchanged. Thereafter, each holder would be required
to include in income his share of any income, gain and loss recognized by the
trust. Although a holder could be subject to Federal income tax on the deemed
exchange of the defeased Outstanding Securities for an interest in the trust,
such holder would not receive any cash until the maturity of such Outstanding
Securities. Prospective investors are urged to consult their own tax advisors as
to the specific consequences of a defeasance and discharge, including the
applicability and effect of tax laws other than the Federal income tax law.
Concerning the Trustee. Citibank, N.A. is the Trustee under the Indenture.
The Company has and may from time to time in the future have banking
relationships with the Trustee in the ordinary course of business.
TERMS OF THE OUTSTANDING SECURITIES
5 5/8% NOTES DUE NOVEMBER 15, 1998. The Notes are limited to $150,000,000
in aggregate principal amount, will mature on November 15, 1998, and bear
interest at the rate of 5 5/8% per annum. Such interest is payable semiannually
on May 15 and November 15 of each year, commencing May 15, 1994, to the persons
in whose names the Notes are registered at the close of business on the April 30
and October 31, respectively, preceding the payment date.
5 1/2% NOTES DUE JANUARY 15, 1999. The Notes are limited to $200,000,000
in aggregate principal amount, will mature on January 15, 1999, and bear
interest at the rate of 5 1/2% per annum. Such interest is payable semiannually
on January 15 and July 15 of each year, commencing July 15, 1994, to the persons
in whose names the Notes are registered at the close of business on the December
31 and June 30, respectively, preceding the payment date.
7 7/8% NOTES DUE OCTOBER 1, 1999. The Notes are limited to $150,000,000 in
aggregate principal amount, will mature on October 1, 1999, and bear interest at
the rate of 7 7/8% per annum. Such interest is payable semiannually on April 1
and October 1 of each year, commencing April 1, 1995, to the persons in whose
names the Notes are registered at the close of business on the March 15 and
September 15, respectively, preceding the payment date.
6 5/8% NOTES DUE JUNE 1, 2000. The Notes are limited to $148,500,000 in
aggregate principal amount, will mature on June 1, 2000, and bear interest at
the rate of 6 5/8% per annum. Such interest is payable semiannually on June 1
and December 1 of each year, commencing June 1, 1994, to the persons in whose
names the Notes are registered at the close of business on the May 15 and
November 15, respectively, preceding the payment date.
7.98% NOTES DUE MARCH 1, 2000. The Notes are limited to $200,000,000 in
aggregate principal amount, will mature on March 1, 2000, and bear interest at
the rate of 7.98% per annum. Such interest is payable semiannually on March 1
and September 1 of each year, commencing September 1, 1995, to the persons in
whose names the Notes are registered at the close of business on the February 15
and August 15, respectively, preceding the payment date.
7% NOTES DUE MAY 15, 2000. The Notes are limited to $150,000,000 in
aggregate principal amount, will mature on May 15, 2000, and bear interest at
the rate of 7% per annum. Such interest is payable semiannually on May 15 and
November 15 of each year, commencing November 15, 1995, to the persons in whose
names the Notes are registered at the close of business on the April 30 and
October 31, respectively, preceding the payment date.
5 7/8% NOTES DUE FEBRUARY 1, 2001. The Notes are limited to $250,000,000
in aggregate principal amount, will mature on February 1, 2001, and bear
interest at the rate of 5 7/8% per annum. Such interest is payable semiannually
on February 1 and August 1 of each year, commencing August 1, 1996, to the
persons in whose names the Notes are registered at the close of business on the
January 15 and July 15, respectively, preceding the payment date.
S&P 500 EQUITY LINKED NOTES DUE AUGUST 13, 2001. The Notes are limited to
$40,072,410 in aggregate principal amount, will mature on August 13, 2001, and
will bear no periodic payments of interest. At Maturity, a Holder will be
entitled to receive with respect to each Security, the principal amount thereof
plus an interest payment based on the percentage increase in the S&P 500
Composite Stock Price Index over the Starting
9
<PAGE> 10
Index Value. All capitalized terms have the meanings given them in the
Prospectus Supplement relating to the Notes.
6 1/2% NOTES DUE OCTOBER 15, 2002. The Notes are limited to $150,000,000
in aggregate principal amount, will mature on October 15, 2002, and bear
interest at the rate of 6 1/2% per annum. Such interest is payable semiannually
on April 15 and October 15 of each year, commencing April 15, 1996, to the
persons in whose names the Notes are registered at the close of business on the
March 30 and September 30, respectively, preceding the payment date.
7.50% NOTES DUE MAY 1, 2002. The Notes are limited to $150,000,000 in
aggregate principal amount, will mature on May 1, 2002, and bear interest at the
rate of 7.50% per annum. Such interest is payable semiannually on May 1 and
November 1 of each year, commencing November 1, 1995, to the persons in whose
names the Notes are registered at the close of business on the April 15 and
October 15, respectively, preceding the payment date.
6 5/8% NOTES DUE NOVEMBER 15, 2003. The Notes are limited to $200,000,000
in aggregate principal amount, will mature on November 15, 2003, and bear
interest at the rate of 6 5/8% per annum. Such interest is payable semiannually
on May 1 and November 1 of each year, commencing May 15, 1997, to the persons in
whose names the Notes are registered at the close of business on the April 15
and October 15, respectively, preceding the payment date.
6 7/8% NOTES DUE JUNE 15, 2005. The Notes are limited to $175,000,000 in
aggregate principal amount, will mature on June 15, 2005, and bear interest at
the rate of 6 7/8% per annum. Such interest is payable semiannually on June 15
and December 15 of each year, commencing December 15, 1995, to the persons in
whose names the Notes are registered at the close of business on the May 31 and
November 30, respectively, preceding the payment date.
7 1/8% NOTES DUE OCTOBER 1, 2006. The Notes are limited to $200,000,000 in
aggregate principal amount, will mature on October 1, 2006, and bear interest at
the rate of 7 1/8% per annum. Such interest is payable semiannually on April 1
and October 1 of each year, commencing April 1, 1997, to the persons in whose
names the Notes are registered at the close of business on the March 31 and
September 30, respectively, preceding the payment date.
S&P 500 EQUITY LINKED NOTES DUE MARCH 11, 2002. The Notes are limited to
$65,987,535 in aggregate principal amount, will mature on March 11, 2002, and
will bear no periodic payments of interest. At Maturity, a Holder will be
entitled to receive with respect to each Security, the principal amount thereof
plus an interest payment based on the percentage increase in the S&P 500
Composite Stock Price Index over the Starting Index Value. All capitalized terms
have the meanings given them in the Prospectus Supplement relating to the Notes.
7% NOTES DUE MARCH 15, 2004. The Notes are limited to $250,000,000 in
aggregate principal amount, will mature on March 15, 2004, and bear interest at
the rate of 7% per annum. Such interest is payable semiannually on March 15 and
September 15 of each year, commencing September 15, 1997, to the persons in
whose names the Notes are registered at the close of business on the February 28
and August 31, respectively, preceding the payment date.
7 3/8% NOTES DUE MAY 15, 2007. The Notes are limited to $200,000,000 in
aggregate principal amount, will mature on May 15, 2007, and bear interest at
the rate of 7 3/8% per annum. Such interest is payable semiannually on May 15
and November 15 of each year, commencing November 15, 1997, to the persons in
whose names the Notes are registered at the close of business on the April 30
and October 31, respectively, preceding the payment date.
6 5/8% NOTES DUE JULY 1, 2002. The Notes are limited to $250,000,000 in
aggregate principal amount, will mature on July 1, 2002, and bear interest at
the rate of 6 5/8% per annum. Such interest is payable semiannually on January 1
and July 1 of each year, commencing January 1, 1998, to the persons in whose
names the Notes are registered at the close of business on the December 31 and
August 31, respectively, preceding the payment date.
10
<PAGE> 11
FLOATING RATE MEDIUM-TERM NOTES DUE SEPTEMBER 10, 2002. The Notes are
limited to $25,000,000 in aggregate principal amount, will mature on September
10, 2002, and bear interest at the rate of 15 basis points over LIBOR. Such
interest is payable on the third Wednesday of each March, June, September and
December, commencing December 17, 1997, to the persons in whose names the Notes
are registered at the close of business on 15th day preceding the payment date.
S&P 500 EQUITY LINKED NOTES DUE OCTOBER 3, 2003. The Notes are limited to
$62,318,445 in aggregate principal amount, will mature on October 3, 2003, and
will bear no periodic payments of interest. At Maturity, a Holder will be
entitled to receive with respect to each Security, the principal amount thereof
plus an interest payment based on the percentage increase in the S&P 500
Composite Stock Price Index over the Starting Index Value. All capitalized terms
have the meanings given them in the Prospectus Supplement relating to the Notes.
6 3/8% NOTES DUE OCTOBER 1, 2004. The Notes are limited to $200,000,000 in
aggregate principal amount, will mature on October 1, 2004, and bear interest at
the rate of 6 3/8% per annum. Such interest is payable semiannually on April 1
and October 1 of each year, commencing April 1, 1998, to the persons in whose
names the Notes are registered at the close of business on the March 31 and
September 30, respectively, preceding the payment date.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Outstanding Securities offered hereby. All offers and sales of Outstanding
Securities pursuant to this Prospectus will be for the account of the respective
SSBH Subsidiary in connection with market-making transactions.
MARKET-MAKING ACTIVITIES
This Prospectus may be used by any SSBH Subsidiary in connection with
offers and sales of the Outstanding Securities in market-making transactions at
negotiated prices related to prevailing market prices at the time of sale. Any
SSBH Subsidiary may act as principal or agent in such transactions. The SSBH
Subsidiaries have no obligation to make a market in any of the Outstanding
Securities and may discontinue their market-making activities at any time
without notice, at their sole discretion.
Smith Barney Inc. and Salomon Brothers Inc are, and each of the SSBH
Subsidiaries may be, a member of the National Association of Securities Dealers,
Inc. (the "NASD") and may participate in distributions of the Outstanding
Securities. Accordingly, the participation of any such entity in the offerings
of Outstanding Securities will conform with the requirements of Rule 2720 of the
Conduct Rules of the NASD regarding the underwriting by an affiliate of the
securities of its parent.
ERISA MATTERS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes certain restrictions on employee benefit plans ("Plans") that are
subject to ERISA and on persons who are fiduciaries with respect to such Plans.
In accordance with ERISA's general fiduciary requirements, a fiduciary with
respect to any such Plan who is considering the purchase of the Outstanding
Securities on behalf of such Plan should determine whether such purchase is
permitted under the governing Plan documents and is prudent and appropriate for
the Plan in view of its overall investment policy and the composition and
diversification of its portfolio. Other provisions of ERISA and Section 4975 of
the Internal Revenue Code of 1986, as amended (the "Code"), prohibit certain
transactions involving the assets of a Plan and persons who have certain
specified relationships to the Plan ("parties in interest" within the meaning of
ERISA or "disqualified persons" within the meaning of Section 4975 of the Code).
Thus, a Plan fiduciary considering the purchase of the Outstanding Securities
should consider whether such a purchase might constitute or result in a
prohibited transaction under ERISA or Section 4975 of the Code.
The Company, directly or through its affiliates, may be considered a "party
in interest" or a "disqualified person" with respect to many Plans that are
subject to ERISA. The purchase of Outstanding Securities by a Plan that is
subject to the fiduciary responsibility provisions of ERISA or the prohibited
transaction provisions
11
<PAGE> 12
of Section 4975 of the Code (including individual retirement accounts and other
plans described in Section 4975(e)(1) of the Code) and with respect to which the
Company is a party in interest or a disqualified person may constitute or result
in a prohibited transaction under ERISA or Section 4975 of the Code, unless such
Outstanding Securities are acquired pursuant to and in accordance with an
applicable exemption, such as Prohibited Transaction Class Exemption ("PTCE")
84-14 (an exemption for certain transactions determined by an independent
qualified professional asset manager), PTCE 91-38 (an exemption for certain
transactions involving bank collective investment funds), PTCE 90-1 (an
exemption for certain transactions involving insurance company pooled separate
accounts, or PTCE 95-60 (an exemption for certain transactions involving
insurance company general accounts). ANY PENSION OR OTHER EMPLOYEE BENEFIT PLAN
PROPOSING TO ACQUIRE ANY OUTSTANDING SECURITIES SHOULD CONSULT WITH ITS COUNSEL.
EXPERTS
The consolidated financial statements and schedules of Salomon Inc as of
December 31, 1996 and 1995, and for each of the years in the three-year period
ended December 31, 1996, included in Salomon Inc's Annual Report on Form 10-K
for the year ended December 31, 1996, (the "Salomon Financials") are
incorporated by reference herein, in reliance upon the report (also incorporated
by reference herein) of Arthur Andersen LLP, independent public accountants, and
upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements and schedule of Smith Barney Holdings
Inc. and its subsidiaries for the fiscal years ended December 31, 1996 and 1995,
and for each of the three years in the period ended December 31, 1996, included
in the Company's Current Report on Form 8-K filed on September 29, 1997, have
been audited by Coopers & Lybrand L.L.P., independent certified public
accountants, as set forth in their report therein, included thereon and
incorporated herein by reference. Such financial statements referred to above
are incorporated by reference herein in reliance upon such report given upon the
authority of said firm as experts in accounting and auditing.
The supplemental consolidated financial statements of the Company and its
subsidiaries for the fiscal years ended December 31, 1996 and 1995 and for each
of the three years in the period ended December 31, 1996, included in the
Company's Current Report on Form 8-K filed on November 28, 1997, have been
audited by Coopers & Lybrand L.L.P., independent certified public accountants,
as set forth in their report thereon, included therein and incorporated herein
by reference, which report states that Coopers & Lybrand L.L.P. did not audit
the Salomon Financials and that their opinion with respect to any amounts
contained in the Salomon Financials is based on the report of Arthur Andersen
LLP. Such financial statements referred to above are incorporated by reference
herein in reliance upon such reports given upon the authority of said firm as
experts in accounting and auditing.
12
