<PAGE> 1
Filed Pursuant to Rule 424(b)(2)
Registration Nos. 333-38931;
333-01807
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED DECEMBER 1, 1997)
$300,000,000
SALOMON SMITH BARNEY HOLDINGS INC.
6 1/8% NOTES DUE JANUARY 15, 2003
------------------
Salomon Smith Barney Holdings Inc. (the "Company") is offering $300,000,000
principal amount of its 6 1/8% Notes due January 15, 2003 (the "Notes").
Interest on the Notes is payable on January 15 and July 15, commencing July 15,
1998. The Notes may not be redeemed prior to maturity. See "Description of
Notes."
The Notes will be issued in fully registered form only in denominations of
$1,000 or integral multiples thereof. The Notes will be initially represented by
one or more global notes registered in the name of The Depository Trust Company
("DTC") or its nominee. Beneficial interests in the Notes will be shown on, and
transfers thereof will be effected only through, records maintained by DTC and
its participants. Owners of beneficial interests in Notes will be entitled to
physical delivery of Notes in certificated form equal in principal amount to
their respective beneficial interests only under the limited circumstances
described herein. See "Description of Notes -- Book-Entry Notes."
Settlement for the Notes will be made in immediately available funds. The
Notes will trade in the Same-Day Funds Settlement System of DTC, and, to the
extent that secondary market trading activity in the Notes is effected through
the facilities of DTC, such trades will be settled in immediately available
funds. All payments of principal and interest will be made by the Company in
immediately available funds.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
===================================================================================================
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note 99.605% .500% 99.105%
- ---------------------------------------------------------------------------------------------------
Total $298,815,000 $1,500,000 $297,315,000
===================================================================================================
</TABLE>
(1) Plus accrued interest, if any, from February 3, 1998 to the date of
delivery.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(3) Before deducting expense payable by the Company estimated to be $75,000.
---------------------
The Notes are offered by the Underwriters named herein, subject to prior
sale, when, as and if accepted by the Underwriters and subject to certain
conditions. It is expected that delivery of the Notes in book-entry form will
be made through the facilities of DTC, on or about February 3, 1998.
---------------------
SALOMON SMITH BARNEY
ABN AMRO CHICAGO CORPORATION
BANC ONE CAPITAL CORPORATION
BEAR, STEARNS & CO. INC.
NATIONSBANC MONTGOMERY SECURITIES LLC
January 29, 1998
<PAGE> 2
Certain persons participating in this offering may engage in transactions
that stabilize, maintain, or otherwise affect the price of the Notes, including
over-allotment, stabilizing transactions and covering transactions. For a
description of these activities, see "Underwriting."
------------------------
CAPITALIZATION
The following table sets forth the supplemental consolidated capitalization
of the Company at September 30, 1997, after giving retroactive effect to the
merger of the Company with Smith Barney Holdings Inc. as a combination of
entities under common control in a transaction accounted for in a manner similar
to a pooling of interests, and as adjusted to give effect to the issuance of the
Notes, the issuance and sale of trust preferred securities of a subsidiary
trust, the issuance and sale of additional long-term debt of the Company after
September 30, 1997 through the date hereof, and the application of the proceeds
from each of these transactions to the repayment of short-term borrowings, as if
such transactions had occurred on September 30, 1997.
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1997
---------------------------
(UNAUDITED)
OUTSTANDING AS ADJUSTED
----------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Short-term borrowings................................................ $11,161 $ 9,138
Notes payable........................................................ 10 10
Long-term debt....................................................... 19,717 21,340
------- -------
Total debt................................................. $30,888 $30,488
======= =======
Redeemable Preferred Stock, Series A(1).............................. 420 --
Salomon Smith Barney-Obligated Mandatorily Redeemable Preferred
Securities of Subsidiary Trust holding solely Subordinated Debt
Securities of Salomon Smith Barney(2).............................. 345 345
SSBH-Obligated Mandatorily Redeemable Preferred Securities of
Subsidiary Trust holding solely Junior Subordinated Debt Securities
of SSBH(3)......................................................... -- 400
Stockholder's equity
Preferred Stock, Series D and E(1)................................. 450 --
Common stock and additional paid-in capital (net of treasury
stock).......................................................... 634 1,504
Retained earnings.................................................... 7,318 7,318
Cumulative translation adjustment.................................... 3 3
------- -------
Total stockholder's equity................................. 8,405 8,825
------- -------
Total capitalization................................................. $40,058 $40,058
======= =======
</TABLE>
- ---------------
(1) On November 28, 1997, in connection with the merger of the Company into a
wholly owned subsidiary of Travelers Group Inc. ("Travelers Group"), each
share of Series A Cumulative Convertible Preferred Stock, 8.08% Cumulative
Preferred Stock, Series D and 8.40% Cumulative Preferred Stock, Series E of
the Company was exchanged, respectively, for one share of Series I
Cumulative Preferred Stock, 8.08% Cumulative Preferred Stock, Series J and
8.40% Cumulative Preferred Stock, Series K of Travelers Group.
(2) The sole asset of SI Financing Trust is $355,700,000 aggregate principal
amount of 9.25% Subordinated Debt Securities of the Company due June 30,
2026.
(3) The sole asset of SSBH Capital I is $412,372,000 aggregate principal amount
of 7.200% junior subordinated deferrable interest debentures of the Company
due January 28, 2038.
S-2
<PAGE> 3
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
NINE
MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, -----------------------------------------
1997 1996 1995 1994 1993 1992
------------- ----- ----- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges......................... 1.29 1.37 1.20 0.98* 1.32 1.27
</TABLE>
The ratio of earnings to fixed charges has been computed by dividing
earnings before income taxes and fixed charges by the fixed charges. For
purposes of this ratio, fixed charges consist of interest expense and that
portion of rentals deemed representative of the appropriate interest factor.
* For the year ended December 31, 1994, earnings as defined were inadequate
to cover fixed charges. The amount by which fixed charges exceeded earnings as
defined for the year was $173 million.
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the Notes
will be used for general corporate purposes, which may include capital
contributions to subsidiaries of the Company and/or the reduction or refinancing
of borrowings of the Company or its subsidiaries. In order to fund its
investment brokerage business, the Company expects to incur additional
indebtedness in the future.
DESCRIPTION OF NOTES
The following description of the terms of the Notes offered hereby
(referred to in the Prospectus as the "Offered Securities") supplements the
description of the general terms of Securities set forth in the Prospectus, to
which description reference is hereby made. The following summary of the Notes
is qualified in its entirety by reference thereto and to the Indenture referred
to therein.
The Notes will be limited to $300,000,000 in aggregate principal amount, as
a result of which, as of January 29, 1998, $10,698,011,165 aggregate principal
amount of Debt Securities remains currently available to be offered by the
Company under the Registration Statements of which this Prospectus Supplement
and the accompanying Prospectus form a part. The Notes will be issued only in
fully registered form without coupons, in denominations of $1,000 and integral
multiples thereof. Initially, the Notes will be issued in the form of one or
more global notes (each, a "Book-Entry Note") registered in the name of DTC or
its nominee, as described below. The Notes will bear interest from February 3,
1998, at the annual rate set forth on the cover page of this Prospectus
Supplement. The Notes will mature on January 15, 2003. Interest on the Notes
will be payable semiannually on January 15, and July 15, commencing July 15,
1998, to the persons in whose names the Notes are registered at the close of
business on the preceding January 1 or July 1, respectively. The Notes will not
be redeemable prior to maturity and will not be subject to any sinking fund.
Principal of and interest on the Notes will be payable at the office or
agency of the Company to be maintained in the Borough of Manhattan, The City of
New York, initially at the Corporate Trust Office of the Trustee, 111 Wall
Street, Fifth Floor, New York, New York; provided, however, that at the option
of the Company, payment of interest may be made by check mailed to the address
of the person entitled thereto as such address shall appear in the register of
holders of Notes. Notwithstanding the foregoing, payments of principal of and
interest on Book-Entry Notes will be made as described below.
The Indenture permits the defeasance of Debt Securities upon the
satisfaction of the conditions described under "Description of
Securities -- Defeasance" in the Prospectus. The Notes are subject to these
defeasance provisions.
BOOK-ENTRY NOTES
The Notes will initially be issued in the form of one or more Book-Entry
Notes, which will be deposited with, or on behalf of, DTC and registered in the
name of DTC or its nominee. Except as set forth below, Book-
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Entry Notes may not be transferred except as a whole by DTC to a nominee of DTC
or by a nominee of DTC to DTC or another nominee of DTC or by DTC or any nominee
to a successor of DTC or a nominee of such successor.
Principal and interest payments on the Notes represented by one or more
Book-Entry Notes will be made by the Company to DTC or its nominee, as the case
may be, as the registered owner of the related Book-Entry Note or Notes. The
Company expects that DTC or its nominee, upon receipt of any payment of
principal or interest in respect of Book-Entry Notes, will credit immediately
the accounts of the related participants with payment in amounts proportionate
to their respective holdings in principal amount of beneficial interests in such
Book-Entry Notes as shown on the records of DTC. Neither the Company nor the
Trustee or any Paying Agent will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests of Book-Entry Notes, or for maintaining, supervising or
reviewing any records relating to such beneficial interests. The Company also
expects that payments by participants to owners of beneficial interests in
Book-Entry Notes held through such participants will be governed by standing
customer instructions and customary practices, as is the case with securities
registered in "street name." Such instructions will be the responsibility of
such participants.
If DTC is at any time unwilling, unable or ineligible to continue as
depositary and a successor depositary is not appointed by the Company within 90
days, the Company will issue Notes in certificated form in exchange for
beneficial interests in the Book-Entry Notes. In addition, the Company may at
any time determine not to have its Notes represented by one or more Book-Entry
Notes, and, in such event, will issue Notes in certificated form in exchange for
beneficial interests in Book-Entry Notes. In any such instance, an owner of a
beneficial interest in a Book-Entry Note will be entitled to physical delivery
in certificated form of Notes equal in principal amount to such beneficial
interest and to have such Notes registered in its name. Notes so issued in
certificated form will be issued in denominations of $1,000 or any amount in
excess thereof that is an integral multiple of $1,000 and will be issued in
registered form only, without coupons.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriters in immediately
available funds. All payments of principal and interest will be made by the
Company in immediately available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing-house or next-day funds. In contrast, the Notes
are expected to trade in the Same-Day Funds Settlement System of DTC until
maturity, and, to the extent that secondary market trading activity in the Notes
is effected through the facilities of DTC, such trades will be settled in
immediately available funds. No assurance can be given as to the effect, if any,
of settlement in immediately available funds on trading activity in the Notes.
UNDERWRITING
Subject to the terms and conditions set forth in the Terms Agreement dated
January 29, 1998, which incorporates by reference the Underwriting Agreement
Basic Provisions dated December 1, 1997 (together, the "Underwriting
Agreement"), the Company has agreed to sell to each of the Underwriters named
below,
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<PAGE> 5
and each of the Underwriters has severally agreed to purchase, the principal
amount of Notes set forth opposite its name below:
<TABLE>
<CAPTION>
UNDERWRITER PRINCIPAL AMOUNT
----------- ----------------
<S> <C>
Salomon Brothers Inc ................................................ $ 60,000,000
ABN AMRO Chicago Corporation ........................................ 60,000,000
Banc One Capital Corporation ........................................ 60,000,000
Bear, Stearns & Co. Inc. ............................................ 60,000,000
NationsBanc Montgomery Securities LLC ............................... 60,000,000
------------
Total...................................................... $300,000,000
============
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the Notes are subject to the
approval of certain legal matters by their counsel and to certain other
conditions. The Underwriters are committed to take and pay for all of the Notes
if any are taken.
The Underwriters propose to offer part of the Notes directly to the public
at the public offering price set forth on the cover page hereof and part to
certain dealers at a price that represents a concession not in excess of .300%
of the principal amount under the public offering price. The Underwriters may
allow, and such dealers may reallow, a concession not in excess of .250% of the
principal amount to certain other dealers.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
The Underwriters may engage in over-allotment, stabilizing transactions and
covering transactions in accordance with Regulation M under the Securities
Exchange Act of 1934, as amended. Over-allotment involves sales in excess of the
offering size, which creates a short position for the Underwriters. Stabilizing
transactions involve bids to purchase the underlying security so long as the
stabilizing bids do not exceed a specified maximum. Covering transactions
involve purchases of the Notes in the open market after the distribution has
been completed in order to cover short positions. Such stabilizing transactions
and covering transactions may cause the price of the Notes to be higher than it
would otherwise be in the absence of such transactions.
The Company does not intend to apply for listing of the Notes on a national
securities exchange, but has been advised by the Underwriters that they
presently intend to make a market in the Notes, as permitted by applicable laws
and regulations. The Underwriters are not obligated, however, to make a market
in the Notes, and any such market making may be discontinued at any time at the
sole discretion of the Underwriters. Accordingly, no assurance can be given as
to the liquidity of, or trading markets for, the Notes.
Salomon Brothers Inc and Smith Barney Inc., each a member of the National
Association of Securities Dealers, Inc. (the "NASD") and a wholly owned
subsidiary of the Company, may participate in distributions of the Notes.
Accordingly, the offerings of Notes will conform with the requirements of Rule
2720 of the Conduct Rules of the NASD regarding a NASD member firm's
underwriting of securities of an affiliate. Certain of the Underwriters or their
affiliates engage in transactions (which may include commercial banking
transactions) with and perform services for the Company or one or more of its
affiliates in the ordinary course of business and may do so in the future.
This Prospectus Supplement, together with the Prospectus, may also be used
by Smith Barney Inc., Salomon Brothers Inc and/or any successor thereto (the
"Salomon Smith Barney Subsidiaries"), each a subsidiary of the Company, in
connection with offers and sales of the Notes in market-making transactions at
negotiated prices related to prevailing market prices at the time of sale. Any
Salomon Smith Barney Subsidiary may act as principal or agent in such
transactions.
S-5
<PAGE> 6
EXPERTS
The consolidated financial statements and schedules of Salomon Inc as of
December 31, 1996 and 1995, and for each of the years in the three-year period
ended December 31, 1996, included in Salomon Inc's Annual Report on Form 10-K
for the year ended December 31, 1996 (the "Salomon Financials"), are
incorporated by reference herein, in reliance upon the report (also incorporated
by reference herein) of Arthur Andersen LLP, independent public accountants, and
upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements and schedule of Smith Barney Holdings
Inc. and its subsidiaries for the fiscal years ended December 31, 1996 and 1995,
and for each of the three years in the period ended December 31, 1996, included
in the Company's Current Report on Form 8-K filed on September 29, 1997, have
been audited by Coopers & Lybrand L.L.P., independent certified public
accountants, as set forth in their report therein, included thereon and
incorporated herein by reference. Such financial statements referred to above
are incorporated by reference herein in reliance upon such report given upon the
authority of said firm as experts in accounting and auditing.
The supplemental consolidated financial statements of the Company and its
subsidiaries for the fiscal years ended December 31, 1996 and 1995 and for each
of the three years in the period ended December 31, 1996, included in the
Company's Current Report on Form 8-K filed on November 28, 1997, have been
audited by Coopers & Lybrand L.L.P., independent certified public accountants,
as set forth in their report thereon, included therein and incorporated herein
by reference, which report states that Coopers & Lybrand L.L.P. did not audit
the Salomon Financials and that their opinion with respect to any amounts
contained in the Salomon Financials is based on the report of Arthur Andersen
LLP. Such financial statements referred to above are incorporated by reference
herein in reliance upon such reports given upon the authority of said firm as
experts in accounting and auditing.
LEGAL OPINIONS
The validity of the Notes offered hereby will be passed upon for the
Company by Stephanie B. Mudick, Esq., as counsel for the Company, 388 Greenwich
Street, New York, New York 10013 and for the Underwriters by Skadden, Arps,
Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York 10022. Ms.
Mudick, Deputy General Counsel of Travelers Group, the parent of the Company,
beneficially owns, or has rights to acquire under Travelers Group employee
benefit plans, an aggregate of less than 1% of the common stock of Travelers
Group. Skadden, Arps, Slate, Meagher & Flom LLP has from time to time acted as
counsel for Travelers Group and certain of its subsidiaries and may do so in the
future. Mr. Kenneth J. Bialkin, a partner in that firm, is a director of
Travelers Group, and he and other attorneys in such firm beneficially own an
aggregate of less than 1% of the common stock of Travelers Group.
S-6
<PAGE> 7
======================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION, OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED
IN THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR BY THE UNDERWRITERS. NEITHER THIS PROSPECTUS SUPPLEMENT NOR
THE PROSPECTUS CONSTITUTES AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH
IT RELATES OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THOSE TO
WHICH IT RELATES IN ANY STATE TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE
SUCH OFFER IN SUCH STATE. THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION CONTAINED IN EITHER
IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Capitalization........................ S-2
Ratio of Earnings to Fixed Charges.... S-3
Use of Proceeds....................... S-3
Description of Notes.................. S-3
Underwriting.......................... S-4
Experts............................... S-6
Legal Opinions........................ S-6
PROSPECTUS
Prospectus Summary.................... 2
The Company........................... 6
Ratio of Earnings to Fixed Charges.... 6
The Offered Securities................ 6
Description of Debt Securities........ 7
Description of Index Warrants......... 15
Limitations on Issuance of Bearer
Securities and Bearer Warrants...... 19
European Monetary Union............... 20
Use of Proceeds and Hedging........... 21
Plan of Distribution.................. 21
ERISA Matters......................... 23
Experts............................... 24
Legal Matters......................... 24
Available Information................. 25
Incorporation of Certain Documents by
Reference........................... 25
</TABLE>
======================================================
======================================================
$300,000,000
SALOMON SMITH BARNEY
HOLDINGS INC.
6 1/8% NOTES DUE JANUARY 15, 2003
------------
PROSPECTUS SUPPLEMENT
JANUARY 29, 1998
(INCLUDING PROSPECTUS
DATED DECEMBER 1, 1997)
------------
SALOMON SMITH BARNEY
ABN AMRO CHICAGO CORPORATION
BANC ONE CAPITAL CORPORATION
BEAR, STEARNS & CO. INC.
NATIONSBANC MONTGOMERY SECURITIES LLC
======================================================
