Pricing Supplement No Euro D204 Dated 6/27/97 Rule 424(b)(3)
(To Prospectus dated April 5, 1996 and File No. 333-01807
Prospectus Supplement dated April 5, 1996)
This Pricing Supplement consists of 24 page(s)
SALOMON INC
Medium-Term Notes, Series D
(Bearer Notes)
Due More Than Nine Months from Date of Issue
Principal Amount or Face Amount: 3,000,000,000 Italian Lira (ITL)
Issue Price: 91.00%
Proceeds to Company on original issuance: ITL 2,730,000,000
Commission or Discount on original issuance: USD 5,160
Salomon Brothers International Limited's capacity on original issuance:
| | As agent |X| As principal
If as principal
|X| The Bearer Notes are being offered at varying prices related
to prevailing market prices at the time of resale.
| | The Bearer Notes are being offered at a fixed initial public
offering price of % of Principal Amount or Face Amount.
Original Issue Date: 6/30/97
Stated Maturity: 12/30/2002
Specified Currency: ITL
(If other than U.S. Dollars)
Authorized Denominations: ITL 1,000,000
(If other than as set forth in the Prospectus Supplement)
Interest Payment Dates:
Accrue to Pay: | | Yes |X| No
Indexed Principal Note: |X| Yes (See Attached) | | No
Type of Interest on Note: | | Fixed Rate | | Floating Rate | | Indexed Rate
(See Attached)
Interest Rate (Fixed Rate Notes): None, See attached.
Initial Interest Rate (Floating Rate Notes): N.A.
Base Rate: | | CD Rate | | Commercial Paper Rate | | Federal Funds Rate
| | LIBOR Telerate | | LIBOR Reuters | | Treasury Rate
| | Treasury Rate Constant Maturity | | Other (See Attached)
Calculation Agent (If other than Citibank): | | Salomon Brothers
|X| Other (See Attached)
Computation of Interest: | | 30 over 360 | | Actual over Actual
| | Actual over 360 | | Other (See Attached)
(If other than as set forth in the Prospectus Supplement)
Interest Reset Dates: N.A.
Rate Determination Dates: N.A.
(If other than as set forth in the Prospectus Supplement)
Index Maturity: N.A.
Spread (+/-): N.A.
Spread Multiplier: N.A.
Change in Spread, Spread Multiplier or Fixed Interest Rate prior to
Stated Maturity: | | Yes (See Attached) |X| No
Maximum Interest Rate: N.A.
Minimimum Interest Rate: N.A.
Amortizing Note: | | Yes (See Attached) |X| No
Optional Redemption: | | Yes |X| No
Optional Redemption Dates:
Redemption Prices:
Redemption: | | In whole only and not in part | | May be in whole or in part
Optional Repayment: | | Yes |X| No
Optional Repayment Dates:
Optional Repayment Prices:
Discount Note: | | Yes |X| No
Total Amount of OID:
Yield to Maturity:
Listed on Luxembourg Stock Exchange: | | Yes |X| No
Common Code: 7584652
ISIN: XS0075846526
Cusip: 79549H9N6
Pricing Supplement No. Euro D 204 dated June 27, 1997
(to Prospectus Supplement dated April 5, 1996
to Prospectus dated April 5, 1996)
DESCRIPTION OF THE NOTES
General
The description in this Pricing Supplement of the
particular terms of the Bearer Notes offered hereby (the "Notes")
supplements, and to the extent inconsistent therewith replaces,
the descriptions of the general terms and provisions of the
Bearer Notes set forth in the accompanying Prospectus and
Prospectus Supplement, to which descriptions reference is hereby
made. The Notes offered hereby are Indexed Principal Notes, as
described under "Description of Bearer Notes" in the accompanying
Prospectus Supplement, to which description reference is hereby
made.
Risk Factors
THE NOTES DO NOT BEAR PERIODIC PAYMENTS OF INTEREST.
The Notes are Indexed Principal Notes. The amount in
respect of principal with respect to a Note that a Holder will
receive at Stated Maturity will be at least 125% of the face
amount of such Note. However, any such amount in excess of 125%
of such face amount that may be payable in respect of principal
will determined by reference to changes in the value of the
Standard & Poor's 500 Index and the Nikkei 225 Index during the
period between July 7, 1997 and December 15, 2002, as described
below under "Indexed Principal". As described more fully below
under "Indexed Principal", if the sum of the arithmetic average
of published closing prices of the Standard & Poor's 500 Index
and the Nikkei 225 Index on the fifteenth day of each calendar
month during the period between July 1997 and December 2002
exceeds 125% of the initial reference level determined by the
Calculation Agent based upon the closing value of each such index
on July 7, 1997, the amount in respect of principal payable with
respect to a Note at Stated Maturity will be greater than 125% of
the face amount of such Note. If this condition is not satisfied,
the amount in respect of principal payable with respect to a Note
at Stated Maturity will be equal to 125% of the face amount of
such Note. Holders of the Notes should be prepared not to receive
more than 125% of the face amount of a Note in respect of
principal on such Note.
Definitions
"Business Day" means any day, other than a Saturday or a
Sunday, that is not a day on which banking institutions are
authorized or required by law or regulation to be closed in (i)
New York, New York, (ii) London, England, (iii) Milan, Italy or
(iv) Tokyo, Japan.
The Calculation Agent will be Salomon Brothers
International Limited, which is a wholly-owned subsidiary of
Salomon Inc (the "Company").
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Interest
THE NOTES DO NOT BEAR PERIODIC PAYMENTS OF INTEREST.
Indexed Principal
The amount payable in respect of principal on a Note at
Stated Maturity (the "Indexed Principal Amount") is to be
determined by the Calculation Agent in accordance with the
formula set out below:
IPA = FA times the greater of (a) [.50 times (SP plus N)]; and
(b) 1.25; where
"IPA" means the Indexed Principal Amount payable in
respect of the Note at Stated Maturity.
"FA" means the Face Amount of the Note (as stated on
the cover of this Pricing Supplement).
"SP" means SPA divided by SPO; where
SPA means the arithmetic average, as determined by the
Calculation Agent, of the closing prices of the S&P 500 Composite
Stock Index (the "S&P 500 Index"), as published by Standard &
Poor's ("S&P"), a Division of the McGraw Hill Companies, Inc., on
the fifteenth day of each calendar month from and including July
1997 through and including December 2002 (or, if any such date is
not a Business Day, the next succeeding Business Day).
SPO means the closing price of the S&P 500 Index, as
published by S&P, on July 7, 1997.
"N" means NA divided by NO; where
NA means the arithmetic average, as determined by the
Calculation Agent, of the closing prices of the Nikkei 225 Index,
as published by Nihon Keizai Shimbun, Inc. ("NKS"), on the
fifteenth day of each calendar month from and including July 1997
through and including December 2002 (or, if any such date is not
a Business Day, the next succeeding Business Day).
NO means the closing price of the Nikkei 225 Index, as
published by NKS, on July 7, 1997.
If S&P discontinues publication of the S&P 500 Index and
publishes a successor or substitute index that the Company
determines, in its sole discretion, to be comparable to the S&P
500 Index (any such successor or substitute index being
hereinafter referred to as a "Successor S&P Index"), then the
Indexed Principal Amount of the Notes shall be determined by the
Calculation Agent, on behalf of the Company, based on such
Successor S&P Index. In the event that the S&P 500 Index or any
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Successor S&P Index ceases publication, the Calculation Agent, in
its sole discretion, on behalf of the Company shall calculate the
Indexed Principal Amount based on the formula and method used in
calculating the S&P 500 Index as of the Issue Date of the Notes
using the closing values of appropriate securities on the New
York Stock Exchange (the "NYSE"), chosen in its discretion.
If NKS discontinues publication of the Nikkei 225 Index and
publishes a successor or substitute index that the Company
determines, in its sole discretion, to be comparable to the
Nikkei 225 Index (any such successor or substitute index being
hereinafter referred to as a "Successor Nikkei Index"), then the
Indexed Principal Amount of the Notes shall be determined by the
Calculation Agent, on behalf of the Company, based on such
Successor Nikkei Index. In the event that the Nikkei 225 Index or
any Successor Nikkei Index ceases publication, the Calculation
Agent, in its sole discretion, on behalf of the Company shall
calculate the Indexed Principal Amount based on the formula and
method used in calculating the Nikkei 225 Index as of the Issue
Date of the Notes using the closing values of appropriate
securities on the Tokyo Stock Exchange (the "TSE"), chosen in its
discretion.
Neither the Calculation Agent nor the Company will have any
responsibility for errors or omissions in making such
calculations or determinations. The Calculation Agent shall not
be an agent of the Holders of Notes, and its calculations and
determinations hereunder shall (except in the case of manifest
error) be final and binding on the Company and such Holders. The
Company shall not bear any liability for any mistake,
misstatement or misquotation of (i) the S&P 500 Index or any
Successor S&P Index by S&P or any other publisher thereof, or
(ii) the Nikkei 225 Index or any Successor Nikkei Index by NKS or
any other publisher thereof.
DESCRIPTION OF THE S&P 500 INDEX
Unless otherwise stated, all information herein relating to
the S&P 500 Index has been derived from publicly-available
material prepared by S&P. Such information reflects the policies
of S&P and is subject to change at the discretion of S&P.
The S&P 500 Index is published by S&P and is intended to
provide a performance benchmark for the U.S. equity markets. The
calculation of the value of the S&P 500 Index (discussed below in
further detail) is based on the relative value of the aggregate
Market Value (as defined below) of the common stocks of 500
companies (the "Component Stocks") as of a particular time as
compared to the aggregate average Market Value of the common
stocks of 500 similar companies during the base period of the
years 1941 through 1943. The "Market Value" of any Component
Stock is the product of the market price per share and the number
of the then outstanding shares of such Component Stock. The 500
companies are not the 500 largest companies listed on the NYSE
and not all 500 companies are listed on such exchange. S&P
chooses companies for inclusion in the S&P 500 Index with an aim
of achieving a distribution by broad industry groupings that
approximates the distribution of these groupings in the common
stock population of the U.S. equity market. S&P may from time to
time, in its sole discretion, add companies to, or delete
companies from, the S&P 500 Index to
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achieve the objectives stated above. Relevant criteria employed
by S&P include the viability of the particular company, the
extent to which that company represents the industry group to
which it is assigned, the extent to which the company's common
stock is widely held and the Market Value and trading activity of
the common stock of that company.
The S&P 500 Index is calculated using a base-weighted
aggregate methodology: the level of the Index reflects the total
Market Value of all 500 Component Stocks relative to the S&P 500
Index's base period of 1941-43 (the "Base Period"). An indexed
number is used to represent the results of this calculation in
order to make the value easier to work with and track over time.
The actual total Market Value of the Component Stocks
during the Base Period has been set equal to an indexed value of
10. This is often indicated by the notation 1941-43=10. In
practice, the daily calculation of the S&P 500 Index is computed
by dividing the total Market Value of the Component Stocks by a
number called the Index Divisor. By itself, the Index Divisor is
an arbitrary number. However, in the context of the calculation
of the S&P 500 Index, it is the only link to the original base
period value of the Index. The Index Divisor keeps the Index
comparable over time and is the manipulation point for all
adjustments to the S&P 500 Index ("Index Maintenance"). Index
Maintenance includes monitoring and completing the adjustments
for company additions and deletions, share changes, stock splits,
stock dividends, and stock price adjustments due to company
restructurings or spin-offs.
To prevent the value of the Index from changing due to
corporate actions, all corporate actions which affect the total
Market Value of the Index require an Index Divisor adjustment. By
adjusting the Index Divisor for the change in total Market Value,
the value of the S&P 500 Index remains constant. This helps
maintain the value of the Index as an accurate barometer of stock
market performance and ensures that the movement of the Index
does not reflect the corporate actions of individual companies in
the Index. All Index Divisor adjustments are made after the close
of trading and after the calculation of the closing value of the
S&P 500 Index. Some corporate actions, such as stock splits and
stock dividends, require simple changes in the common shares
outstanding and the stock prices of the companies in the Index
and do not require Index Divisor adjustments.
The table below summarizes the types of S&P 500 Index
maintenance adjustments and indicates whether or not an Index
Divisor adjustment is required.
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Divisor
Type of Corporate Adjustment
Action Adjustment Factor Required
- ----------------- ----------------- --------
Stock split Shares Outstanding multiplied by 2; No
(i.e. 2x1) Stock Price diveded by 2
Share issuance Shares Outstanding plus newly issued Yes
(i.e. Change > Shares
5%)
Share repurchase Shares Outstanding minus Repurchased Yes
(i.e. Change > Shares
5%)
Special cash Share Price minus Special Dividend Yes
dividends
Company change Add new company Market Value Minus Yes
old company Market Value
Rights offering Price of parent company minus Yes
Price of Rights
---------------
Right Ratio
Spin-Offs Price of parent company minus Yes
Price of Spin-Off Co.
---------------------
Share Exchange Ratio
Stock splits and stock dividends do not affect the Index
Divisor of the S&P 500 Index, because following a split or
dividend both the stock price and number of shares outstanding
are adjusted by S&P so that there is no change in the Market
Value of the Component Stock. All stock split and dividend
adjustments are made after the close of trading on the day
before the ex-date.
Each of the corporate events exemplified in the table
requiring an adjustment to the Index Divisor has the effect of
altering the Market Value of the Component Stock and consequently
of altering the aggregate Market Value of the Component Stocks
(the "Post-Event Aggregate Market Value"). In order that the
level of the Index (the "Pre-Event Index Value") not be affected
by the altered Market Value (whether increase or decrease) of the
affected Component Stock, a new Index Divisor ("New Divisor") is
derived as follows:
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Post-Event Aggregate Market = Pre-Event Index Value
Value
---------------------------
New Divisor
New Divisor = Post-Event Aggregate Market
Value
---------------------------
Pre-Event Index Value
A large part of the S&P 500 Index maintenance process
involves tracking the changes in the number of shares outstanding
of each of the S&P 500 Index companies. Four times a year, on a
Friday shortly prior to the end of each calendar quarter, the
share totals of companies in the Index are updated as required by
any changes in the number of shares outstanding. After the totals
are updated the Index Divisor is adjusted to compensate for the
net change in the total Market Value of the Index. In addition,
any changes over 5% in the current common shares outstanding for
the S&P 500 Index companies are carefully reviewed on a weekly
basis, and when appropriate, an immediate adjustment is made to
the Index Divisor.
None of the Company, the Calculation Agent, the Trustee
under the Senior Debt Indenture or the Agent accepts any
responsibility for the calculation, maintenance or publication of
the S&P 500 Index or any Successor S&P Index or substitute index.
License Agreement
S&P and Salomon Brothers Inc (an affiliate of the Company)
have entered into a non-exclusive license agreement providing for
the license to Salomon Brothers Inc, and any of its affiliated or
subsidiary companies (including the Company), in exchange for a
fee, of the right to use the S&P 500 Index, which is owned and
published by S&P, in connection with certain securities.
including the Notes.
The license agreement between S&P and Salomon Brothers Inc
provides that the following language must be set forth in this
Pricing Supplement:
The Notes are not sponsored, endorsed, sold or
promoted by S&P. S&P makes no representation or
warranty, express or implied, to the holders of the
Notes or any member of the public regarding the
advisability of investing in securities generally or
in the Notes particularly or the ability of the S&P
500 Index to track general stock market performance.
S&P's only relationship to the Company with respect to
the Notes is the licensing of certain trademarks and
trade names of S&P and of the S&P 500 Index, which is
determined, composed and calculated by S&P without
regard to the Company or the Notes. S&P has no
obligation to take the needs of the Company or the
holders of the Notes into consideration in
determining, composing or calculating the
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<PAGE>
S&P 500 Index. S&P is not responsible for and has not
participated in the determination of the timing of,
prices at, or quantities of the Notes to be issued or
in the determination or calculation of the equation by
which the Notes are to be converted into cash. S&P has
no obligation or liability in connection with the
administration, marketing or trading of the Notes.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE
COMPLETENESS OF THE S&P 500 INDEX OR ANY DATA INCLUDED
THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY
ERRORS, OMISSIONS OR INTERRUPTIONS THEREIN. S&P MAKES
NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE
OBTAINED BY THE COMPANY, HOLDERS OF THE NOTES OR ANY
OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500
INDEX OR ANY DATA INCLUDED THEREIN. S&P MAKES NO
EXPRESS OR IMPLIED WARRANTIES, AND HEREBY EXPRESSLY
DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE
S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT
LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P
HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT
OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS).
EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
"Standard & Poor's(R)", "S&P(R)", "S&P 500(R)", "Standard &
Poor's 500," and "500" are trademarks of The McGraw-Hill
Companies, Inc. and have been licensed for use by the Company.
Historical Information
The following table sets forth the high and low daily
closing levels, as well as end-of-quarter closing levels, of the
S&P 500 Index for each quarter in the period from January 1, 1992
through June 15, 1997. The historical values of the S&P 500 Index
should not be taken as an indication of future performance.
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Daily Closing Levels
High Low Period
End
1992:
1st Quarter 420.77 403.00 403.69
2nd Quarter 418.49 394.50 408.14
3rd Quarter 425.27 409.16 417.80
4th Quarter 441.28 402.66 435.71
1993:
1st Quarter 456.34 429.05 451.67
2nd Quarter 453.85 433.54 450.53
3rd Quarter 463.56 441.43 458.93
4th Quarter 470.94 457.48 466.45
1994:
1st Quarter 482.00 445.55 445.76
2nd Quarter 462.37 438.92 444.27
3rd Quarter 476.07 446.13 462.71
4th Quarter 473.77 445.45 459.27
1995:
1st Quarter 503.90 459.11 500.71
2nd Quarter 551.07 501.85 544.75
3rd Quarter 586.77 547.09 584.41
4th Quarter 621.69 576.72 615.93
1996:
1st Quarter 661.45 598.48 645.43
2nd Quarter 678.51 631.18 669.12
3rd Quarter 687.33 626.65 687.33
4th Quarter 757.03 689.08 740.74
1997:
1st Quarter 816.29 737.01 757.12
2nd Quarter (through June 16) 893.90 737.65 893.90
The closing level of the S&P 500 Index on June 25, 1997 was
888.99.
Since its inception, the S&P 500 Index has experienced
significant daily price fluctuations. Any historical upward or
downward trend in the closing level of the S&P 500 Index during
any period set forth above is not any indication that the S&P 500
Index is more or less likely to increase or decline at any time
during the term of the Notes.
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DESCRIPTION OF NIKKEI 225 INDEX
Unless otherwise stated, all information herein relating to
the Nikkei 225 Index has been derived from the Stock Market
Indices Data Bank published by NKS and other publicly-available
sources. Such information reflects the policies of NKS and is
subject to change at the discretion of NKS.
The Nikkei 225 Index is a stock index calculated, published
and disseminated by NKS that measures the composite price
performance of selected Japanese stocks. The Nikkei 225 Index is
currently based on 225 highly capitalized underlying stocks
trading on the TSE representing a broad cross-section of Japanese
industries. (See Appendix A hereto for a list of the 225
underlying stocks as of June 15, 1997.) All 225 underlying stocks
are stocks listed in the First Section of the TSE. Stocks listed
in the First Section are among the most actively traded stocks on
the TSE.
The Nikkei 225 Index is a modified, price-weighted index
(i.e., an underlying stock's weight in the index is based on its
price per share rather than the total market capitalization of
the issuer) which is calculated by (i) multiplying the per share
price of each underlying stock by the corresponding weighting
factor for such underlying stock (a "Weight Factor"), (ii)
calculating the sum of all these products and (iii) dividing such
sum by a divisor (the "Divisor"). The Divisor, initially set in
1949 at 225, was 9.999 as of June 15, 1997 and is subject to
periodic adjustments as set forth below. Each Weight Factor is
computed by dividing yen 50 by the par value of the relevant
underlying stock, so that the share price of each underlying
stock when multiplied by its Weight Factor corresponds to a share
price based on a uniform par value of yen 50. The stock prices
used in the calculation of the Nikkei 225 Index are those
reported by a primary market for the underlying stocks (currently
the TSE). The level of the Nikkei 225 Index is calculated once
per minute during TSE trading hours.
In order to maintain continuity in the level of the Nikkei
225 Index in the event of certain changes due to non-market
factors affecting the underlying stocks, such as the addition or
deletion of stocks, substitution of stocks, stock dividends,
stock splits or distributions of assets to stockholders, the
Divisor used in calculating the Nikkei 225 Index is adjusted in a
manner designed to prevent any instantaneous change or
discontinuity in the level of the Nikkei 225 Index. Thereafter,
the Divisor remains at the new value until a further adjustment
is necessary as the result of another change. As a result of such
change affecting any underlying stock, the divisor is adjusted in
such a way that the sum of all share prices immediately after
such change multiplied by the applicable Weight Factor and
divided by the new Divisor (i.e., the level of the Nikkei 225
Index immediately after such change) will equal the level of the
Nikkei 225 Index immediately prior to the change.
Underlying stocks may be deleted or added by NKS. Any stock
becoming ineligible for listing in the First Section of the TSE
due to any of the following reasons will be deleted from the
underlying stocks: (i) bankruptcy of the issuer, (ii) merger of
the issuer with, or acquisition of the issuer by, another
company, (iii) delisting of such stock, (iv) transfer of such
stock to the "Seiri-Post" because of excess debt of the issuer or
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because of any other reason or (v) transfer of such stock to the
Second Section. Upon deletion of a stock from the underlying
stocks, NKS will select a suitable replacement for such deleted
underlying stock in accordance with certain criteria. In an
exceptional case, a newly listed stock in the First Section of
the TSE that is recognized by NKS to be representative of a
market may be added to the underlying stocks. In such a case, an
existing underlying stock with low trading volume and not
representative of a market will be deleted by NKS.
NKS is under no obligation to continue the calculation and
dissemination of the Nikkei 225 Index. The Notes are not
sponsored, endorsed, sold or promoted by NKS. No inference should
be drawn from the information contained in this Pricing
Supplement that NKS makes any representation or warranty, implied
or express, to the Company, the Holders or any member of the
public regarding the advisability of investing in securities
generally or in the Notes in particular or the ability of the
Nikkei 225 Index to track general stock market performance. NKS
has no obligation to take the needs of the Company or the Notes
into consideration in determining, composing or calculating the
Nikkei 225 Index. NKS is not responsible for, and has not
participated in the determination of, the timing of, prices for,
or quantities of, the Notes to be issued or in the determination
or calculation of the equation by which the Indexed Principal
Amount payable with respect to the Notes is set. NKS has no
obligation or liability in connection with the administration,
marketing or trading of the Notes.
The use of and references to the Nikkei 225 Index in
connection with the Notes has been consented to by NKS, the
publisher of the Nikkei 225 Index.
None of the Company, the Calculation Agent, the Trustee
under the Senior Debt Indenture or the Agent accepts any
responsibility for the calculation, maintenance or publication of
the Nikkei 225 Index or any Successor Nikkei Index or substitute
index. NKS disclaims all responsibility for any errors or
omissions in the calculation and dissemination of the Nikkei 225
Index or the manner in which such index is applied in determining
the Indexed Principal Amount or any other amount payable in
respect of the Notes.
Historical Data on Nikkei 225 Index
NKS first calculated and published the Nikkei 225 Index in
1970. The following table sets forth the highest and lowest daily
closing level of the period from January 1, 1992 through June 15,
1997, as well as the closing level of the Nikkei 225 Index as of
the end of each such quarter or partial quarter. The historical
values of the Nikkei 225 Index should not be taken as an
indication of future performance.
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Daily Closing Levels
Highest Lowest Closing
Level Level Level
1992:
1st Quarter 23,801.18 19,345.95 19,345.95
2nd Quarter 18,804.60 15,741.27 15,951.73
3rd Quarter 18,908.47 14,309.41 17,399.08
4th Quarter 17,690.67 15,993.48 16,924.95
1993:
1st Quarter 19,048.38 16,287.45 18,591.45
2nd Quarter 21,076.00 19,099.09 19,590.00
3rd Quarter 21,148.11 19,621.46 20,105.71
4th Quarter 20,500.25 16,078.71 17,417.24
1994:
1st Quarter 20,677.77 17,369.74 19,111.92
2nd Quarter 21,552.81 19,122.22 20,643.93
3rd Quarter 20,862.77 19,468.89 19,563.81
4th Quarter 20,148.83 18,666.93 19,723.06
1995:
1st Quarter 19,684.04 15,749.77 16,139.95
2nd Quarter 17,103.69 14,507.17 14,517.40
3rd Quarter 18,847.89 14,295.90 17,913.06
4th Quarter 20,023.52 17,337.19 19,868.15
1996:
1st Quarter 21,406.85 19,734.70 21,406.85
2nd Quarter 22,666.70 21,171.82 22,530.75
3rd Quarter 22,455.49 20,107.11 21,556.40
4th Quarter 21,612.30 19,161.71 19,361.35
1997:
1st Quarter 19,446.00 17,303.65 18,003.40
2nd Quarter (through June 16) 20,681.07 17,485.75 20,681.07
The closing level of the Nikkei 225 Index on June 25, 1997
was 20,679.27.
Since its inception, the Nikkei 225 Index has experienced
significant daily price fluctuations. Any historical upward or
downward trend in the closing level of the Nikkei 225 Index
during any period set forth above is not any indication that the
Nikkei 225 Index is more or less likely to increase or decline at
any time during the term of the Notes.
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The Tokyo Stock Exchange
The Tokyo Stock Exchange is one of the world's largest
securities exchanges in terms of market capitalization. The TSE
is a two-way, continuous, pure auction market. Trading hours are
currently from 9:00 A.M. to 11:00 A.M. and from 12:30 P.M. to
3:00 P.M., Tokyo time, Monday through Friday.
Due to the time zone difference, on any normal trading day
the TSE will close prior to the opening of business in New York
City on the same calendar day. Therefore, the closing level of
the Nikkei 225 Index on such trading day will generally be
available in the United States by the opening of business on the
same calendar day.
The TSE has adopted certain measures intended to prevent
any extreme short-term price fluctuations resulting from order
imbalances. These include daily price floors and ceilings
intended to prevent extreme fluctuations in individual stock
prices. In general, any stocks listed on the TSE cannot be traded
at a price outside of these limits which are stated in absolute
Japanese yen, and not percentage, limits from the closing price
of the stock on the previous day. In addition, when there is a
major order imbalance in a listed stock, the TSE posts a "special
bid quote" or a "special asked quote" for that stock at a
specified higher or lower price level than the stock's last sale
price in order to solicit counter orders and balance supply and
demand for stock. Investors should also be aware that the TSE may
suspend the trading of individual stocks in certain limited and
extraordinary circumstances including, for example, unusual
trading activity in that stock. As a result, variations in the
Nikkei 225 Index may be limited by price limitations, or by
suspension of trading, on individual stocks which comprise the
Nikkei 225 Index which may, in turn, adversely affect the value
of the Notes under certain circumstances.
License Agreement
NKS and the Company have entered into a license agreement
providing for a license, in exchange for a fee, of certain trade
and service marks with respect to indices owned and published by
NKS in connection with the issuance of the Notes. The use of and
reference to the Nikkei 225 Index in connection with the Notes
have been consented to by NKS, the publisher of the Nikkei 225
Index.
USE OF PROCEEDS
A portion of the proceeds received by the Company from the
sale of the Notes will be used by the Company or one or more of
its subsidiaries, in connection with hedging the Company's
obligations under the Notes, to purchase or acquire positions in
a variety of financial instruments relating to (i) the S&P 500
Index and/or all or certain of its respective underlying stocks
or (ii) the Nikkei 225 Index and/or all or certain of its
respective underlying stocks.
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EUROPEAN MONETARY UNION
Stage III of the European Economic and Monetary Union
("Stage III") is presently scheduled to commence on January 1,
1999 for those member states of the European Union that satisfy
the economic convergence criteria set forth in the Treaty on
European Union, to which Italy is a signatory. Stage III includes
the introduction of a single currency (the "Euro") which will be
legal tender in such member states. It is anticipated that the
European Union will adopt regulations or other legislation
providing specific rules for the introduction of the Euro in
substitution for the respective national currencies of such
member states, which regulations or legislation may be
supplemented by legislation of the individual member states. In
the event that Italy adopts the Euro, the laws and regulations of
the European Union (and, if any, of Italy) relating to the Euro
implemented pursuant to or by virtue of the Treaty on European
Union shall apply to the Notes and the Indenture, and, except as
provided in the following paragraph, the payment of principal of,
or interest on, the Notes at any time after the official date of
introduction of the Euro by Italy shall be effected in Euro in
conformity with any such legally applicable measures.
If, following the introduction of the Euro by Italy, the
Company has the option, pursuant to legally applicable measures,
to make payments of principal of, or interest on, the Notes in
either Lire or Euro, the Company will make such payments in Lire
or Euro at its sole discretion. To the extent that the terms and
conditions of the Notes require the rounding up or down of
certain amounts or quotations expressed in Euro, such rounding
will be made to the smallest currency unit of the Euro.
The circumstances and consequences described in this
section and any resultant amendment to the terms and conditions
of the Notes will not entitle any Holder of the Notes (i) to any
legal remedy, including, without limitation, redemption,
rescission, notice, repudiation, adjustment or renegotiation of
the terms and conditions of the Notes or the Indenture, or (ii)
to raise any defense or make any claim (including, without
limitation, claims of breach, force majeure, frustration of
purpose or impracticability) or any other claim for compensation,
damages or any other relief, nor will any such events affect any
of the other obligations of the Company under the Notes and the
Indenture.
DESCRIPTION OF ITALIAN LIRA
The lira is the national currency of Italy. Italian bank
notes are issued by The Bank of Italy, which is Italy's central
bank and the sole bank of issue. On June 25, 1997, the noon
buying rate for cable transfers in New York City payable in lira,
as reported by the Federal Reserve Bank of New York, was Lit.
1,683.00 = $1.00.
The exchange rate between the lira and the U.S. dollar is,
at any moment, a result of the supply of and the demand for the
two currencies, and changes in such exchange rate result over
time from the interaction of many factors directly or indirectly
affecting economic conditions in Italy and in the United States,
including economic and political developments in other countries.
Of particular importance are rates of inflation,
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interest rate levels, the balance of payments (both on capital
and current account) and the extent of governmental surpluses or
deficits in Italy and in the United States, all of which are in
turn sensitive to the monetary, fiscal and trade policies pursued
by the governments of Italy, the United States and other
countries prominent in international trade and finance. In recent
years, rates of exchange between the U.S. dollar and the Italian
lira have been highly volatile.
TAXATION
The following disclosure supplements, and to the extent
inconsistent therewith, replaces, the disclosure in the
Prospectus Supplement under "Taxation in the United States":
Under U.S. Treasury regulations relating to debt instruments
that provide for contingent payments, gain realized on a sale or
other disposition of the Notes, and the excess of the redemption
price of the Notes over their issue price, will be classified as
interest income (rather than as gain) for U.S. tax purposes. Such
interest income will be exempt from withholding of U.S. Federal
income tax to the extent described in the Prospectus Supplement
under "Taxation in the United States."
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APPENDIX A
LIST OF NIKKEI 225 INDEX UNDERLYING STOCKS
The following is a list of the 225 companies whose
stocks comprised the Nikkei 225 Index as of June 15, 1997.
1. AJINOMOTO CO. INC.
2. ALL NIPPON AIRWAYS CO. LTD.
3. AOKI CORPORATION
4. ASAHI BREWERIES LTD.
5. ASAHI CHEMICAL INDUSTRY CO. LTD.
6. ASAHI DENKA KOGYO K.K.
7. ASAHI GLASS CO. LTD.
8. BANK OF TOKYO-MITSUBISHI LTD.
9. BRIDGESTONE CORPORATION
10. CANON INC.
11. CHICHIBU ONODA
12. CHIYODA CORPORATION
13. CHUBU ELECTRIC POWER
14. CITIZEN WATCH CO. LTD.
15. DAI-ICHI KANGYO BANK LTD.
16. DAINIPPON PRINTING CO. LTD.
17. DAINIPPON PHARMACEUTICAL CO. LTD.
18. DAIWA HOUSE INDUSTRY CO. LTD.
19. DENKI KAGAKU KOGYO K.K.
20. DENSO CORP.
21. DOWA MINING CO. LTD.
22. EBARA CORPORATION
23. FUJI BANK LTD.
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24. FUJIBOSEKI
25. FUJI ELECTRIC CO. LTD.
26. FUJI PHOTO FILM CO. LTD.
27. FUJIKURA LTD.
28. FUJITA CORPORATION
29. FUJITSU LTD.
30. FURUKAWA CO. LTD.
31. FURUKAWA ELECTRIC CO. LTD.
32. HAZAMA CORPORATION
33. HEIWA REAL ESTATE CO. LTD.
34. HINO MOTORS LTD.
35. HITACHI LTD.
36. HITACHI ZOSEN CORPORATION
37. HOKUETSU PAPER MILLS LTD.
38. HONDA MOTOR CO. LTD.
39. HONEN CORPORATION
40. ISAEKI AND CO. LTD.
41. ISHIKAWAJIMA HARIMA HEAVY IND.
42. ISUZU MOTORS LTD.
43. ITOCHU CORPORATION
44. IWATANI INTERNATIONAL CORPORATION
45. JAPAN ENERGY CORPORATION
46. JAPAN STEEL WORKS LTD.
47. JAPAN SYNTHETIC RUBBER CO.
48. KAJIMA CORPORATION
49. KANEBO LTD.
50. KANSAI ELECTRIC POWER CO. INC.
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51. KAWASAKI HEAVY IND. LTD.
52. KAWASAKI KISEN KAISHA LTD.
53. KAWASAKI STEEL CORPORATION
54. KEIHIN ELECTRIC EXPRESS RAILWAY CO.
55. KEIO TEITO ELECTRIC RAILWAY CO. LTD
56. KEISEI ELECTRIC RAILWAY CO. LTD.
57. KIKKOMAN CORPORATION
58. KIRIN BREWERY CO. LTD.
59. KOBE STEEL LTD.
60. KOMATSU LTD.
61. KONICA CORPORATION
62. KOYO SEIKO CO. LTD.
63. KUBOTA CORPORATION
64. KUMAGAI GUMI CO. LTD.
65. KURARAY CO. LTD.
66. KYOKUYO CO. LTD.
67. KYOWA HAKKO KOGYO CO. LTD.
68. MARUBENI CORPORATION
69. MARUI CO. LTD.
70. MARUZEN CO. LTD.
71. MATSUSHITA ELECTRIC INDUSTRIAL
72. MAZDA MOTOR CORPORATION
73. MEIDENSHA CORPORATION
74. MEIJI MILK PRODUCTS CO. LTD.
75. MEIJI SEIKA KAISHA LTD.
76. MERCIAN CORPORATION
77. MINEBEA CO. LTD.
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78. MITSUBISHI CHEMICAL CORPORATION
79. MITSUBISHI CORPORATION
80. MITSUBISHI ELECTRIC CORPORATION
81. MITSUBISHI ESTATE CO. LTD.
82. MITSUBISHI HEAVY INDUSTRIES
83. MITSUBISHI MATERIALS CORPORATION
84. MITSUBISHI OIL CO. LTD.
85. MITSUBISHI PAPER MILLS LTD.
86. MITSUBISHI RAYON CO. LTD.
87. MITSUBISHI STEEL MANUFACTURING CO.
88. MITSUBISHI TRUST AND BANKING CORP.
89. MITSUBISHI LOGISTICS CORP.
90. MITSUI AND CO. LTD.
91. MITSUI ENG. AND SHIPBUILDING
92. MITSUI MARINE AND FIRE INSUR. CO.
93. MITSUI MINING AND SMELTING LTD.
94. MITSUI MINING CO. LTD.
95. MITSUI O.S.K. LINES LTD.
96. MITSUI REAL ESTATE SALES CO. LTD.
97. MITSUI SOKO CO. LTD.
98. MITSUI TOATSU CHEMICALS INC.
99. MITSUI TRUST AND BANKING CO. LTD.
100. MITSUKOSHI LTD.
101. MORINAGA AND CO. LTD.
102. NACHI-FUJIKOSHI CORPORATION
103. NAVIX LINE LTD.
104. NEC CORPORATION
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105. NEW OJI PAPER CO.
106. NGK INSULATORS LTD.
107. NICHIREI CORPORATION
108. NICHIRO GYOGYO
109. NIHON CEMENT CO. LTD.
110. NIHON DENKO CO. LTD.
111. NIHON SHINPAN CO. LTD.
112. NIIGATA ENGINEERING CO. LTD.
113. NIKKO SECURITIES CO. LTD.
114. NIKON CORPORATION
115. NIPPON BEET SUGAR MANUFACTURING CO.
116. NIPPON CARBIDE INDUSTRIES CO. INC.
117. NIPPON CARBON CO. LTD.
118. NIPPON CHEMICAL INDUSTRIAL CO. LTD.
119. NIPPON EXPRESS CO. LTD.
120. NIPPON FLOUR MILLS CO. LTD.
121. NIPPON KAYAKU CO. LTD.
122. NIPPON LIGHT METAL CO. LTD.
123. NIPPON METAL INDUSTRY CO. LTD.
124. NIPPON OIL CO. LTD.
125. NIPPON PAPER IND. CO. LTD.
126. NIPPON PISTON RING CO. LTD.
127. NIPPON SHARYO LTD.
128. NIPPON SHEET GLASS CO. LTD.
129. NIPPON SODA CO. LTD.
130. NIPPON STEEL CORPORATION
131. NIPPON SUISAN KAISHA LTD.
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132. NIPPON TELEGRAPH AND TELEPHONE NTT
133. NIPPON YAKIN KOGYO
134. NIPPON YUSEN K.K.
135. NISSAN CHEMICAL INDUSTRIES LTD.
136. NISSAN MOTOR CO. LTD.
137. NISSHIN FLOUR MILLING CO. LTD.
138. NISSHIN OIL MILLS LTD.
139. NISSHINBO INDUSTRIES INC.
140. NISSHO IWAI CORPORATION
141. NISSHOKIN
142. NITTO BOSEKI CO. LTD.
143. NKK CORPORATION
144. NOF CORPORATION
145. NOMURA SECURITIES CO. LTD.
146. NORITAKE CO. LTD.
147. NSK LTD.
148. NTN CORPORATION
149. OBAYASHI CORPORATION
150. ODAKYU ELECTRIC RAILWAY
151. OKI ELECTRIC INDUSTRY CO. LTD.
152. OKUMA CORPORATION
153. OSAKA GAS CO. LTD.
154. PIONEER ELECTRONIC CORPORATION
155. RASA INDUSTRIES LTD.
156. RICOH COMPANY LTD.
157. SAKURA BANK LTD.
158. SANKYO CO. LTD.
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159. SANKYU INC.
160. SANWA BANK LTD.
161. SANYO ELECTRIC CO. LTD.
162. SAPPORO BREWERIES LTD.
163. SATO KOGYO CO. LTD.
164. SEIKA CORPORATION
165. SHARP CORPORATION
166. SHIMIZU CORPORATION
167. SHIMURA KAKO CO.
168. SHINETSU CHEMICAL CO. LTD.
169. SHINAGAWA REFRACTORIES CO. LTD.
170. SHIONOGI AND CO. LTD.
171. SHOWA DENKO K.K.
172. SHOWA ELECTRIC WIRE AND CABLE CO. LTD.
173. SHOWA LINE LTD.
174. SHOWA SHELL SEKIYU K.K.
175. SONY CORPORATION
176. SUMITOMO BANK LTD.
177. SUMITOMO CEMENT CO. LTD.
178. SUMITOMO CHEMICAL CO. LTD.
179. SUMITOMO COAL MINING CO. LTD.
180. SUMITOMO CORPORATION
181. SUMITOMO ELECTRIC IND. LTD.
182. SUMITOMO HEAVY INDUSTRIES, LTD.
183. SUMITOMO METAL INDUSTRIES LTD.
184. SUMITOMO METAL MINING CO. LTD.
185. SUZUKI MOTOR CORPORATION
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186. TAISEI CORPORATION
187. TAKARA SHUZO
188. TAKEDA CHEMICAL INDUSTRIES
189. TEIJIN LTD.
190. TEIKOKU OIL
191. TEKKEN CORPORATION
192. TOA CORPORATION
193. TOAGOSEI CHEMICAL INDUSTRY
194. TOBISHIMA CORPORATION
195. TOBU RAILWAY
196. TOEI CO.
197. TOHO RAYON
198. TOHO ZINC CO. LTD.
199. TOKAI CARBON CO. LTD.
200. TOKIO MARINE AND FIRE INSUR. CO.
201. TOKYO DOME CORPORATION
202. TOKYO ELECTRIC POWER CO. INC.
203. TOKYO GAS CO. LTD.
204. TOKYO ROPE MFG.
205. TOKYU CORPORATION
205. TOKYU DEPARTMENT STORE
206. TOMEN CORPORATION
207. TONEN CORPORATION
208. TOPPAN PRINTING CO. LTD.
209. TOPY INDUSTRIES
210. TORAY INDUSTRIES
211. TOSHIBA CORPORATION
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212. TOSOH CORPORATION
214. TOTO LTD.
215. TOYO SEIKAN KAISHA
216. TOYOBO CO. LTD.
217. TOYOTA MOTOR CORPORATION
218. UBE CHEMICAL INDUSTRIES
219. UNITIKA LTD.
220. YAMAHA CORPORATION
221. YAMANOUCHI PHARMACEUTICAL
222. YASUDA FIRE AND MARINE INSURANCE CO.
223. YOKOGAWA ELECTRIC
224. YOKOHAMA RUBBER
225. YUASA CORPORATION
9
