Pricing Supplement No. Euro H004 Dated 02/24/98 Rule 424(b)(2)
(To Prospectus dated December 1, 1997 and File No. 333-38931
Prospectus Supplement dated December 5, 1997)
This Pricing Supplement consists of 21 page(s)
SALOMON SMITH BARNEY HOLDINGS INC.
Medium-Term Notes, Series H
(Bearer Notes)
Due More Than Nine Months from Date of Issue
Principal Amount or Face Amount: USD 15,000,000.00
Issue Price: 98.00%
Proceeds to Company on original issuance: USD 14,700,000.00
Commission or Discount on original issuance: USD 32,662.50
Salomon Brothers International Limited's capacity on original issuance:
|X| As agent | | As principal
If as principal
| | 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: 02/25/98
Stated Maturity: 02/26/2001
Specified Currency:
(If other than U.S. Dollars)
Authorized Denominations: USD 10,000.00
(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 |X| 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 |X| 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 |X| 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: |X| Yes | | No
Common Code: 008443084
ISIN: XS0084430841
Cusip: 99315W9N3
Pricing Supplement No. Euro H 004 dated February 24, 1998
(to Prospectus dated December 1, 1997
to Prospectus Supplement dated December 5, 1997)
DESCRIPTION OF THE NOTES
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
No Periodic Payments of Interest
THE NOTES DO NOT BEAR PERIODIC PAYMENTS OF INTEREST.
Indexed Notes
The Notes are Indexed Principal Notes. As described more
fully below under "Indexed Principal", the amount in respect of
principal with respect to a Note that a Holder will receive at
Stated Maturity will be determined by reference to two
independent factors: (i) the difference in the exchange rate
between the U.S. Dollar and the Spanish Peseta on the second
Business Day prior to Stated Maturity and a reference exchange
rate set at the time of issuance of the Notes and (ii) changes in
the value of the FTSE Eurotop 100-index(R) (which index is
described below) during the term of the Notes. As a result of
this dual indexation feature, the amount in respect of principal
a holder may receive on a Note may be less than the Face Amount
of such Note. HOLDERS OF THE NOTES SHOULD BE PREPARED TO RECEIVE
LESS THAN THE FACE AMOUNT OF A NOTE IN RESPECT OF PRINCIPAL ON
ANY SUCH NOTE.
Exchange Rate Risk. Assuming that the value of FTSE Eurotop
100- index(R) remains constant or decreases throughout the term
of the Notes, if the exchange rate between the Spanish Peseta and
the U.S. Dollar on the second Business Day prior to Stated
Maturity is greater than 152.68, the amount in respect of
principal payable with respect to a Note at Stated Maturity will
be less than the Face Amount of such Note.
Index Risk. Assuming that the exchange rate between the
Spanish Peseta and the U.S. Dollar remains constant during the
term of the Notes, if the Average Index Value of the FTSE Eurotop
100-index(R) (as determined by calculating the arithmetic average
of the published closing prices of the FTSE Eurotop 100-index(R)
on the 25th of each month during the period from March 1998
through January 2001 and on February 19, 2001) exceeds a
reference level determined by the Calculation Agent based upon
the closing value of the FTSE Eurotop 100-index(R) on the Issue
<PAGE>
Date, the amount in respect of principal payable with respect to
a Note at Stated Maturity will be greater than 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 may still be greater than the Face Amount of such Note,
and in no event shall be less than such Face Amount, as long as
the exchange rate between the Spanish Peseta and the U.S. Dollar
on the second Business Day prior to Stated Maturity is less than
or equal to 152.68.
Effect of Averaging. Because the Average Index Value used
to calculate a portion of the amount of principal payable in
respect of a Note will be based upon the closing value of the
FTSE Eurotop 100-index(R) on 36 dates during the term of the
Notes (the 25th of each month for 35 months, beginning in March
1998, and February 19, 2001), the effect on such amount of a
significant increase in the value of the FTSE Eurotop
100-index(R) subsequent to the issuance of the Notes may be
substantially or entirely offset by a subsequent decrease in the
value of the FTSE Eurotop 100-index(R) prior to the date of
Stated Maturity. Similarly, the effect on such amount of a high
closing value of the FTSE Eurotop 100-index(R) on one or more of
such dates during the term of the Notes may be substantially or
entirely offset by that of a lower closing value on one or more
other such dates. In addition, the full effect of increases in
the value of the FTSE Eurotop 100-index(R) during the term of the
Notes will not be reflected in the amount payable in respect of
principal on the Notes, because a portion of the Average Index
Value will be determined on each of 36 dates during such period.
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 any
of (i) New York, New York, (ii) London, England, (iii) Frankfurt,
Germany, (iv) Paris, France, (v) Zurich, Switzerland, (vi) Milan,
Italy, (vii) Madrid, Spain, (viii) Stockholm, Sweden, (ix)
Brussels, Belgium or (x) Amsterdam, The Netherlands.
If any date specified herein for the making of any payment,
calculation, determination or other action with respect to the
Notes would be a day that is not a Business Day, such action
shall be taken on the next succeeding Business Day, provided,
however, if such Business Day is in the next succeeding calendar
month, such action shall be taken on the immediately preceding
Business Day.
The Calculation Agent will be Salomon Brothers
International Limited, which is a wholly-owned subsidiary of
Salomon Smith Barney Holdings Inc. (the "Company").
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 (the "Index Formula"):
IPA = FA TIMES [E TIMES [(1) PLUS (0.62 TIMES IV) PLUS
(C)]]; where:
2
<PAGE>
"IPA" means the Indexed Principal Amount payable at
Stated Maturity of the Note.
"FA" means the Face Amount of the Note (as stated on
the cover of this Pricing Supplement).
"E" means EI divided by EA; where:
"EI" means 152.68; and
"EA" means the number of Spanish Pesetas (calculated
to two decimal places) required to purchase one U.S. Dollar, as
determined by the Calculation Agent with reference to the offer
spot exchange rate between the Spanish Peseta and the U.S.
Dollar, as displayed on Reuters screen "FXFY", row "11:00" (or
any successor row and page thereto) at 11:00 a.m. (London time)
on the second Business Day prior to Stated Maturity.
"IV" means the greater of zero and [(AIV/IIV) minus
1]; where
"AIV" means the "Average Index Value" of the FTSE
Eurotop 100-index(R) during the term of the Notes, as
determined by the Calculation Agent by calculating the
arithmetic average of the Official Index Closing Prices of
the FTSE Eurotop 100-index(R), as published by Amsterdam
Exchanges NV ("AEX"), on the 25th of each month from and
including March 1998 through January 2001 and on February
19, 2001; and
"IIV" means the Official Index Closing Price of the
FTSE Eurotop 100-index(R), as published by AEX, on February
25, 1998.
"C" means (C1 plus C2 plus C3); where
"C1" means 0.02 if the Official Index Closing Price of
the FTSE Eurotop 100- index(R) on February 25, 1999 is less
than the Official Index Closing Price of the FTSE Eurotop
100-index(R) on February 25, 1998. If this condition is not
met, C1 shall be equal to zero.
"C2" means 0.02 if the Official Index Closing Price of
the FTSE Eurotop 100- index(R) on February 25, 2000 is less
than the Official Index Closing Price of the FTSE Eurotop
100-index(R) on February 25, 1999. If this condition is not
met, C2 shall be equal to zero.
"C3" means 0.02 if the Official Index Closing Price of
the FTSE Eurotop 100- index(R) on February 25, 2001 is less
than the Official Index Closing Price of the FTSE Eurotop
100-index(R) on February 25, 2000. If this condition is not
met, C3 shall be equal to zero.
3
<PAGE>
SUCCESSOR INDEXES
If AEX discontinues publication of the FTSE Eurotop
100-index(R) and FTSE International Limited ("FTSE") or any other
publisher publishes a successor or substitute index that the
Company determines, in its sole discretion, to be comparable to
the FTSE Eurotop 100- index(R) (any such successor or substitute
index being hereinafter referred to as a "Successor Eurotop
Index"), then the Indexed Principal Amount shall be determined by
the Calculation Agent, on behalf of the Company, based on such
Successor Eurotop Index. In the event that the FTSE Eurotop
100-index(R) or any Successor Eurotop Index ceases publication,
the Calculation Agent, acting on behalf of the Company and in its
sole discretion, shall calculate the Indexed Principal Amount
based on the formula and method used in calculating the FTSE
Eurotop 100- index(R) as of the Issue Date of the Notes using the
closing values of appropriate securities traded on stock
exchanges in countries that are European member states of the
Organization for Economic Cooperative and Development ("OECD"),
as chosen in its sole discretion.
None of the Calculation Agent, the Company, or any Agent
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 the FTSE Eurotop 100-index(R) or
any Successor Eurotop Index by AEX or any other publisher
thereof.
PAYMENT DATE
The Stated Maturity of the Notes is February 26, 2001.
EVENTS OF DEFAULT AND ACCELERATION
In case an Event of Default (as described in the
accompanying Prospectus) with respect to the Notes shall have
occurred and be continuing, the amount payable to a Holder of a
Note upon any acceleration permitted by the Notes will be equal
to the Indexed Principal Amount in respect of such Note,
calculated in the manner set forth above as though the date of
early repayment was the Stated Maturity of the Notes. If a case
under the United States bankruptcy code is commenced in respect
of the Company, the claim of a Holder of a Note may be limited,
under Title 11 of the United States Code, to the Face Amount of
such Note.
In case of default in payment at the maturity date of the
Notes (whether at the date of Stated Maturity or upon
acceleration), from and after the maturity date, the Notes shall
bear interest, payable upon demand of the Trustee, at the rate of
6.00% per annum (to the extent that payment of such interest
shall be legally enforceable) on the unpaid amount due and
payable on such date in accordance with the terms of the Notes to
the date payment of such amount is made or duly provided for.
4
<PAGE>
DESCRIPTION OF FTSE EUROTOP 100-INDEX(R)
Unless otherwise stated, all information herein relating to
the FTSE Eurotop 100-index(R) has been derived from information
made available by AEX and other publicly available sources. Such
information reflects the policies of FTSE and AEX as of February
15, 1998 as stated in such sources; such policies are subject to
change at the discretion of FTSE or AEX.
The FTSE Eurotop 100-index(R) is a stock index published,
operated and distributed by AEX and regulated and supervised by
AEX and the European Index Committee of FTSE that is intended to
measure the composite price performance of the underlying stocks,
which have been selected in an attempt to represent the 100 most
liquid stocks of European issuers trading on the principal
European stock exchanges and to otherwise reflect general market
trends on such exchanges. It is currently expected that FTSE will
take over the publication, operation and distribution of the FTSE
Eurotop 100-index(R) from AEX during the course of 1998.
There are two components to the process of selecting the
stocks that comprise the FTSE Eurotop-100 index(R). The first
component consists of the selection of the countries that are to
be represented in the FTSE Eurotop-100 index(R). Any such country
must first be one of the European member states of the OECD.
Selection of countries for inclusion is then based on the
aggregate exchange capitalization in ECU of stocks of domestic
issuers listed on stock exchanges in the relevant country at the
end of the previous calendar year. For purposes of this
calculation, aggregate exchange capitalization is generally
defined as the aggregate market capitalization of all stocks of
domestic issuers traded on the leading stock exchange in such
country (although for the Federal Republic of Germany, aggregate
exchange capitalization is calculated for the country as a
whole). The principal stock exchange of the European country with
the largest exchange capitalization is the first exchange to be
included in the FTSE Eurotop 100-index(R), and exchanges from
other qualifying countries will then be considered in decreasing
order of aggregate exchange capitalization. The principal stock
exchange of any such country will be added to the FTSE Eurotop
100-index(R) if the aggregate exchange capitalization of the
relevant country amounts to more than 2.5% of the aggregate
exchange capitalization of all selected countries. Each of the
countries with an exchange included in the FTSE Eurotop
100-index(R) is assigned a base weighting derived from its
aggregate exchange capitalization at the end of past calendar
year; the number of stocks from such country that are included in
the FTSE Eurotop 100-index(R) is determined by and equal to that
country's base weighting, in percentage points.
As of February 15, 1998, the underlying stocks that
comprise the FTSE Eurotop 100- index(R) are traded on the
following European exchanges: the London Stock Exchange ("LSE"),
the Frankfurter Wertpapierborse (the Frankfurt Stock Exchange or
"FWB"), the Bourse de Paris (the "Paris Stock Exchange"), the
Schweizer Borse (the Swiss Stock Exchange or "SWX"), the AEX
Effectenbeurs (the AEX-Stock Exchange or "ASE"), the Borsa
Italiana (the Italian Stock Exchange or "ISE"), the Sociedad
Rectora de la Bolsa de Valores de Madrid (the Madrid Stock
Exchange or "MSE"), the Stockholm Fondbors AB (the Stockholm
Stock Exchange or "SSE") and the Bourse de Bruxelles/Beurs van
Brussel (the Brussels Stock Exchange or "BSE").
5
<PAGE>
The second component of the FTSE Eurotop 100-index(R)
selection process consists of the selection of the individual
constituent stocks, which are chosen on the basis of the
cumulative trading volume in each stock on the principal
exchanges in their respective countries over the past three
years, with the stocks having the highest such cumulative trading
volume in each country generally being selected to fill the
number of places in the index assigned to such country. If a
particular issuer has stock listed on more than one exchange,
only the listing with the highest trading volume is taken into
consideration. Certain stocks (including those regarded as
investment funds or stocks that may only be owned by residents of
the relevant country) are excluded from selection. The stocks
which are included in the index are assigned a base weighting
derived from their market capitalization on the date of periodic
adjustment, which is expressed by the number of shares included
in the FTSE Eurotop 100-index(R). Where possible, each
constituent stock is represented by an integral number of shares.
The FTSE Eurotop 100- index(R) was first published on December
29, 1989 and is widely reported by newspapers (including the
Financial Times) and other media. See Appendix A hereto for a
list of the stocks comprising the FTSE Eurotop 100-index(R) as of
February 15, 1998.
The value of the FTSE Eurotop 100-index(R) is calculated on
the basis of share prices and foreign exchange rates. The share
prices are transaction prices established during normal,
regulated trading exclusively on the principal stock exchange in
each of the countries included in the FTSE Eurotop 100-index(R).
The share prices used are those most recently published on the
business day in question, converted into ECU on the basis of
cross rates of the relevant offer prices most recently published
by two leading data vendors. At any particular time, the FTSE
Eurotop 100-index(R) is calculated by multiplying the sum of the
most recently published prices of each of the underlying stocks,
converted into ECU, by their relevant weight, and divided by 100.
Calculation of the official values of the FTSE Eurotop
100-index(R) will start at such time as all of the relevant
exchanges will customarily have started normal, regulated trading
and the compiler of the index (the management of AEX) has
received the necessary prices. If for any reason the price of a
stock or a necessary exchange rate is not known at this time, the
index will be calculated on the basis of the last price for that
stock or the last foreign exchange rate which was available. If
at the time of the calculation of the official opening value less
than 75 of the underlying stocks are open for normal regulated
trading on the relevant home exchanges, index values published
until the time of the calculation of the official closing value
for that day are "partial index values" The calculation of
official values of the FTSE Eurotop 100-index(R) will end at such
time as the last relevant stock exchange will have customarily
ceased normal regulated trading.
The FTSE Eurotop 100-index(R) is currently updated every
fifteen seconds between 9.30 A.M. and 5.30 P.M., Amsterdam time.
Due to the time zone difference between New York City and
Amsterdam on any normal trading day, trading in the underlying
stocks of the FTSE Eurotop 100-index(R) on the relevant European
stock exchanges will cease prior to the end of the trading day in
New York City. The Official Index Closing Price of the FTSE
Eurotop 100-index(R) is generally issued at 5.30 P.M., Amsterdam
time and will therefore generally be available in the United
States shortly after 11.30 A.M., New York City time. The time
zone difference between New York City and Amsterdam may vary at
certain times of the year due to different beginning
6
<PAGE>
and ending dates of Daylight Savings Time in New York City and
the comparable Dutch Summer Time in Amsterdam.
The FTSE Eurotop 100-index(R) is a capital-weighted index
(i.e., an underlying stock's weight in the index is based on the
total market capitalization of the issuer, rather than on its
price per share). Accordingly, a 5 percent price change in the
first ranked underlying stock has a greater effect on the FTSE
Eurotop 100-index(R) than a 5 percent price change in the 100th
ranked underlying stock.
Once each year, on the third Friday in April, the AEX
undertakes a review of the underlying stocks and determines
whether it is necessary to add or delete securities from the FTSE
Eurotop 100-index(R). The review of the constituent countries and
stocks is conducted on the basis of the selection criteria
described above. In addition, if there is a non-FTSE Eurotop
100-index(R) constituent stock with an effective trading volume
that is at least 10% higher than the effective trading volume of
a constituent stock, then that non-index stock will be selected
to replace the constituent stock that has the lowest effective
volume in that country. At such time, the weights of the
constituent stocks in the index may also be revised to take
account of takeovers, mergers, split ups, spin offs, stock
dividends, bonus payments or rights issues. However, no
adjustment takes place if the effect of any such action is less
than 0.01 index points (1 ECU). No operational adjustments are
made for changes in market capitalization as a result of a normal
issue of new shares by issuers of the underlying stocks.
AEX is under no obligation to continue the calculation and
dissemination of the FTSE Eurotop 100-index(R). The Notes are not
in any way sponsored, endorsed, sold or promoted by AEX, FTSE,
London Stock Exchange Limited ("LSEL") or the Financial Times
Ltd. ("FTL", and, collectively with AEX, FTSE and LSEL, the
"Owners") and none of the Owners are otherwise involved in the
issue and offering of the Notes. The Owners make no warranty or
representation whatsoever, expressly or impliedly, either as to
the results to be obtained from the use of the FTSE Eurotop
100-index(R) and/or the figure at which the FTSE Eurotop
100-index(R) stands on any particular day or otherwise. The FTSE
Eurotop 100-index(R) is compiled by or on behalf of AEX or FTSE.
However, none of the Owners have any obligation or liability in
connection with the administration, marketing or trading of the
Notes. The Owners shall not be liable (whether in negligence or
otherwise) to any person for any error in the FTSE Eurotop 100-
index(R) and shall not be under any obligation to advise any
person of any error therein.
"FTSE" and "Footsie" are registered trade marks of LSEL and
FTL and are used by FTSE under license. "Eurotop" is a registered
trademark of the AEX or its subsidiaries and is used by FTSE
under license FTSE 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 by
the Owners in connection with the issuance of the Notes. The use
of and reference to the FTSE Eurotop 100-index(R) in connection
with the Notes have been consented to by the Owners.
None of the Company, the Calculation Agent, the Trustee
under the Senior Debt Indenture or any Agent accepts any
responsibility for the calculation, maintenance or publication of
the FTSE Eurotop 100-index(R) or any Successor Eurotop Index. The
Owners disclaim all
7
<PAGE>
responsibility for any errors or omissions in the calculation and
dissemination of the FTSE Eurotop 100-index(R) or the manner in
which such index is applied in determining any Indexed Principal
Amount or any other amount payable with respect to the Notes.
Historical Data on the FTSE Eurotop 100-index(R)
The following table sets forth the highest and lowest daily
closing price of the FTSE Eurotop 100-index(R), as published by
AEX or its predecessors, for each quarter during the period from
1993 through February 16, 1998, as well as the closing price of
the FTSE Eurotop 100- index(R) as of the end of each such quarter
or partial quarter. The historical values of the FTSE Eurotop
100-index(R) should not be taken as an indication of future
performance.
Daily Closing Prices
-------------------------------
Highest Lowest Period
Level Level End
------- ------ ------
1993
1st Quarter 952.32 862.69 947.38
2nd Quarter 1012.86 934.84 1012.86
3rd Quarter 1133.15 1001.66 1104.34
4th Quarter 1239.00 1106.53 1239.00
1994
1st Quarter 1392.63 1202.49 1212.65
2nd Quarter 1275.91 1143.06 1154.33
3rd Quarter 1242.55 1149.08 1164.33
4th Quarter 1200.78 1136.48 1178.46
1995
1st Quarter 1189.18 1117.30 1147.10
2nd Quarter 1244.92 1152.00 1214.06
3rd Quarter 1316.68 1220.02 1282.90
4th Quarter 1344.19 1239.68 1342.85
1996
1st Quarter 1417.35 1333.01 1414.32
2nd Quarter 1458.08 1414.70 1438.49
3rd Quarter 1471.55 1364.41 1471.55
4th Quarter 1614.77 1474.86 1614.77
1997
1st Quarter 1894.47 1583.79 1858.99
2nd Quarter 2130.39 1774.05 2108.06
3rd Quarter 2355.95 2132.47 2309.12
4th Quarter 2351.23 2044.47 2299.75
1998
1st Quarter (through
February 16, 1998) 2512.77 2236.40 2508.33
8
<PAGE>
The closing price of the FTSE Eurotop 100-index(R) on
February 19, 1998 was 2536.85.
Since its inception, the FTSE Eurotop 100-index(R) has
experienced significant daily price fluctuations. Any historical
upward or downward trend in the closing level of the FTSE Eurotop
100-index(R) during any period set forth above is not any
indication that the FTSE Eurotop 100- index(R) is more or less
likely to increase or decline at any time during the term of the
Notes.
DESCRIPTION OF THE CONSTITUENT STOCK EXCHANGES
All information herein regarding the stock exchanges on
which the underlying stocks of the FTSE Eurotop 100-index(R) are
traded has been derived from information made available by the
respective exchanges, The IFR Handbook of World Stock & Commodity
Exchanges (the "IFR Handbook") and other publicly-available
sources. Such information is subject to change at the discretion
of the governing bodies of each of the exchanges described
herein. Neither the Company nor any Agent have participated in
the preparation of any of the sources of information used to
compile the descriptions of the exchanges or made any due
diligence inquiry with respect to the information provided
herein. Neither the Company nor any Agent makes any
representation that any of the sources used to compile the
descriptions of the exchanges is accurate or complete.
The London Stock Exchange, SEAQ and SETS The LSE is the
largest established securities market in the United Kingdom and
one of the world's largest securities exchanges in terms of
market capitalization. Trading on the LSE takes place in quantity
of shares, rather than in round lots. The rules of the LSE
currently place no limits on daily permissible price movements in
the trading of listed securities. SEAQ is the LSE's electronic
price information system, which acts as an interface between
market-makers and their customers. Throughout the trading day, 30
registered market-makers are obliged to display to the market
their bid and offer prices and the maximum bargain size to which
these prices relate. All equity prices displayed on SEAQ are
firm. Trading hours on the LSE and SEAQ currently begin at 8:30
A.M. and end at 4:30 P.M., London time.
Prior to settlement, the LSE requires each member firm to
report details of its transactions to the stock exchange checking
service to ensure that both parties agree on all aspects of their
transactions. Once through this checking service, transactions
are passed to the LSE's computer-based system for settlement.
On October 20, 1997, the LSE changed the way in which the
stocks of its largest domestic issuers are traded through the
introduction of SETS (Stock Exchange Electronic Trading Service).
SETS was designed to replace the SEAQ structure as the means for
trading in the stocks of issuers that comprise the FT-SE(R) 100
Share Index (including each of the stocks traded on the LSE that
are included in the FTSE Eurotop-100 index(R). At the heart of
the changes was the introduction of an electronic order book,
which now enables buyers and sellers to post their bid and sell
prices and to have their trades "matched" automatically on the
screen. The system is designed to allow investors to place buy
and sell orders on to the order book through a member firm of the
LSE. Those orders are displayed on-screen through a central
electronic system and the trade completed (or "executed")
automatically when the order matches with a
9
<PAGE>
corresponding buy or sell order. An LSE working party is
currently considering the most appropriate structure for trading
non-FT-SE(R) 100 shares, which in the meantime are expected to
continue to be traded as at present.
The Frankfurt Stock Exchange. The FWB is the largest stock
exchange in Germany and the fourth largest stock exchange in the
world, currently accounting for a significant majority of all
stock exchange transactions in Germany. The FWB market is a
two-way, continuous pure auction market. Trading hours are
currently from 10:30 a.m. to 1:30 p.m., Frankfurt time, on each
day the FWB is open for trading.
The FWB has adopted certain measures intended to prevent
any extreme short-term price fluctuations resulting from order
imbalances. These include set tick sizes, required signaling of
price markups or markdowns exceeding certain specified limits and
delays in the determination of prices in the case of such markups
or markdowns, with such prices only being set by market makers
after consultation with FWB officials. Investors should also be
aware that the FWB may suspend the trading of individual stocks
(including stocks included in the FTSE Eurotop 100- index(R)) in
certain limited circumstances, including, for example, the
temporary endangerment of orderly trading or the determination by
the FWB that the public does not appear to be sufficiently
informed about particular events relating to a given issuer. In
such cases, quotation of the stock is suspended and all
outstanding orders canceled.
The Paris Stock Exchange. The Paris Stock Exchange is
regulated by the Conseil des Bourses de Valeurs (the French Stock
Exchange Council or "CBV"), which determines the rules under
which the exchange and brokerage firms operate. The Societe des
Bourses Francaises S.A. (the "SBF") is a separate entity that has
been charged with implementing decisions taken by the CBV and
ensuring that the market operates smoothly. In 1991, the CBV
added securities traded on the regional stock exchanges to those
traded on the Paris Stock Exchange to form a nationwide
securities market.
Trades on the Paris Stock Exchange may be in cash or on
account on the Marche a Reglement Mensuel (the Monthly Settlement
Market of the Paris Stock Exchange or "RM Market') Cash
transactions are the least actively traded of French and foreign
stocks on the official list while the most actively traded
equities are on a monthly settlement basis. Trading takes place
through a centralized order-driven system with exchange members
acting as brokers. The SBF is authorized to suspend trading
temporarily in any security or set a limit on price fluctuations,
should it feel that this is in the interests of the market. In
order to accomplish this aim, securities are classified into
three different categories, each with its own trading hours,
maximum authorized daily price fluctuation and time limit on
halts in trading. Class CA shares are in the first category and
are permitted to fluctuate at 10 percent above or below the
previous day's closing price. Trading is halted for 15 minutes if
prices rise above or fall below this limit. The subsequent
permitted fluctuation is 5 percent above or below the price when
trading was halted, to a maximum of 21.20 percent above and 18.75
percent below the previous day's closing price. Class CB shares,
the second category, are permitted to fluctuate at 5 percent
above or below the previous day's closing price. Trading is
halted for 30 minutes if prices rise above or fall below this
limit. The subsequent permitted fluctuation is 2.5 percent above
or below the
10
<PAGE>
price when trading was halted, to a maximum of 10.15 percent
above and 9.60 percent below the previous day's closing price.
The final category of shares, Class FA, are only permitted to be
traded between 11:30 A.M. and 4:00 P.M., Paris time. Class FA
shares are only permitted to fluctuate at 5 percent above or
below the previous day's closing price. No halt in trading is
specified for these shares but the subsequent permitted
fluctuation is 5 percent above or below the price recorded at
11:30 A.M. when trading commenced. The Paris Stock Exchange is
open for continuous trading from 10:00 A.M. to 5:00 P.M., Paris
time.
Clearance of trades is through RELIT, a system based on
delivery-against-payment.
The Swiss Stock Exchange. The SWX features an electronic
platform which ensures both fully automated trading and
integrated settlement of all stock market transactions.
Electronic trading begins with the investor: member banks'
investment advisors register incoming orders from their customers
in their trading system. These data are forwarded to the trader
and checked, or fed directly into the trading system by the
trader. From here they go to the central exchange system of SWX,
which acknowledges receipt of the order, assigns a time stamp to
it and verifies its formal correctness.
Depending on the type of transaction, the data are also
transmitted to third-party data vendors. In the fully automated
exchange system in use at SWX, buy and sell orders are matched
according to clearly defined rules (so-called matching rules).
Regardless of their size or origin, trading orders are executed
according to price (first priority) and the time received (second
priority); this is known as price/time priority. Each trade
triggers an automatic settlement through the Swiss Securities
Clearing Corporation ("SEGA") and the Swiss National Bank
("SNB").
Trading at the SWX is divided into three periods:
pre-opening, opening and current trading. During current trading,
transactions in some securities may be briefly interrupted under
certain circumstances. Pre-opening starts at 4.30 p.m. (5.00 p.m.
for Swiss government bonds) on the previous business day and
lasts until 10:00 p.m. (all times are Zurich times). It resumes
at 6:00 p.m. on the current business day. Orders (bids and
offers) may be entered or deleted in the electronic orderbook
during pre-opening times, but no actual trades are made. A
theoretical opening price is continuously calculated and
displayed for the guidance of traders.
The opening determines the opening price and executes the
orders according to the matching rules. This procedure takes
place at 8:30 a.m. for Swiss government bonds, 9:30 a.m. for all
other bonds, 10:00 a.m. for stocks and 10.15 a.m. for
derivatives. For establishing the opening price at the start of
trading (or upon resumption of trading after an interruption),
the highest-execution principle is used; in other words, the
price is fixed in such a manner as to achieve the largest
possible trading volume.
After the opening, permanent trading begins. New orders are
continuously matched with existing ones. The matching rules are
also applicable here. All orders are stored in the orderbook
until a counterpart is found.
11
<PAGE>
Trading in all exchange products stops at 4.30 p.m. (5.00
p.m. for all Swiss government bonds), which marks the start of
pre-opening for the following business day. Orders can be placed
up to 10:00 p.m. and again from 6:00 a.m. onwards.
At the SWX, permanent trading with voluntary market making
takes place in all securities during official trading hours. All
orders below the exchange obligation limit must be executed
during trading hours through the trading system, while large
orders with a market value of at least 200,000 Swiss Francs
("CHF") (for stocks) and CHF 100,000 (options and bonds) may be
traded off the exchange. However, all trades made outside the
exchange system must be reported within 30 minutes.
AEX-Stock Exchange. On January 1, 1997, the AEX-Stock
Exchange merged with Amsterdam's European Options Exchange to
form the AEX. AEX is supervised by the Stichting Toezicht
Effectenverkeer (the Securities Board of the Netherlands). The
ASE is a subsidiary of AEX and is supervised by the Board of
Directors of AEX. One of the Managing Directors of the AEX also
serves as the chief executive officer of the ASE.
Trading in securities on the ASE currently begins at 9:30
A.M. and ends at 4:30 P.M., Amsterdam time. Traditionally,
however, transactions in certain actively traded shares are
permitted from 4:30 P.M. until the closing of trading on the New
York Stock Exchange. Currently the ASE's trading system
distinguishes between two market segments, large or "wholesale"
orders and smaller or "retail" ones, in order to expedite
trading. The market segment in which a transaction is carried out
depends on the "wholesale limit," a trade value limit fixed for
each type of stock; an order below the wholesale limit is dealt
with in the retail segment while one equal to or above the
wholesale limit occurs in the wholesale segment. The trading
system is under evaluation and modifications are expected to be
put in effect during the course of 1998.
AIDA and ASSET are two systems provided by ASE to support
wholesale trading in securities other than government bonds and
other liquid bonds. AIDA provides an anonymous screen trading
facility for authorized institutions, while ASSET allows them to
communicate their willingness to trade to institutional investors
inside or outside The Netherlands by making quotes. The Trading
System Amsterdam consists of AIDA, ASSET and various retail
systems.
All securities transactions on the ASE are conducted on a
cash basis. Transactions in officially listed securities on the
ASE are settled via the AEX Effectenclearing, a securities
clearing organization which is a subsidiary of AEX Depository and
Clearing, which is a subsidiary of AEX.
The Italian Stock Exchange. The Italian securities
exchanges currently consist of the Italian Stock Exchange (Borsa)
and the Alternative Market (Mercato Ristretto). Admission to
listing on Italian securities exchanges is currently regulated
and decided upon by CONSOB, an Italian governmental agency.
12
<PAGE>
Securities listed on the Italian Stock Exchange are traded
electronically on the Sistema Telematico delle Borse Italiane
("Telematico"). Regulations for trading in Italian securities on
Telematico were introduced in November 1991.
As a general rule, securities that are listed on Italian
regulated markets must be traded on those markets, subject to
certain exceptions established by CONSOB. Securities must
ordinarily be traded in minimum lots of a prescribed size (or
multiples thereof) determined for each security. Lots smaller
than the prescribed minimum may be traded on Telematico subject
to certain limitations.
Securities transactions on Telematico are settled on the
fifth business day following the trading date. Securities
transactions must satisfy (i) in case of sales, either the Margin
or the Deposit, and (ii) in case of purchases, the Margin.
"Margin" means a deposit equal to 100% of the agreed price, and
"Deposit" means a deposit of an equal number of the same shares
as those sold. If the established trading price of a security
differs by more than 10% from the previous day's reference price,
CONSOB may (and, if the difference is more than 20%, it normally
will) suspend trading temporarily in that security.
The Italian Stock Exchange Council issues a daily official
list with certain information on transactions in each listed
security, including the volume traded and the high and low prices
of the day. No "closing price" is reported for the electronic
trading system, but an "official price," calculated as a weighted
average of all trades effected during the trading day and a
"reference price", calculated as a weighted average of the last
10% of the trades effected during such day, are published. A
centralized securities depositary system owned by the Bank of
Italy and certain of the major Italian banks and financial
institutions assists with the settlement of transactions and
the delivery of securities traded on Telematico. The Bank of
Italy, acting in concert with CONSOB, is responsible for
regulating clearance and settlement.
The Madrid Stock Exchange. Trading in equities on the MSE
takes place principally through the Automated Quotation System
("AQS"). The AQS is operated and regulated by the Sociedad de
Bolsas, a corporation owned by the companies that manage the MSE
and other local exchanges. The AQS permits the computerized
matching of buy and sell orders at the time of entry of the
order.
On each trading day between 9:45 A.M. to 10:00 A.M. Madrid
time, and on each first trading day of the month from 9:30 A.M.
to 10:00 A.M., an opening price is established for each security
traded on the AQS based on orders placed during that time.
Trading in a particular security does not begin until at least 20
percent of bids and offers can be matched at a price not more
than 10 percent above or below the previous day's closing price.
If these conditions are not met after the pre-opening session,
the volume requirement is reduced to 10 percent and the opening
price is allowed to vary up to 15 percent from the previous day's
closing price. Trading is usually suspended until the next
trading day if trading cannot begin after an hour under these
conditions. In certain circumstances, the Sociedad de Bolsas may
permit deviations from the reference price. Computerized trading
hours are from 10:00 A.M. to 5:00 P.M. during which time the
trading price of a security is permitted to vary up to 15 percent
(20 percent with the
13
<PAGE>
authorization of the Sociedad de Bolsas) of the previous day's
closing price. If the quoted price exceeds this limit, trading in
the security is suspended until the next trading day. Trades with
different reference price limits may also occur outside the
computerized matching system between 5:00 P.M. and 8:00 P.M.
without prior authorization of the Sociedad de Bolsas.
Transactions on the MSE are cleared and settled through the
Servicio de Compensacion y Liquidacion de Valores, S.A., which
may only be used by its broker members.
The Stockholm Stock Exchange. The SSE is the official stock
market of Sweden and is where all listed shares are traded.
Recently-enacted legislation abolished the exchange's monopoly on
share trading, and since January 1, 1993 other operators have
been free to open competing bourses. From that time the exchange
has been transformed into a limited company. Following a recent
merger with the Swedish derivatives market, SSE is owned by the
listed company OM Gruppen AB ("OM"). Trading on the SSE can only
be executed through a member of the exchange. Members are banks
and brokerage houses, and individual brokers are employed by a
member.
The Financial Supervisory Authority oversees the activities
of all financial institutions and is the licensing authority for
stockbroking companies. It also establishes policies for
stock market operations.
Shares on the SSE are traded under three separate listings:
the official market A-list and the parallel markets OTC-list and
the O-list, both for smaller companies All shares are traded
through the SAX computerized and automated trading system. This
system matches buy and sell orders to allow the automatic closing
of transactions when price and volume quotations correspond.
After the merger with OM, derivatives are also traded in the SAX
system. The SSE also lists certain foreign shares. For foreign
shares to be registered the company must meet the same
requirements as those in force for Swedish companies. In January
1998, SSE and the Copenhagen Stock Exchange entered into a
cooperation agreement pursuant to which the two exchanges will
use the same trading system for the trading of shares. Swedish
and Danish shares are expected to be traded in the trading system
beginning in 1999.
Trading in shares in the automated SAX system can be
performed from 10:00 a.m. to 4:00 p.m. Stockholm time, but
intermediaries are allowed to trade at any time from their
inventory or through the linking of a buyer and a seller. The
Swedish equity market and the SAX system are based on
order-driven trading, i.e., transactions will be the direct
result of an order to buy or sell from an investor.
The Brussels Stock Exchange. The BSE is the principal
securities market in Belgium, which is operated by the Societe de
la Bourse des Valeurs Mobilieres de Bruxelles/
Effectenbeursvennootschap van Brussel ("SBVMB/EBVB"). The BSE has
a Board of Directors and a management committee (the "Exchange
Management Committee") which acts as an independent market
regulator, responsible for the overall management of the
Exchange. The Commissie voor het Bank en Financiewezen (the
Belgian Banking and Finance Commission or "BFC") oversees the
Exchange Management Committee in its capacity as market
regulator.
14
<PAGE>
There are currently approximately 65 credit institutions
and securities brokers (societe de bourse/beursvennootschappen)
authorized to trade operating on the BSE. The members of the
Exchange are granted admission to the markets by the Exchange
Management Committee. They are subject to the supervision of the
Exchange Management Committee and the BFC. The BFC verifies
compliance with applicable regulations by, among others, members
of the BSE and grants licenses to Belgian members to perform
investment services and securities transactions.
The principal market of the BSE, the First Market, is
divided into forward and spot markets. The forward market, which
is generally seen as a market for institutional investors, is the
most important market because of its turnover. A limited number
of shares , usually the most-actively traded shares, are traded
on the forward market. This market accounts for about two-thirds
of the total turnover of the BSE. The Exchange Management
Committee decides what securities will be traded in the forward
market and may intervene in cases of excessive price swings. The
forward market has both a "continuous" and a "semi-continuous"
segment. On the continuous segment takes place on a continuous
basis and trading prices are quoted on a real-time basis. On the
semi-continuous segment, trading prices are fixed at least twice
a day. A stock is listed on the continuous or semi-continuous
segment according to the average number of trades a day, the
average of the total daily value of trades, the average daily
bid-offer spread, the number of trading suspensions due to major
price variations and the average volume of orders executed at the
opening of each day, in each determined on an annual basis.
An order driven New Trading System has been fully
implemented since July 4, 1996. Transactions in the listed
securities are settled through a system of delivery versus
payment, operated by the Caisse Interprofesionelle de Depots et
de Virements de Titres SA/Interpersonele Effectendeposito- en
Girokas N.V. together with the SBVMB/EBVB and the Banque
Nationale de Belgique/De Nationale Bank van Belgie.
DESCRIPTION OF SPANISH PESETAS
The Peseta is the national currency of Spain. Spanish bank
notes are issued by The Bank of Spain, which is the country's
central bank and sole bank of issue. On February 23, 1998, the
noon buying rate for cable transfers in New York City payable in
Pesetas, as reported by the Federal Reserve Bank of New York, was
ESP 152.20 = $1.00.
The exchange rate between the Spanish Peseta 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 the rate result over time
from the interaction of many factors directly or indirectly
affecting economic conditions in Spain and in the United States,
including economic and political developments in other countries.
Of particular importance are rates of inflation, interest rate
levels, the balance of payments (both on capital and current
account) and the extent of governmental surpluses or deficits in
Spain and in the United States, all of which are in turn
sensitive to the monetary, fiscal and trade policies pursued by
the governments of Spain, the United States and other countries
important to international trade and finance. In recent years,
rates of exchange between the U.S. Dollar and the Spanish Peseta
have been highly volatile.
15
<PAGE>
Historical Data on the Spanish Peseta/U.S. Dollar Exchange Rate
The following table sets forth the highest and lowest daily
cross-exchange rate between the Spanish Peseta and the U.S.
Dollar, as published by Extel Financial Limited at 4:00 p.m.
London Time, for each quarter during the period from 1993 through
February 16, 1998, as well as such cross exchange rate as of the
end of each such quarter or partial quarter. Such historical
rates of exchange between the Spanish Peseta and the U.S. Dollar
should not be taken as an indication of future performance.
Exchange Rate
(Number of ESP equal to One USD)
--------------------------------
Highest Lowest Period
Level Level End
------- ------ ------
1993
1st Quarter 119.02 111.59 115.15
2nd Quarter 130.74 114.10 130.20
3rd Quarter 145.75 127.99 131.97
4th Quarter 142.93 129.65 142.93
1994
1st Quarter 145.33 136.12 136.12
2nd Quarter 140.42 129.99 131.60
3rd Quarter 131.60 125.38 128.58
4th Quarter 133.51 124.49 131.63
1995
1st Quarter 133.85 126.00 126.00
2nd Quarter 127.05 120.15 121.09
3rd Quarter 127.25 118.40 123.19
4th Quarter 124.33 120.51 121.32
1996
1st Quarter 126.47 120.88 124.12
2nd Quarter 129.61 123.70 128.21
3rd Quarter 128.42 124.85 128.41
4th Quarter 131.82 125.96 130.08
1997
1st Quarter 145.46 129.93 141.77
2nd Quarter 147.07 141.18 147.07
3rd Quarter 158.84 147.09 149.17
4th Quarter 152.42 144.13 152.42
1998
1st Quarter (through
February 16, 1998) 155.93 151.03 154.13
The cross exchange rate between the Spanish Peseta and the U.S.
Dollar on February 19, 1998, as published by Extel Financial
Limited at 4:00 p.m., London time, was ESP 154.51 = USD1.00.
16
<PAGE>
TAXATION
The following disclosure supplements, and to the extent
inconsistent therewith, replaces, the disclosure in the
Prospectus Supplement under "Certain United States Federal Income
Tax Considerations":
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 "Certain United States Federal Income Tax
Considerations."
17
<PAGE>
APPENDIX A
LIST OF FTSE EUROTOP 100-INDEX(R) UNDERLYING STOCKS
The following is a list of the 100 companies whose stocks
comprised the FTSE Eurotop 100- index(R) as of February 15, 1998.
UNITED KINGDOM
1. Abbey National
2. Allied Domecq
3. BAA
4. B.A.T. Industries
5. BG
6. BTR
7. Barclays Bank
8. Bass
9. Boots Co
19. British Aerospace
11. British Airways
12. British Petroleum Co.
13. British Steel
14. British Telecom
15. Cable & Wireless
16. Diageo PLC
17. General Electric Co
18. Glaxo
19. Granada Group
20. HSBC Holdings
21. Imperial Chemical Ind.
22. Lloyds TSB PLC
23. Marks & Spencer
24. Nat Westminister Bank
25. National Power
26. Prudential Corporation PLC
27. Reed Intl PLC
28. Reuters Holdings
29. Rio Tinto PLC
30. Sainsbury(J) PLC
31. Shell Transport
32. SmithKline Beecham
33. Standard Chartered
34. Tesco
35. Unilever PLC
36. Vodafone Group
37. Zeneca
Germany
1. Allianz
<PAGE>
2. BASF
3. BMW St
4. Bayer
5. Commerzbank
6. Daimler-Benz
7. Deutsche Bank
8. Hoechst
9. Mannesmann
10. RWE St
11. Siemens
12. Thyssen
13. VEBA
14. Volkswagen St
France
1. AXA-UAP
2. AlCatel Alsthom CGE
3. BNP
4. Carrefour
5. Elf-AquitaIne
6. Gen. des Eaux
7. Groupe Danone
8. Lvmh
9. Peugeot
10. Saint Gobain
11. Societe Generale
12. Total B
13. l'Oreal
Switzerland
1. ABB (I)
2. CS Holding (N)
3. Nestle (N)
4. Novartis (N)
5. Roche (GS)
6. SBV (N)
7. Swiss Reinsurance (N)
8. UBS/SBG (I)
9. Zurich Versicherungen (N)
The Netherlands
1. ABN AMRO Bank
2. Akzo Nobel
3. Elsevier
4. ING Group (CRT)
5. KPN
6. Philips Electronics
7. Royal Dutch Petroleum
8. Unilever (CRT)
2
<PAGE>
Italy
1. ENI
2. FIAT
3. Generali Assicur.
4. Montedison
5. Olivetti
6. Telecom Italia
Spain
1. Bnco Santander
2. ENDESA
3. Iberdrola
4. Repsol
5. Telefonica
Sweden
1. Astra (Afr)
2. Ericsson (Bfr)
3. Investor Bfr
4. S-E Banken (Afr)
5. Volvo (Bfr)
Belgium
1. Electrabel
2. Generale Bank
3. Petrofina
3
