<PAGE> 1
PRICING SUPPLEMENT NO. H101 DATED APRIL 17, 2000
(TO PROSPECTUS DATED DECEMBER 1, 1997 AND PROSPECTUS SUPPLEMENT DATED DECEMBER
5, 1997)
RULE 424(B)(2) FILE NO. 333-38931
$83,000,000 PRINCIPAL AMOUNT
SALOMON SMITH BARNEY HOLDINGS INC.
MEDIUM-TERM NOTES, SERIES H
(REGISTERED NOTES -- FIXED RATE)
0.25% NOTES EXCHANGEABLE FOR A BASKET OF SELECTED TECHNOLOGY STOCKS, DUE 2005
The 0.25% Notes Exchangeable for a Basket of Selected Technology Stocks, Due
2005 offered hereby are Medium-Term Notes, Series H of Salomon Smith Barney
Holdings Inc., as further described in this Pricing Supplement and in the
accompanying Prospectus dated December 1, 1997 and Prospectus Supplement dated
December 5, 1997.
The Notes are exchangeable at your option and are redeemable at our option
for baskets of shares comprised of the stocks of seven selected technology
companies (Atmel Corp., Broadcom Corp., JDS Uniphase Corp., Level 3
Communications, QUALCOMM Inc., Siebel Systems, Inc. and VERITAS Software Corp.).
The number of shares of each of the underlying securities in each basket is
linked to a basket composition ratio for each stock that is fixed at the time
the Notes are issued and subject to change only in the event of certain
extraordinary corporate events affecting the issuer of the relevant underlying
security. In certain cases, we may redeem the Notes for an amount payable in
cash, rather than delivering shares of the underlying securities.
The Notes bear interest at the rate of 0.25% per annum, payable on April 18
and October 18 of each year, commencing October 18, 2000. If not previously
exchanged by you or called by us, the Notes will mature on April 18, 2005. The
Notes are not subject to any sinking fund prior to maturity and are issued in
minimum denominations of $1,000 and integral multiples thereof.
- EXCHANGE RIGHT On any trading day (beginning May 18, 2000), you will have
the right to exchange each $1,000 principal amount of Notes you then hold
for 7.2464 baskets of shares. The number of shares of each of the
underlying securities included in a basket will equal the basket
composition ratio of the security on the applicable exchange date.
- CALL RIGHT Beginning on February 17, 2002, upon not less than 30 nor more
than 60 days' notice, we may call the Notes, in whole, and not in part,
for mandatory redemption on or after April 18, 2002. Following an exercise
of our call right, you will receive for each $1,000 principal amount of
Notes:
- 7.2464 baskets of shares, with the number of shares of each of the
underlying securities included in each basket being equal to the basket
composition ratio of the security on the applicable call date, if the
value of 7.2464 baskets on the trading day immediately preceding the
notice date is greater than $1,000; or
- a call price equal to $1,000 in cash, if the value of 7.2464 baskets on
the trading day immediately preceding the notice date is less than or
equal to $1,000. Your exchange right will cease to be available
following any exercise of our call right for the call price.
Accordingly, the value of the stocks (or cash) that you will receive at
maturity or upon an earlier exchange or call for the Notes will not necessarily
be greater than (and may, in limited circumstances, be less than) the issue
price of your Notes.
PLEASE REFER TO "RISK FACTORS" BEGINNING ON PAGE PS-2 FOR A DISCUSSION OF
CERTAIN FACTORS THAT PROSPECTIVE PURCHASERS OF THE NOTES SHOULD CAREFULLY
CONSIDER.
For more details on the exchange right, call right, the underlying
securities, definitions of certain terms and a discussion of certain United
States federal income tax consequences for holders of the Notes, please refer to
"Description of the Notes", "The Underlying Issuers" and "Certain United States
Federal Income Tax Considerations" in this Pricing Supplement.
The issuers of the underlying securities are not affiliated with Salomon
Smith Barney Holdings, are not involved in this offering of Notes and will have
no obligations with respect to the Notes.
The Notes have been approved for listing on the American Stock Exchange
under the symbol "TES.A", subject to official notice of issuance.
<TABLE>
<CAPTION>
PRICE TO AGENT'S PROCEEDS TO SALOMON
PUBLIC(1) COMMISSION SMITH BARNEY HOLDINGS(1)
-------------- ---------- ------------------------
<S> <C> <C> <C>
Per Note............................................... $ 1,000.00 $0.00 $ 1,000.00
Total.................................................. $83,000,000.00 $0.00 $83,000,000.00
</TABLE>
- ---------------
(1) Plus accrued interest, if any, from April 18, 2000 to the date of delivery.
The Notes are being offered through Salomon Smith Barney Inc., as principal.
Salomon Smith Barney
<PAGE> 2
RISK FACTORS
An investment in the Notes entails significant risks not associated with
similar investments in a conventional debt security, including, among other
things, fluctuations in the market price of the underlying securities and other
events that are difficult to predict and beyond Salomon Smith Barney Holdings'
control:
COMPARISON TO OTHER SECURITIES
The terms of the Notes differ from those of ordinary debt securities in
that the Notes are exchangeable at your option and are redeemable at our option
for baskets of shares comprised of the stocks of seven selected technology
companies. The number of shares of each of the underlying securities in each
basket is linked to a basket composition ratio for each stock that is fixed at
the time the Notes are issued and subject to change only in the event of certain
extraordinary corporate events affecting the issuers of the underlying
securities. In certain cases, we may redeem the Notes for an amount payable in
cash, rather than delivering shares of the underlying securities.
No Equity Appreciation if Value of Basket of Underlying Securities Does Not
Increase At Least 38% from its Value on April 5, 2000. The opportunity for
equity appreciation afforded by an investment in the Notes is less than the
opportunity for equity appreciation afforded by an investment in the underlying
securities. You will not participate in any equity appreciation unless (1) the
Notes are called or exchanged and (2) on the date the exchange is effected (or,
if we call the Notes, on the trading day before the date we give notice), the
value of the basket of underlying securities exceeds $1,000, which would require
an appreciation in the value of the basket of underlying securities at that time
of approximately 38% from the value of the basket on April 5, 2000. In addition,
even if this condition is met at that time, you will not participate in
approximately the first 38% of the appreciation of the value of the basket from
April 5, 2000.
Prices of stocks in the technology sector have been highly volatile in
recent weeks and prices of all of the underlying securities have declined
significantly in the period between April 5, 2000 and the date of this Pricing
Supplement. See "The Underlying Issuers -- Historical Data on the Underlying
Securities".
Return Does Not Reflect Dividends. Your return on the Notes will not
reflect the return you would realize if you actually owned the underlying
securities and received the dividends paid on those underlying securities
because the Notes do not take into consideration the value of the dividends paid
on those underlying securities.
Price of the Underlying Securities May Decline During the Period from the
Exercise of Our Call Right to the Date of Redemption. Following any exercise of
our call that results in delivery of baskets of underlying shares (rather than a
call price) right up to and including the date on which the redemption is
effected, you are subject to the risk of a depreciation in the value of the
underlying securities, and therefore a reduction in the value of the basket of
stocks you would receive upon redemption. Unlike most conventional convertible
debt securities, this risk may cause you to receive stocks with a value less
than the principal amount of your Notes in certain circumstances. Although you
can limit this risk by immediately exercising your exchange right on the date we
provide notice of a call, you cannot entirely eliminate this risk with respect
to a decline in the value of the basket of underlying securities on the relevant
notice date.
Low Interest Rate; Possible Low Yield. The annual interest rate on the
Notes will be only 0.25%. As a result, if the value of the basket of underlying
securities over the term of the Notes is less than, equal to or only slightly
greater than its value on April 5, 2000 (resulting in your receiving an amount
of shares or cash upon exchange or redemption with a value that is equal to or
slightly greater than the principal amount of your Notes), the effective yield
on your Notes may be less than that which would be payable on a conventional
fixed-rate, non-callable debt security of Salomon Smith Barney Holdings.
PS-2
<PAGE> 3
RELATIONSHIP OF THE NOTES AND THE UNDERLYING SECURITIES
Prior to receiving shares of the underlying securities following your
exchange or our call, you will have no rights against the issuers of the
underlying securities even though (1) the value of any basket of shares that you
receive upon an exchange or call is dependent on the then-current prices of the
underlying securities, and (2) the market value of the Notes is expected to
depend primarily on the extent of the appreciation, if any, of the value of the
basket of underlying securities above the value of the basket on April 5, 2000.
The historical trading prices of the underlying securities included in this
Pricing Supplement under "Historical Data on the Underlying Securities" are not
an indicator of the future performance of the underlying securities during the
term of the Notes. While the trading prices of the underlying securities will
affect the trading price of the Notes, it is impossible to predict whether the
prices of the underlying securities will rise or fall. The issuers of the
underlying securities are not in any way involved in this offering and have no
obligations relating to the Notes or to holders of the Notes. In addition, you
will only have voting rights with respect to the underlying securities if you
receive shares following your exchange or our call.
There can be no assurance that each of the issuers of the underlying
securities will continue to be subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended, and will distribute any reports,
proxy statements and other information required thereby to its shareholders. In
the event that any of the issuers of the underlying securities cease to be
subject to such reporting requirements and the Notes continue to be outstanding,
pricing information for the Notes may be more difficult to obtain and the value
and liquidity of the Notes may be adversely affected.
FACTORS AFFECTING TRADING VALUE OF THE NOTES
We believe that the value of the Notes in the secondary market will be
affected by supply and demand for the Notes, the value of the basket of
underlying securities and a number of other factors. Some of these factors are
interrelated in complex ways; as a result, the effect of any one factor may be
offset or magnified by the effect of another factor. The following paragraphs
describe what we expect to be the impact on the market value of the Notes of a
change in a specific factor, assuming all other conditions remain constant.
Underlying Securities Prices. The trading price of the Notes at any time
may be affected by changes in the prices of the underlying securities. Trading
prices of stocks of companies in the technology sector, including those of the
underlying securities, have been volatile in recent periods and can be subject
to significant risks. Trading prices of the underlying securities will be
influenced by the results of operations of the respective issuers and by complex
and interrelated political, economic, financial and other factors that can
affect the capital markets generally, the stock exchanges on which the
underlying securities are traded and the market segment of which the issuers are
a part. Trading prices of the underlying securities also may be influenced if
we, the issuers or any other entity issues securities with terms similar to the
Notes or transfers shares of the underlying securities. In addition, the prices
of the underlying securities could become more volatile and could be depressed
by hedging or arbitrage trading activity that may develop involving the Notes
and the underlying securities. You should refer to "Use of Proceeds and Hedging"
in this Pricing Supplement and the accompanying Prospectus.
Call Feature. Our ability to call the Notes prior to their maturity date
is likely to limit the secondary market price at which the Notes will trade. We
believe that if we did not have the right to call the Notes, the secondary
market price of the Notes could be significantly different.
Interest Rates. We expect that the trading value of the Notes will be
affected by changes in interest rates. In general, if U.S. interest rates
increase, the trading value of the Notes may be adversely affected, and if U.S.
interest rates decrease, the trading value of the Notes may be favorably
affected.
Volatility of the Value of the Basket. Volatility is the term used to
describe the size and frequency of market fluctuations. Because the basket is
based on a relatively small number of underlying securities,
PS-3
<PAGE> 4
the value of the basket may be subject to greater volatility. If the volatility
of the value of the basket increases or decreases, the trading value of the
Notes may be adversely affected.
Time Remaining to Maturity. The Notes may trade at a value above that
which would be expected based on the level of interest rates and the prices of
the underlying securities. Any such difference will reflect a "time premium"
resulting from expectations concerning the prices of the underlying securities
during the period prior to the maturity of the Notes. However, as the time
remaining to the maturity of the Notes decreases, this time premium may
decrease, adversely affecting the trading value of the Notes.
Dividend Yields. The issuers of the underlying securities have not
historically paid dividends. If dividend yields on the underlying securities
increase, we expect that the value of the Notes may decrease, since the value of
any shares or cash you will receive upon your exchange or our call will not
reflect the value of such payments.
Salomon Smith Barney Holdings' Credit Ratings, Financial Condition and
Results. Actual or anticipated changes in our credit ratings, financial
condition or results may affect the market value of the Notes.
Economic Conditions and Earnings Performance of Underlying
Issuers. General economic conditions and earnings results of the issuers of the
underlying securities and real or anticipated changes in those conditions or
results may affect the market value of the Notes.
We want you to understand that the impact of one of the factors specified
above, such as an increase in prices of the underlying securities, may offset
some or all of any change in the trading value of the Notes attributable to
another factor, such as an increase in interest rates.
In general, assuming all relevant factors are held constant, we expect that
the effect on the trading value of the Notes of a given change in most of the
factors listed above will be less if it occurs later in the term of the Notes
than if it occurs earlier in the term of the Notes.
DILUTION OF THE UNDERLYING SECURITIES
The basket composition ratio, or relative weight of each underlying
security in the basket, and, in certain circumstances, the process of
determination of the value of the basket, are subject to adjustment for a number
of events arising out of stock splits and combinations, stock dividends, a
number of other transactions involving the issuers of the underlying securities,
as well as for the liquidation, dissolution or winding up of an issuer. You
should refer to the section "Description of the Notes -- Adjustment to Basket
Composition Ratios; Reorganization Events" below. The basket composition ratios
and the process of determination of the value of the basket will not be adjusted
for other events that may adversely affect the price of an underlying security,
such as offerings of common stock for cash or in connection with acquisitions.
Because of the relationship of the value of any basket of shares you receive
upon exchange or redemption to the then-current prices of the underlying
securities, these other events may reduce the value of those shares. There can
be no assurance that the issuers of the underlying securities will not make
offerings of common stock or take such other action in the future, or as to the
amount of these offerings, if any.
POSSIBLE ILLIQUIDITY OF THE SECONDARY MARKET
The Notes have been approved for listing on the American Stock Exchange,
subject to official notice of issuance, under the symbol "TES.A". However, it is
not possible to predict how the Notes will trade in the secondary market or
whether such market will be liquid or illiquid. There is currently no secondary
market for the Notes. Accordingly, the liquidity of the Notes may be limited.
Salomon Smith Barney Inc. currently intends, but is not obligated, to make a
market in the Notes. There can be no assurance that a secondary market will
develop or, if a secondary market does develop, that it will provide holders of
Notes with liquidity or that it will continue for the life of the Notes.
PS-4
<PAGE> 5
AFFILIATION OF SALOMON SMITH BARNEY HOLDINGS AND THE CALCULATION AGENT
Because Salomon Smith Barney Inc., which is acting as the calculation agent
for the Notes, is an affiliate of ours, potential conflicts of interest may
exist between the calculation agent and the holders of the Notes, including with
respect to certain determinations and judgments that the calculation agent must
make in determining amounts due to holders of the Notes or whether a market
disruption event has occurred. You should refer to "Description of the
Notes -- Market Disruption Events" below. Salomon Smith Barney Inc., as a
registered broker-dealer, is required to maintain policies and procedures
regarding the handling and use of confidential proprietary information, and such
policies and procedures will be in effect throughout the term of the Notes to
restrict the use of information relating to the calculation of the value of the
basket of underlying securities that the calculation agent may be required to
make prior to their dissemination. Salomon Smith Barney Inc. is obligated to
carry out its duties and functions as the calculation agent in good faith and
using its reasonable judgment.
PURCHASES AND SALES BY AFFILIATES OF SALOMON SMITH BARNEY HOLDINGS
Salomon Smith Barney Holdings, Salomon Smith Barney Inc. and other
affiliates of ours may from time to time buy or sell the underlying securities
or derivative instruments related to those securities for their own accounts in
connection with their normal business practices or in connection with hedging
the Salomon Smith Barney Holdings obligations under the Notes. These
transactions could affect the price of such stocks. You should refer to "Use of
Proceeds and Hedging" in this Pricing Supplement and the accompanying
Prospectus.
POTENTIAL FEDERAL INCOME TAX CONSEQUENCES
Because the Notes will be treated by Salomon Smith Barney Holdings as
contingent payment debt obligations of Salomon Smith Barney Holdings, and
because by accepting a Note each holder agrees to this treatment of the Notes,
United States holders of a Note will be required to include original issue
discount for United States federal income tax purposes in gross income on a
constant yield basis over the term of the Note. This tax OID will be includible
in a United States holder's gross income (as ordinary income) over the term of
the Note even though the amount of tax OID included in income in each year will
exceed the semi-annual interest payments to be made on the Note prior to
maturity or our exercise of our call right or your exercise of your exchange
right. The amount of the tax OID is calculated based in part on an assumed
amount payable upon exchange or redemption. This assumed amount is neither a
prediction nor guarantee of the actual yield of, or payment to be made in
respect of, a Note or whether we will exercise our call right or you will
exercise your exchange right. If the amount we actually pay upon exchange or
redemption is, in fact, less than this assumed amount, or if neither Salomon
Smith Barney Holdings nor a United States holder exercises, respectively, the
call right or the exchange right, then a United States holder will have
recognized taxable income in periods prior to exchange, redemption or maturity
that exceeds that holder's economic income from holding the Note during such
periods (with an offsetting ordinary loss upon exchange or redemption or at
maturity). If we exercise our call right, or a United States holder exercises
its exchange right or otherwise disposes of the Note prior to maturity, the
United States holder will be required to treat any gain recognized upon the
disposition of the Note as ordinary income (rather than capital gain). You
should refer to "Certain United States Federal Tax Considerations" in this
Pricing Supplement and the Prospectus Supplement.
DESCRIPTION OF THE NOTES
GENERAL
The description in this Pricing Supplement of the particular terms of the
0.25% Notes Exchangeable for a Basket of Selected Technology Stocks, Due 2005
offered hereby (the "Notes") supplements, and to the extent inconsistent
therewith replaces, the descriptions of the general terms and provisions of the
Registered Notes set forth in the accompanying Prospectus and Prospectus
Supplement, to which descriptions reference is hereby made. See "Definitions"
beginning on p. PS-8 for the definition of certain terms used herein. Terms used
but not defined herein have the meanings given to them in the Prospectus or the
Prospectus Supplement.
PS-5
<PAGE> 6
EXCHANGE RIGHT
On any Exchange Date, you will have the right (the "Exchange Right"), by
completing the Official Notice of Exchange attached as Exhibit A hereto and
delivering that notice to both the Calculation Agent and the Paying Agent for
the Notes no later than 11:00 a.m. New York City time on the relevant Exchange
Date, to exchange each $1,000 principal amount of Notes you then hold for 7.2464
Baskets of shares of the Underlying Securities, with the number of shares of
each of the Underlying Securities included in each basket being equal to the
Exchange Amount. We will deliver the Baskets of shares to you three Business
Days after the Exchange Date, as long as the Paying Agent has received delivery
of the Notes on the Exchange Date.
The Exchange Right will cease to be available following any exercise of our
Call Right that will result in payment to you of the Call Price, as explained
more fully below.
We will not pay accrued and unpaid interest on Notes that you exchange
under your Exchange Right. Notwithstanding the foregoing, we will pay you
accrued interest up to and including the earlier of the Exchange Date and April
17, 2002, if:
- you exercise your Exchange Right after we call the Notes for mandatory
redemption for Baskets of shares of the Underlying Securities,
- the Company Notice Date is on or before April 17, 2002, and
- the Call Date is on or after April 18, 2002.
CALL RIGHT
Beginning on February 17, 2002, upon not less than 30 nor more than 60
days' notice to holders of the Notes in the manner described below, we may call
the Notes (the "Call Right"), in whole, and not in part, for mandatory
redemption on or after April 18, 2002. Following an exercise of our Call Right,
you will receive for each $1,000 principal amount of Notes:
- 7.2464 Baskets of shares of the Underlying Securities, with the number of
shares of each of the Underlying Securities included in each basket being
equal to the Exchange Amount, if Parity on the Trading Day immediately
preceding the Company Notice Date, as determined by the Calculation
Agent, is greater than the Call Price, or
- an amount in cash equal to the Call Price, if Parity on the Trading Day
immediately preceding the Company Notice Date, as determined by the
Calculation Agent, is less than or equal to the Call Price.
Once we call the Notes, unless you have already exercised your Exchange
Right, we will deliver to you Baskets of shares of the Underlying Securities or
pay you the Call Price in cash, as the case may be:
- three Business Days after the Call Date, if we deliver to you Baskets of
shares of the Underlying Securities, or
- on the Call Date specified in the notice of mandatory redemption, if we
pay you the Call Price.
We will not pay accrued but unpaid interest on the Notes if we call them
for mandatory redemption for Baskets of the Underlying Securities. We will pay
accrued and unpaid interest up to and including the Call Date on the Notes if we
call them for mandatory redemption at the Call Price.
On or after the Company Notice Date, you will continue to be entitled to
exercise your Exchange Right, unless we have called the Notes for redemption at
the Call Price.
Notices to holders of the Notes will be published in a leading daily
newspaper in The City of New York, which is expected to be The Wall Street
Journal. Notwithstanding the foregoing, so long as the Notes are represented by
Global Securities and such Notes are held on behalf of the Depositary, any such
notice may, at our option in lieu of publication, be given by delivery to the
Depositary, in which event such notice shall be deemed to have been given to
holders of the Notes on the seventh Trading Day after the day on which such
notice is delivered.
PS-6
<PAGE> 7
DELIVERY OF SHARES
We may satisfy our obligation to deliver Baskets of shares of the
Underlying Securities under the Notes at any time by causing our affiliate,
Salomon Smith Barney Inc., to deliver the shares to the Paying Agent through the
facilities of DTC; the Paying Agent will in turn be obligated to deliver the
shares to holders of the Notes.
On any date when we are required to deliver Baskets of shares of the
Underlying Securities to holders of the Notes, in place of receiving a fraction
of a single share of any of the Underlying Securities, holders will instead
receive a cash payment equal to the product of the fractional amount of a single
share of the Underlying Security and the Closing Price per share of that
Underlying Security on the applicable Exchange Date or Call Date, as the case
may be. If physical or book-entry delivery of shares of the Underlying
Securities cannot be made at any time as when required in accordance with the
terms of the Notes, we will pay holders of the Notes an amount in cash equal to
the value of the Exchange Amount due at the relevant time.
INTEREST
The Notes will bear interest at a rate equal to 0.25% per annum, calculated
on the basis of 30 over 360. The Interest Payment Dates with respect to the
Notes are April 18 and October 18 of each year, commencing October 18, 2000. The
record date with respect to any Interest Payment Date will be the date (whether
or not a Business Day) immediately preceding such Interest Payment Date.
PAYING AGENT; TRUSTEE; CUSIP NUMBER
Citibank, N.A. will serve as Paying Agent and Registrar for the Notes and
will also hold the Global Security representing the Notes as custodian for DTC.
The First National Bank of Chicago, as successor trustee under an indenture
dated as of December 1, 1988, as amended or supplemented from time to time, will
serve as Trustee for the Notes.
The CUSIP number for the Notes is 79549B EQ 6.
THE BASKET
The "Basket" is comprised of the common stocks (together, the "Underlying
Securities") of the seven following issuers (together, the "Underlying Issuers")
as weighted below based on their Closing Prices on April 5, 2000 (to achieve a
Basket value of $100 on that date):
<TABLE>
<CAPTION>
NUMBER OF
SHARES
DELIVERABLE PER
INITIAL BASKET $1,000
UNDERLYING SECURITY PERCENTAGE COMPOSITION PRINCIPAL
UNDERLYING ISSUER (TICKER SYMBOL/LISTING) OF BASKET RATIO AMOUNT*
- ----------------- ----------------------- ---------- ----------- ---------------
<S> <C> <C> <C> <C>
Atmel Corp....................... ATML (NASDAQ) 0.142857 0.266090 1.928195
Broadcom Corp. (Class A)......... BRCM (NASDAQ) 0.142857 0.069835 0.506052
JDS Uniphase Corp................ JDSU (NASDAQ) 0.142857 0.129576 0.938960
Level 3 Communications........... LVLT (NASDAQ) 0.142857 0.150376 1.089685
QUALCOMM Inc..................... QCOM (NASDAQ) 0.142857 0.101138 0.732886
Siebel Systems, Inc.............. SEBL (NASDAQ) 0.142857 0.135169 0.979489
VERITAS Software Corp............ VRTS (NASDAQ) 0.142857 0.122888 0.890496
</TABLE>
- ---------------
* Computed by multiplying the Basket Composition Ratio by the Exchange Ratio and
based on the initial Basket Composition Ratio; the Basket Composition Ratio
for each Underlying Security is subject to adjustment.
PS-7
<PAGE> 8
The value of the Basket on any Trading Day will equal the sum of the
products of each Underlying Security's Closing Price by that Underlying
Security's Basket Composition Ratio. The Basket Composition Ratios are subject
to adjustment for certain corporate events. See "-- Adjustments to Basket
Composition Ratios; Reorganization Events" below.
DEFINITIONS
"Calculation Agent" means Salomon Smith Barney Inc.
"Call Date" means the date, from and including April 18, 2002, specified in
the notice of mandatory redemption, which must be not less than 30 nor more than
60 days after the Company Notice Date.
"Call Price" means $1,000 for each $1,000 principal amount of Notes.
"Closing Price" means, with respect to any security on any date of
determination, the closing sale price (or, if no closing price is reported, the
last reported sale price) of the security:
- on the Nasdaq National Market of the Nasdaq Stock Market, Inc. or any
successor exchange or securities market on that date, or
- if the security is not quoted on the Nasdaq National Market on that date,
as reported in the composite transactions for the principal United States
securities exchange on which the security is listed or quoted, or
- if the security is not listed or quoted on any such exchange, the last
quoted bid price for the security in the over-the-counter market as
reported by Nasdaq, the National Quotation Bureau or any similar
organization, or
- if this bid price in unavailable, the market value of the security on
that date determined by a nationally recognized independent investment
banking firm, which may be the Calculation Agent, retained for this
purpose by us.
"Company Notice Date" means any Trading Day, from and including February
17, 2002, on which we are entitled to give notice to call the Notes for
mandatory redemption and on which we issue the notice of mandatory redemption.
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as amended.
"Exchange Amount" means (i) a number of shares of each of the Underlying
Securities equal to the product of the Exchange Ratio and the Basket Composition
Ratio of the relevant Underlying Security on, (x) in the case of your Exchange
Right, the applicable Exchange Date or, (y) in the case of our Call Right, the
Call Date, in each case as calculated by the Calculation Agent, plus (ii) any
cash required to be delivered as a result of the elimination of fractional
shares.
"Exchange Date" means any Trading Day from and including May 18, 2000
through and including the Trading Day prior to the earliest of (1) maturity, (2)
the Call Date, and (3) if we call the Notes for cash at the Call Price as
described below, the Company Notice Date.
"Exchange Ratio" means 7.2464.
"Parity", with respect to any Trading Day, means the Exchange Ratio times
the value of the Basket on that Trading Day, as determined by the Calculation
Agent.
A "Trading Day" means a day on which trading is generally conducted in the
Nasdaq National Market and on the American Stock Exchange, as determined by the
Calculation Agent, and on which a Market Disruption Event has not occurred.
ADJUSTMENTS TO BASKET COMPOSITION RATIOS; REORGANIZATION EVENTS
The Basket Composition Ratio for each Underlying Security will be subject
to adjustment from time to time in certain situations. Any such adjustments
could have an impact on the Exchange Amount.
PS-8
<PAGE> 9
Salomon Smith Barney Inc., as Calculation Agent, will be responsible for the
effectuation and calculation of any adjustment described herein and will furnish
the Paying Agent and Trustee with notice of any such adjustment.
If any Underlying Issuer, after the closing date of the offering
contemplated hereby,
(1) pays a stock dividend or makes a distribution with respect to that
issuer's Underlying Security in shares of such security,
(2) subdivides or splits that issuer's outstanding Underlying Securities
into a greater number of securities,
(3) combines that issuer's outstanding Underlying Securities into a smaller
number of securities, or
(4) issues by reclassification of that issuer's Underlying Securities any
shares of other common stock of the Underlying Issuer,
then, in each such case, the Underlying Security's Basket Composition Ratio will
be multiplied by a dilution adjustment equal to the number of shares of that
issuer's Underlying Security, or in the case of a reclassification referred to
in (4) above, the number of shares of other common stock of the Underlying
Issuer, issued pursuant thereto, or the fraction thereof, that a holder who held
one of that issuer's Underlying Security immediately prior to such event would
be entitled solely by reason of such event to hold immediately after such event.
If any Underlying Issuer, after the closing date, issues, or declares a
record date in respect of an issuance of, rights or warrants to all holders of
that issuer's Underlying Securities entitling them to subscribe for or purchase
the Underlying Securities at a price less than the Then-Current Market Price of
one Underlying Security, other than rights to purchase Underlying Securities
pursuant to a plan for the reinvestment of dividends or interest, then, in each
such case, the Basket Composition Ratio for that Underlying Security will be
multiplied by a dilution adjustment equal to a fraction, the numerator of which
will be the number of that issuer's Underlying Securities outstanding
immediately prior to the time the adjustment is effected by reason of the
issuance of such rights or warrants, plus the number of additional Underlying
Securities of that issuer offered for subscription or purchase pursuant to such
rights or warrants, and the denominator of which will be the number of that
issuer's Underlying Securities outstanding immediately prior to the time the
adjustment is effected, plus the number of additional Underlying Securities of
that issuer which the aggregate offering price of the total number of that
issuer's Underlying Securities so offered for subscription or purchase pursuant
to such rights or warrants would purchase at the Then-Current Market Price,
which will be determined by multiplying the total number of Underlying
Securities so offered for subscription or purchase by the exercise price of such
rights or warrants and dividing the product so obtained by such Then-Current
Market Price. To the extent that, after the expiration of such rights or
warrants, that issuer's Underlying Securities offered thereby have not been
delivered, the Basket Composition Ratio for the Underlying Security will be
further adjusted to equal the Basket Composition Ratio which would have been in
effect had such adjustment for the issuance of such rights or warrants been made
upon the basis of delivery of only the number of Underlying Securities actually
delivered.
If any Underlying Issuer, after the closing date, declares or pays a
dividend or makes a distribution to all holders of its Underlying Securities, in
either case, of evidences of its indebtedness or other non-cash assets,
excluding any dividends or distributions referred to above, or issues to all
holders of its Underlying Securities rights or warrants to subscribe for or
purchase any of its securities other than rights or warrants referred to above,
then, in each such case, the Basket Composition Ratio for that issuer's
Underlying Security will be multiplied by a dilution adjustment equal to a
fraction, the numerator of which will be the Then-Current Market Price of the
Underlying Security, and the denominator of which will be such Then-Current
Market Price less the fair market value (as determined by a nationally
recognized independent investment banking firm retained for this purpose by
Salomon Smith Barney Holdings, whose determination will be final) as of the time
the adjustment is effected of the portion of the assets, evidences of
indebtedness, rights or warrants so distributed or issued applicable to one
Underlying Security.
PS-9
<PAGE> 10
Notwithstanding the foregoing, in the event that, with respect to any dividend
or distribution to which this paragraph would otherwise apply, the denominator
in the fraction referred to in the above formula is less than $1.00 or is a
negative number, then Salomon Smith Barney Holdings may, at its option, elect to
have the adjustment provided by this paragraph not be made and in lieu of such
adjustment, on the maturity date, the holders of the Notes will be entitled to
receive an additional amount of cash equal to the product of the number of Notes
held by such holder multiplied by the fair market value of such indebtedness,
assets, rights or warrants (determined, as of the date such dividend or
distribution is made, by a nationally recognized independent investment banking
firm retained for this purpose by Salomon Smith Barney Holdings, whose
determination will be final) so distributed or issued applicable to one
Underlying Security of that issuer.
If, after the closing date, any Underlying Issuer declares a record date in
respect of a distribution of cash, other than any permitted dividends described
below, any cash distributed in consideration of fractional shares of that
issuer's Underlying Securities and any cash distributed in a Reorganization
Event, by dividend or otherwise, to all holders of that issuer's Underlying
Securities, or makes an excess purchase payment, then the Basket Composition
Ratio for the Underlying Security will be multiplied by a dilution adjustment
equal to a fraction, the numerator of which will be the Then-Current Market
Price of the Underlying Security on such record date, and the denominator of
which will be such Then-Current Market Price less the amount of such
distribution applicable to one Underlying Security which would not be a
permitted dividend, or, in the case of an excess purchase payment, less the
aggregate amount of such excess purchase payment for which adjustment is being
made at such time divided by the number of Underlying Securities outstanding on
such record date.
For purposes of these adjustments, a permitted dividend is any quarterly
cash dividend in respect of an Underlying Security, other than a quarterly cash
dividend that exceeds the immediately preceding quarterly cash dividend, and
then only to the extent that the per share amount of such dividend results in an
annualized dividend yield on the Underlying Security in excess of 10%. An excess
purchase payment is the excess, if any, of (x) the cash and the value (as
determined by a nationally recognized independent investment banking firm
retained for this purpose by Salomon Smith Barney Holdings, whose determination
will be final) of all other consideration paid by the Underlying Issuer with
respect to one Underlying Security of that issuer acquired in a tender offer or
exchange offer by the Underlying Issuer, over (y) the Then-Current Market Price
of the Underlying Security. Notwithstanding the foregoing, in the event that,
with respect to any dividend or distribution or excess purchase payment to which
this paragraph would otherwise apply, the denominator in the fraction referred
to in the formula in the preceding paragraph is less than $1.00 or is a negative
number, then Salomon Smith Barney Holdings may, at its option, elect to have the
adjustment provided by this paragraph not be made and in lieu of such
adjustment, on the maturity date, the holders of the Notes will be entitled to
receive an additional amount of cash equal to the product of the number of Notes
held by such holder multiplied by the sum of the amount of cash plus the fair
market value of such other consideration (determined, as of the date such
dividend or distribution is made, by a nationally recognized independent
investment banking firm retained for this purpose by Salomon Smith Barney
Holdings, whose determination will be final) so distributed or applied to the
acquisition of the Underlying Security in such a tender offer or exchange offer
applicable to one Underlying Security.
Each dilution adjustment shall be effected as follows:
- in the case of any dividend, distribution or issuance, at the opening of
business on the Business Day next following the record date for
determination of holders of the applicable Underlying Securities entitled
to receive such dividend, distribution or issuance or, if the
announcement of any such dividend, distribution, or issuance is after
such record date, at the time such dividend, distribution or issuance
shall be announced by the Underlying Issuer;
- in the case of any subdivision, split, combination or reclassification,
on the effective date of such transaction;
PS-10
<PAGE> 11
- in the case of any excess purchase payment for which the Underlying
Issuer announces, at or prior to the time it commences the relevant share
repurchase, the repurchase price per share for shares proposed to be
repurchased, on the date of such announcement; and
- in the case of any other excess purchase payment on the date that the
holders of the repurchased shares become entitled to payment in respect
thereof.
All dilution adjustments will be rounded upward or downward to the nearest
1/10,000th or, if there is not a nearest 1/10,000th, to the next lower
1/10,000th. No adjustment to any Basket Composition Ratio will be required
unless such adjustment would require an increase or decrease of at least one
percent therein, provided, however, that any adjustments which by reason of this
sentence are not required to be made will be carried forward and taken into
account in any subsequent adjustment. If any announcement or declaration of a
record date in respect of a dividend, distribution, issuance or repurchase
requiring an adjustment as described herein is subsequently canceled by the
Underlying Issuer, or such dividend, distribution, issuance or repurchase fails
to receive requisite approvals or fails to occur for any other reason, then,
upon such cancellation, failure of approval or failure to occur, the Basket
Composition Ratio will be further adjusted to the Basket Composition Ratio which
would then have been in effect had adjustment for such event not been made. If a
Reorganization Event occurs after the occurrence of one or more events requiring
an adjustment as described herein, the dilution adjustments previously applied
to the Basket Composition Ratio in respect of such events will not be rescinded
but will be applied to the new Basket Composition Ratio provided for below.
"Then-Current Market Price" of any Underlying Security, for the purpose of
applying any dilution adjustment, means the Closing Price of one Underlying
Security for the trading day immediately prior to the time such adjustment is
effected or, in the case of an adjustment effected at the opening of business on
the Business Day next following a record date, immediately prior to the earlier
of the time such adjustment is effected and the related ex-date. The "ex-date"
with respect to any dividend, distribution or issuance is the first date on
which the Underlying Security trades regular way on its principal U.S. market
without the right to receive such dividend, distribution or issuance.
For purposes of this section, "trading day" as to any Underlying Security
means a day on which that Underlying Security (A) is not suspended from trading
on any national or regional securities exchange, securities market or
association or over-the-counter market at the close of business and (B) has
traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary U.S. market for the
trading of such security.
In the event of any of the following "Reorganization Events":
- any consolidation or merger of an Underlying Issuer, or any surviving
entity or subsequent surviving entity of an Underlying Issuer, with or
into another entity, other than a merger or consolidation in which the
Underlying Issuer is the continuing corporation and in which that
issuer's Underlying Securities outstanding immediately prior to the
merger or consolidation are not exchanged for cash, securities or other
property of the Underlying Issuer or another issuer,
- any sale, transfer, lease or conveyance to another corporation of the
property of an Underlying Issuer or any successor as an entirety or
substantially as an entirety,
- any statutory exchange of securities of an Underlying Issuer or any
successor of an Underlying Issuer with another issuer, other than in
connection with a merger or acquisition, or
- any liquidation, dissolution or winding up of an Underlying Issuer or any
successor of an Underlying Issuer,
the value of the Basket, upon a call by Salomon Smith Barney Holdings for
mandatory redemption for shares of the Underlying Securities in an amount per
$1,000 principal amount of Notes equal to the Exchange Amount or upon exchange
at the option of the holder, will be calculated with respect to that issuer's
Underlying Security by multiplying the Basket Composition Ratio for that
Underlying Security by the Transaction Value (rather than the Closing Price of
that Underlying Security), provided that for
PS-11
<PAGE> 12
purposes of determining whether Parity on the trading day preceding the Company
Notice Date is less than the Call Price, the value of the Basket will be
calculated with respect to that issuer's Underlying Security by multiplying the
then-existing Basket Composition Ratio for that Underlying Security by the
Transaction Value. At such time, no adjustment will be made to the Basket
Composition Ratio of the Underlying Securities.
"Transaction Value" means the sum of:
1. for any cash received in a Reorganization Event, the amount of cash
received per Underlying Security;
2. for any property other than cash or Marketable Securities received
in a Reorganization Event, an amount equal to the market value on the date
the Reorganization Event is consummated of such property received per
Underlying Security (as determined by a nationally recognized independent
investment banking firm retained for this purpose by Salomon Smith Barney
Holdings, whose determination will be final); and
3. for any "Marketable Securities" received in a Reorganization Event,
an amount equal to the Closing Price per share of such Marketable
Securities on the trading day immediately prior to the maturity date or
Exchange Date multiplied by the number of such Marketable Securities
received per Underlying Security.
"Marketable Securities" are any perpetual equity securities or debt
securities with a stated maturity after the maturity date, in each case that are
listed on a U.S. national securities exchange or reported by the Nasdaq Stock
Market, Inc. The number of shares of any equity securities constituting
Marketable Securities included in the calculation of Transaction Value pursuant
to clause (3) of the preceding paragraph will be subject to adjustment if any
event that would, had it occurred with respect to any Underlying Security or to
an Underlying Issuer, have required an adjustment as described above occurs with
respect to such Marketable Securities or the issuer thereof between the time of
the Reorganization Event and the maturity date. Adjustment for such subsequent
events shall be as nearly equivalent as practicable to the adjustments described
above.
MARKET DISRUPTION EVENTS
"Market Disruption Event" means any of the following events, as determined
by Salomon Smith Barney Inc., as Calculation Agent.
(a) The suspension or material limitation of trading in one or more of the
Underlying Securities which comprise the Basket, for more than two hours of
trading or during the one-half hour period preceding the close of trading on the
NYSE, the Nasdaq National Market, any other applicable organized U.S. exchange
or the primary international exchange on which a security represented by an
Underlying Security is traded. For purposes of this definition, limitations on
trading during significant market fluctuations imposed pursuant to NYSE Rule 80B
(or any applicable rule or regulation enacted or promulgated by the NYSE, the
Securities and Exchange Commission (the "SEC") or any other self regulatory
organization or of similar scope as a replacement for Rule 80B, as determined by
the Calculation Agent) shall be considered "material".
(b) The suspension or material limitation, in each case, for more than two
hours of trading or during the one-half hour period preceding the close of
trading (whether by reason of movements in price exceeding levels permitted by
the relevant exchange or otherwise) in options contracts related to one or more
of the Underlying Securities which are traded on any major U.S. or international
exchange.
(c) The unavailability, through a recognized system of public dissemination
of transaction information, for more than two hours of trading or during the
one-half hour period preceding the close of trading, of accurate price, volume
or related information in respect of one or more of the Underlying Securities or
in respect of options contracts related to one or more of the Underlying
Securities, in each case traded on any major U.S. or international exchange.
PS-12
<PAGE> 13
For purposes of determining whether a Market Disruption Event has occurred:
(1) a limitation on the hours or number of days of trading will not constitute a
Market Disruption Event if it results from an announced change in the regular
business hours of the relevant exchange or market, (2) a decision to discontinue
permanently trading in the relevant options contract will not constitute a
Market Disruption Event, (3) any suspension in trading in an options contract on
one or more of the Underlying Securities by a major securities market by reason
of (x) a price change violating limits set by such securities market, (y) an
imbalance of orders relating to such contracts or (z) a disparity in bid and ask
quotes relating to such contracts will constitute a Market Disruption Event,
notwithstanding that such suspension or material limitation is less than two
hours, and (4) a "suspension or material limitation" on an exchange or in a
market will include a suspension or material limitation of trading by one class
of investors provided that such suspension continues for more than two hours of
trading or during the last one-half hour period preceding the close of trading
on the relevant exchange or market (but will not include limitations imposed on
certain types of trading under NYSE Rule 80A or any applicable rule or
regulation enacted or promulgated by the NYSE, any other self-regulatory
organization or the SEC of a similar scope or as a replacement for Rule 80A, as
determined by the Calculation Agent) and will not include any time when such
exchange or market is closed for trading as part of such exchange's or market's
regularly scheduled business hours. Under certain circumstances, the duties of
Salomon Smith Barney Inc. as the Calculation Agent in determining the existence
of Market Disruption Events could conflict with the interests of Salomon Smith
Barney Inc. as an affiliate of the issuer of the Notes.
USE OF PROCEEDS AND HEDGING
Before and immediately following the initial offering of the Notes, Salomon
Smith Barney Holdings or one or more of its subsidiaries will use a portion of
the proceeds from this offering to acquire the Underlying Securities or listed
or over-the-counter options contracts in, or other derivative or synthetic
instruments related to, the Underlying Securities in connection with hedging
Salomon Smith Barney Holdings' obligations under the Notes. The balance of the
proceeds will be used for general corporate purposes. Please refer to "Use of
Proceeds and Hedging -- Use of Proceeds Relating to Index Warrants and Indexed
Notes" in the accompanying Prospectus.
THE UNDERLYING ISSUERS
According to publicly available documents:
- Atmel Corporation is a global semiconductor company that designs,
develops, manufactures and sells a wide range of highly integrated
semiconductor integrated circuit products. Atmel is incorporated under
the laws of the State of Delaware. Atmel is currently subject to the
informational reporting requirements of the Exchange Act. Accordingly,
Atmel files reports (including its Annual Report on Form 10-K for the
fiscal year ended December 31, 1999), proxy statements and other
information with the SEC.
- Broadcom Corporation is the leading provider of highly integrated silicon
solutions that enable broadband digital transmission of voice, video and
data to and throughout the home and within the business enterprise.
Broadcom is incorporated under the laws of the State of California.
Broadcom is currently subject to the informational reporting requirements
of the Exchange Act. Accordingly, Broadcom files reports (including its
Annual Report on Form 10-K for the fiscal year ended December 31, 1999),
proxy statements and other information with the SEC.
- JDS Uniphase Corporation is the leading provider of advanced fiber optic
components and modules, which are sold to leading telecommunications and
cable television system providers worldwide. JDS Uniphase is incorporated
under the laws of the State of Delaware. JDS Uniphase is currently
subject to the informational reporting requirements of the Exchange Act.
Accordingly, JDS Uniphase files reports (including its Annual Report on
Form 10-K for the fiscal year ended June 30, 1999 and its Quarterly
Reports on Form 10-Q for the quarterly periods ended
PS-13
<PAGE> 14
September 30, 1999 and December 31, 1999), proxy statements and other
information with the SEC.
- Level 3 Communications, Inc. and its subsidiaries engage in the
communications, information services and coal mining businesses through
ownership of operating subsidiaries and substantial equity positions in
public companies. Level 3 is incorporated under the laws of the State of
Delaware. Level 3 is currently subject to the informational reporting
requirements of the Exchange Act. Accordingly, Level 3 files reports
(including its Annual Report on Form 10-K for the fiscal year ended
December 31, 1999), proxy statements and other information with the SEC.
- QUALCOMM Incorporated is a leading provider of digital wireless
communications products, technologies and services based on its
technology. QUALCOMM is incorporated under the laws of the State of
Delaware. QUALCOMM is currently subject to the informational reporting
requirements of the Exchange Act. Accordingly, QUALCOMM files reports
(including its Annual Report on Form 10-K for the fiscal year ended
September 26, 1999 and its Quarterly Report on Form 10-Q for the
quarterly period ended December 31, 1999), proxy statements and other
information with the SEC.
- Siebel Systems, Inc. is the world's leading provider of eBusiness
applications. Siebel Systems is incorporated under the laws of the State
of Delaware. Siebel Systems is currently subject to the informational
reporting requirements of the Exchange Act. Accordingly, Siebel Systems
files reports (including its Annual Report on Form 10-K for the fiscal
year ended December 31, 1999), proxy statements and other information
with the SEC.
- VERITAS Software Corporation is the leading independent supplier of
enterprise data storage management solutions, providing advanced storage
management software for open system environments. VERITAS is incorporated
under the laws of the State of Delaware. VERITAS is currently subject to
the informational reporting requirements of the Exchange Act.
Accordingly, VERITAS files reports (including its Annual Report on Form
10-K for the fiscal year ended December 31, 1998 and its Quarterly Report
on Form 10-Q for the quarterly period ended March 31, 1999), proxy
statements and other information with the SEC.
Any registration statement, report, proxy statement or other information of
the Underlying Issuers filed with the SEC may be inspected and copied at the
offices of the SEC at the addresses listed under "Available Information" in the
accompanying Prospectus.
THE UNDERLYING ISSUERS ARE NOT AFFILIATED WITH SALOMON SMITH BARNEY
HOLDINGS, WILL NOT RECEIVE ANY OF THE PROCEEDS FROM THE SALE OF THE NOTES AND
WILL HAVE NO OBLIGATIONS WITH RESPECT TO THE NOTES. THIS PRICING SUPPLEMENT
RELATES ONLY TO THE NOTES OFFERED HEREBY AND DOES NOT RELATE TO THE UNDERLYING
ISSUERS OR THE UNDERLYING SECURITIES.
HISTORICAL DATA ON THE UNDERLYING SECURITIES
Holders of the Notes will not be entitled to any rights with respect to the
Underlying Securities (including, without limitation, voting rights or rights to
receive dividends or other distributions in respect thereof) prior to receiving
shares of the underlying securities as a result of your exchange or our call.
PS-14
<PAGE> 15
Atmel
Atmel's common stock is quoted on the NASDAQ National Market under the
symbol "ATML". The following table sets forth, for each of the quarterly periods
indicated, the high and the low sale price for Atmel's common stock, as reported
on the NASDAQ National Market, and adjusted to reflect 2 for 1 splits of the
common stock on each of August 9, 1995 and December 20, 1999. Atmel has not
declared or paid any dividends on its common stock during the periods indicated.
<TABLE>
<CAPTION>
QUARTER HIGH LOW
- ------- ---- ---
<S> <C> <C>
1995
First....................................................... 10 9/16 7 45/64
Second...................................................... 14 1/2 9 3/8
Third....................................................... 18 14 3/32
Fourth...................................................... 16 1/4 10 1/8
1996
First....................................................... 16 1/8 9 11/16
Second...................................................... 20 17/25 12 11/16
Third....................................................... 16 9/16 12
Fourth...................................................... 18 9/16 12 11/16
1997
First....................................................... 23 7/16 11 7/8
Second...................................................... 14 13/16 11 1/4
Third....................................................... 19 17/32 13 1/4
Fourth...................................................... 18 3/4 9 1/32
1998
First....................................................... 10 1/4 7
Second...................................................... 10 1/8 6 3/8
Third....................................................... 7 5/16 3 1/64
Fourth...................................................... 8 3/16 3 19/32
1999
First....................................................... 9 13/32 7 1/32
Second...................................................... 13 3/32 8 9/16
Third....................................................... 20 15/16 13 3/16
Fourth...................................................... 30 3/8 15 3/8
2000
First....................................................... 59 1/2 25 1/16
Second (through April 14, 2000)............................. 57 7/8 39 5/8
</TABLE>
The closing price of Atmel's common stock on April 14, 2000 was $39 5/8.
According to Atmel's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999, as of March 3, 2000, there were 221,070,889 shares of Atmel
common stock outstanding.
Broadcom
Broadcom's Class A common stock is quoted on the NASDAQ National Market
under the symbol "BRCM". The following table sets forth, for each of the
quarterly periods indicated, the high and the low sale price for Broadcom's
Class A common stock, as reported on the NASDAQ National Market and adjusted to
reflect 2 for 1 splits of the Class A common stock on each of February 18, 1999
and
PS-15
<PAGE> 16
February 14, 2000. Broadcom has not declared or paid any dividends on its Class
A common stock during the periods indicated.
<TABLE>
<CAPTION>
QUARTER HIGH LOW
- ------- ---- ---
<S> <C> <C>
1998
Second (from April 17)...................................... 18 13/32 12
Third....................................................... 20 31/32 12 13/16
Fourth...................................................... 32 1/16 15 7/16
1999
First....................................................... 44 13/16 25 1/32
Second...................................................... 72 9/32 30
Third....................................................... 72 3/16 52 1/16
Fourth...................................................... 137 1/2 54 9/16
2000
First....................................................... 246 114 15/16
Second (through April 14, 2000)............................. 219 1/16 122 1/4
</TABLE>
The closing price of Broadcom's Class A common stock on April 14, 2000 was
$122 1/4.
According to Broadcom's Annual Report on Form 10-K for the fiscal year
ended December 31, 1999, as of March 24, 2000, there were 117,890,115 shares of
Broadcom Class A common stock outstanding.
JDS Uniphase
JDS Uniphase's common stock is quoted on the NASDAQ National Market under
the symbol "JDSU". The following table sets forth, for each of the quarterly
periods indicated, the high and the low sale price for JDS Uniphase's common
stock, as reported on the NASDAQ National Market, and adjusted to reflect 2 for
1 splits of the common stock on each of June 4, 1996, November 13, 1997, July
27, 1999, December 30, 1999 and March 13, 2000. JDS Uniphase has not declared or
paid any dividends on its common stock during the periods indicated.
<TABLE>
<CAPTION>
QUARTER HIGH LOW
- ------- ---- ---
<S> <C> <C>
1995
First....................................................... 50/81 16/39
Second...................................................... 31/42 31/54
Third....................................................... 1 11/64 59/91
Fourth...................................................... 1 11/67 33/41
1996
First....................................................... 1 15/64 69/73
Second...................................................... 2 7/32 1 1/6
Third....................................................... 2 41/64 1 3/11
Fourth...................................................... 3 23/32 2 37/64
1997
First....................................................... 3 3/32 1 84/85
Second...................................................... 3 15/19 2 8/41
Third....................................................... 5 1/43 3 50/81
Fourth...................................................... 5 13/16 3 9/16
</TABLE>
PS-16
<PAGE> 17
<TABLE>
<CAPTION>
QUARTER HIGH LOW
- ------- ---- ---
<S> <C> <C>
1998
First....................................................... 5 40/77 5 40/77
Second...................................................... 7 7/8 7 7/8
Third....................................................... 7 7/8 7 7/8
Fourth...................................................... 8 43/64 8 43/64
1999
First....................................................... 14 25/64 7 15/16
Second...................................................... 20 3/4 13 13/64
Third....................................................... 29 9/64 19 31/49
Fourth...................................................... 83 13/16 28 13/16
2000
First....................................................... 146 17/32 74 7/8
Second (through April 14, 2000)............................. 121 7/8 79 5/8
</TABLE>
The closing price of JDS Uniphase's common stock on April 14, 2000 was
$79 5/8.
According to JDS Uniphase's Quarterly Report on Form 10-Q for the quarterly
period ended December 31, 1999, as of January 31, 2000, there were 250,147,466
shares of JDS Uniphase common stock outstanding. In addition, as of such date,
there were outstanding 105,973,567 Exchangeable Shares of JDS Uniphase Canada
Ltd. which are exchangeable at any time into JDS Uniphase common stock on a
one-for-one basis, entitle their holders to dividend and other rights
economically equivalent to those of the common stock, and through a voting
trust, vote at meetings of stockholders of JDS Uniphase.
Level 3
Level 3's common stock is quoted on the NASDAQ National Market under the
symbol "LVLT". The following table sets forth, for each of the quarterly periods
indicated, the high and the low sale price for Level 3's common stock, as
reported on the NASDAQ National Market, and adjusted to reflect a 2 for 1 split
of the common stock on August 10, 1998. Level 3 has not declared or paid any
dividends on its common stock during the periods indicated.
<TABLE>
<CAPTION>
QUARTER HIGH LOW
- ------- ---- ---
<S> <C> <C>
1998
Second...................................................... 37 1/8 24
Third....................................................... 42 1/8 29 25/32
Fourth...................................................... 43 1/8 24
1999
First....................................................... 72 13/16 39 3/4
Second...................................................... 93 1/16 60 1/16
Third....................................................... 67 7/8 46 7/8
Fourth...................................................... 84 9/16 51 3/16
2000
First....................................................... 130 3/16 73 13/16
Second (through April 14, 2000)............................. 98 1/2 69 5/16
</TABLE>
The closing price of Level 3's common stock on April 14, 2000 was $73 3/8.
According to Level 3's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999, as of February 1, 2000, there were 341,772,589 shares of
Level 3 common stock outstanding.
PS-17
<PAGE> 18
QUALCOMM
QUALCOMM's common stock is quoted on the NASDAQ National Market under the
symbol "QCOM". The following table sets forth, for each of the quarterly periods
indicated, the high and the low sale price for QUALCOMM's common stock, as
reported on the NASDAQ National Market, and adjusted to reflect a 2 for 1 split
of the common stock on May 11, 1999 and a 4 for 1 split of the common stock on
December 31, 1999. QUALCOMM has not declared or paid any dividends on its common
stock during the periods indicated.
<TABLE>
<CAPTION>
QUARTER HIGH LOW
- ------- ---- ---
<S> <C> <C>
1995
First....................................................... 4 19/64 2 5/8
Second...................................................... 4 25/64 3 1/16
Third....................................................... 6 25/32 4 9/32
Fourth...................................................... 5 59/64 4 15/32
1996
First....................................................... 6 7/64 4 31/64
Second...................................................... 6 33/41 3 53/64
Third....................................................... 6 35/64 4 3/4
Fourth...................................................... 5 3/4 4 17/32
1997
First....................................................... 7 57/64 4 59/64
Second...................................................... 7 33/64 5 19/64
Third....................................................... 7 49/51 5 10/21
Fourth...................................................... 8 7/8 5 8/11
1998
First....................................................... 7 2/15 5 3/4
Second...................................................... 7 15/32 5 27/32
Third....................................................... 8 25/64 5 8/25
Fourth...................................................... 7 24/83 4 57/64
1999
First....................................................... 15 35/64 6 53/57
Second...................................................... 35 7/8 15 37/64
Third....................................................... 48 5/47 34 55/64
Fourth...................................................... 176 1/8 46 45/64
2000
First....................................................... 179 5/16 110 9/16
Second (through April 14, 2000)............................. 152 1/4 105 3/16
</TABLE>
The closing price of QUALCOMM's common stock on April 14, 2000 was
$105 3/16.
According to QUALCOMM's Annual Report on Form 10-K for the fiscal year
ended September 26, 1999, as of November 15, 1999, there were 164,957,845 shares
of QUALCOMM common stock outstanding.
Siebel Systems
Siebel Systems' common stock is quoted on the NASDAQ National Market under
the symbol "SEBL". The following table sets forth, for each of the quarterly
periods indicated, the high and the low sale price for Siebel Systems' common
stock, as reported on the NASDAQ National Market, and adjusted to reflect 2 for
1 splits of the common stock on each of December 20, 1996, March 23, 1998 and
PS-18
<PAGE> 19
November 15, 1999. Siebel Systems has not declared or paid any dividends on its
common stock during the periods indicated.
<TABLE>
<CAPTION>
QUARTER HIGH LOW
- ------- ---- ---
<S> <C> <C>
1996
Third....................................................... 5 23/32 2 29/32
Fourth...................................................... 7 25/64 4 27/32
1997
First....................................................... 6 3/8 3 3/4
Second...................................................... 8 1/16 3 5/16
Third....................................................... 10 41/64 7 37/64
Fourth...................................................... 12 1/4 8 3/16
1998
First....................................................... 15 3/8 10 1/4
Second...................................................... 16 1/8 10 24/25
Third....................................................... 17 15/16 9 3/8
Fourth...................................................... 16 31/32 8 9/32
1999
First....................................................... 27 3/16 16 7/16
Second...................................................... 33 5/32 16 3/16
Third....................................................... 38 1/32 25 3/16
Fourth...................................................... 89 1/8 33 3/8
2000
First....................................................... 167 11/16 69
Second (through April 14, 2000)............................. 126 13/16 86 9/16
</TABLE>
The closing price of Siebel Systems' common stock on April 14, 2000 was
$86 9/16.
According to Siebel Systems' Annual Report on Form 10-K for the fiscal year
ended December 31, 1999, as of February 10, 2000, there were 195,969,654 shares
of Siebel Systems common stock outstanding.
VERITAS
VERITAS' common stock is quoted on the NASDAQ National Market under the
symbol "VRTS". The following table sets forth, for each of the quarterly periods
indicated, the high and the low sale price for VERITAS' common stock, as
reported on the NASDAQ National Market, and adjusted to reflect a 2 for 1 split
of the common stock on May 22, 1995 and 3 for 2 splits of the common stock on
each of October 1, 1996, September 15, 1997, May 21, 1998, July 9, 1999,
November 22, 1999 and March 6, 2000. VERITAS has not declared or paid any
dividends on its common stock during the periods indicated.
<TABLE>
<CAPTION>
QUARTER HIGH LOW
- ------- ---- ---
<S> <C> <C>
1995
First....................................................... 80/81 44/81
Second...................................................... 1 43/81 71/76
Third....................................................... 1 88/91 1 37/62
Fourth...................................................... 2 43/78 1 20/43
</TABLE>
PS-19
<PAGE> 20
<TABLE>
<CAPTION>
QUARTER HIGH LOW
- ------- ---- ---
<S> <C> <C>
1996
First....................................................... 2 13/20 1 71/81
Second...................................................... 3 17/70 2 5/38
Third....................................................... 4 27/41 1 43/50
Fourth...................................................... 5 37/81 4 2/9
1997
First....................................................... 5 44/81 2 56/81
Second...................................................... 5 5/18 2 23/54
Third....................................................... 7 5/18 5 1/81
Fourth...................................................... 7 8/9 5 19/27
1998
First....................................................... 8 41/54 6 5/54
Second...................................................... 9 23/35 7 11/18
Third....................................................... 12 11/12 9 1/3
Fourth...................................................... 14 2/9 5 59/72
1999
First....................................................... 19 47/72 13 5/9
Second...................................................... 21 7/12 14 1/4
Third....................................................... 35 2/3 20 31/36
Fourth...................................................... 95 5/12 32 17/18
2000
First....................................................... 168 11/16 76 1/24
Second (through April 14, 2000)............................. 126 1/4 82
</TABLE>
The closing price of VERITAS' common stock on April 14, 2000 was $82.
According to VERITAS' Quarterly Report on Form 10-Q for the quarterly
period ended March 30, 1999 (the most recent such report available as of the
date of this Pricing Supplement), as of April 30, 1999, there were 48,194,733
shares of VERITAS common stock outstanding.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States federal income tax
considerations that may be relevant to a holder of a Note. This summary
supplements, and should be read in conjunction with, the section entitled
"Certain United States Federal Income Tax Considerations" in the Prospectus
Supplement.
Investors should consult their own tax advisors in determining the tax
consequences to them of holding Notes, including the application to their
particular situation of the United States federal income tax considerations
discussed below and in the Prospectus Supplement.
TAX CHARACTERIZATION OF THE NOTES
Each Note will be treated by Salomon Smith Barney Holdings for United
States federal income tax purposes as a single debt instrument issued by Salomon
Smith Barney Holdings that is subject to United States Treasury regulations
governing contingent debt instruments (the "Contingent Debt Regulations").
Moreover, each holder, by accepting a Note, agrees to this treatment of the Note
and to report all income (or loss) with respect to the Note in accordance with
the Contingent Debt Regulations. The remainder of this summary assumes the
treatment of each Note as a single debt instrument subject to the Contingent
Debt Regulations and the holder's agreement thereto.
PS-20
<PAGE> 21
United States Holders
Taxation of Interest. A United States holder (as such term is defined in
the Prospectus Supplement) of a Note will recognize income (or loss) on a Note
in accordance with the Contingent Debt Regulations. The Contingent Debt
Regulations require the application of a "noncontingent bond method" to
determine accruals of income, gain, loss and deduction with respect to a
contingent debt obligation. As described in more detail in the second and third
succeeding paragraphs, under the noncontingent bond method, a United States
holder of a Note will be required for tax purposes to include in income each
year an accrual of interest at the annual computational rate of 7.2250% (the
"comparable yield"). Solely for purposes of determining the comparable yield
pursuant to the Contingent Debt Regulations, a United States holder of a Note
will be assumed to be entitled to receive, in respect of each Note, semi-annual
payments of interest at a rate of 0.25 percent, as well as a payment of $404.55
at maturity, or upon exchange or redemption (the "Assumed Exchange Amount"). The
Assumed Exchange Amount is calculated as the amount required to produce the
comparable yield when combined with the semi-annual payments of interest made in
respect of a Note, taking into account the Note's issue price.
The comparable yield and the Assumed Exchange Amount are used to determine
accruals of interest FOR TAX PURPOSES ONLY and are not assurances or predictions
by Salomon Smith Barney Holdings with respect to the actual yield of, or payment
to be made in respect of, a Note. The comparable yield and the Assumed Exchange
Amount do not necessarily represent Salomon Smith Barney Holdings's expectations
regarding such yield, the amount of such payment, or whether Salomon Smith
Barney Holdings will exercise its Call Right or any holder will exercise its
Exchange Right.
Each Note will be issued at par. However, there will be original issue
discount for United States federal income tax purposes ("Tax OID") because Tax
OID must be accrued at the comparable yield. Under the Tax OID rules of the
Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury
regulations promulgated thereunder, a United States holder of a Note, whether
such holder uses the cash or the accrual method of tax accounting, will be
required to include as ordinary interest income the sum of the "daily portions"
of Tax OID on the Note for all days during the taxable year that the United
States holder owns the Note. As a result, a United States holder of a Note that
employs the cash method of tax accounting will be required to include amounts in
respect of Tax OID accruing on a Note in taxable income each year, even though
cash payments will be made with respect to the Notes only upon Interest Payment
Dates, at maturity, or upon exchange or redemption.
The daily portions of Tax OID on a Note are determined by allocating to
each day in any accrual period a ratable portion of the Tax OID allocable to
that accrual period. In the case of an initial holder, the amount of Tax OID on
a Note allocable to each accrual period is determined by multiplying the
"adjusted issue price" (as defined below) of a Note at the beginning of the
accrual period by the comparable yield of a Note (appropriately adjusted to
reflect the length of the accrual period). The "adjusted issue price" of a Note
at the beginning of any accrual period will generally be the sum of its issue
price and the amount of Tax OID allocable to all prior accrual periods, less the
amount of any payments made in all prior accrual periods. Based upon the
comparable yield, if a United States holder who employs the accrual method of
tax accounting and pays taxes on a calendar year basis buys a Note at original
issue for $1,000 and holds it until maturity, such holder will be required to
pay taxes on the following amounts of ordinary income from the Note (in excess
of accrued semi-annual interest income) for each of the following periods:
$49.1136 in 2000, $73.2965 in 2001, $78.5921 in 2002, $84.2704 in 2003, $90.6134
in 2004 and $28.6632 in 2005.
Disposition (including Exchange) of the Notes. When a United States holder
sells, exchanges or otherwise disposes of a Note (including upon repayment of
the Note at maturity or upon the exercise by Salomon Smith Barney Holdings of
its Call Right or the holder of its Exchange Right) (a "disposition"), the
United States holder's gain (or loss) on such disposition will equal the
difference between the amount received by the United States holder for the Note
(including, for this purpose, (a) in the case of an Exchange Amount, the fair
market value of the Underlying Securities received or (b) in the case of the
Call Price, the amount of cash received) and the United States holder's tax
basis in the Note. A United
PS-21
<PAGE> 22
States holder's tax basis (i.e., adjusted cost) in a Note will be equal to the
United States holder's original purchase price for such Note, plus any Tax OID
accrued by the United States holder and less the amount of any payments received
by the holder while holding the Note. If the Call Right or the Exchange Right is
exercised, respectively, by Salomon Smith Barney Holdings or the United States
holder and the Exchange Amount or the Call Price, as the case may be, exceeds
the Assumed Exchange Amount, the United States holder will be required to
include such excess in income as ordinary interest at maturity, or upon exchange
or redemption. Alternatively, if the Call Right or the Exchange Right is
exercised and the Exchange Amount or the Call Price, as the case may be, is less
than the Assumed Exchange Amount, or if neither the Call Right nor the Exchange
Right is exercised, the difference between the Assumed Exchange Amount and the
Exchange Amount or the Call Price or the amount paid at maturity, as the case
may be, will be treated as an offset to any interest otherwise includible in
income by the United States holder with respect to the Note for the taxable year
in which maturity, exchange or redemption occurs, but only to the extent of the
amount of such includible interest. Any remaining portion of such shortfall may
be recognized and deducted by the United States holder as an ordinary loss.
Any gain realized by a United States holder on a disposition will be
treated as ordinary interest income. Any loss realized by a United States holder
on a disposition will be treated as an ordinary loss to the extent of the United
States holder's Tax OID inclusions with respect to the Note up to the date of
disposition. Any loss realized in excess of such amount generally will be
treated as a capital loss. An individual United States holder generally will be
allowed a deduction for any such ordinary loss without regard to the two-percent
miscellaneous itemized deduction rule of Section 67 of the Code. Any capital
loss recognized by a United States holder will be a long-term capital loss if
such United States holder has held such Note for more than one year, and a
short-term capital loss in other cases.
A United States holder's tax basis in the Underlying Securities received
upon an exchange of Notes for the Exchange Amount will equal the fair market
value of those Underlying Securities.
Non-United States Holders
The discussion in the Prospectus Supplement under the heading "Certain
United States Federal Income Tax Considerations -- Non-United States Holders"
refers to Treasury regulations governing information reporting and the
certification procedures regarding withholding and backup withholding on certain
amounts paid to non-United States persons. Such regulations are described in the
Prospectus Supplement as being effective as of December 31, 1998. The effective
date of the regulations has been deferred until December 31, 2000.
ERISA MATTERS
The purchaser, by its purchase or other acquisition of Notes, is deemed to
represent that such purchaser is not an employee benefit plan subject to the
fiduciary responsibility provisions of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or any entity with respect to which part or
all of its assets constitute assets of any such employee benefit plan by reason
of 29 C.F.R. 2510.3-101 or otherwise, or any government or other plan subject to
Federal, state or local law substantially similar to the fiduciary
responsibility provisions of ERISA ("ERISA Plan"). Any plan that is subject to
Section 4975(e)(1) of the Code that is not an ERISA Plan (for example,
individual retirement accounts, individual retirement annuities or Keogh Plans)
will be deemed to have represented, by its purchase or other acquisition of the
Notes, that such purchase, acquisition, holding and subsequent disposition of
such Notes and the transactions contemplated hereby do not constitute a
prohibited transaction under Section 4975 of the Code.
PS-22
<PAGE> 23
EXHIBIT A
OFFICIAL NOTICE OF EXCHANGE
DATED: [ , ]
[Must be on or after May 18, 2000]
<TABLE>
<S> <C>
Citibank, N.A., as Salomon Smith Barney Inc., as
Paying Agent Calculation Agent
111 Wall Street, 5th. Floor 390 Greenwich Street
Global Agency & Trust Services New York, New York 10013
New York, NY 10005 Attn: Structured Products/Equity Derivatives
Attention: Sebastian Andrieszyn Group
Phone: (212) 657-9055 Phone: (212) 723-7349
Fax: (212) 825-3483 Fax: (212) 723-8732
</TABLE>
Ladies and Gentlemen:
The undersigned holder of the 0.25% Notes Exchangeable for a Basket of
Selected Technology Stocks, Due 2005 (the "Notes") hereby irrevocably elects to
exercise with respect to the principal amount of the Notes indicated below, as
of the date hereof (or, if this notice is received after 11:00 a.m. on any
Trading Day by either the Calculation Agent or the Paying Agent, as of the next
Trading Day), provided that such day is prior to the earliest of (i) April 12,
2005, (ii) the Call Date, and (iii) in the event of a call for cash at the Call
Price, the Company Notice Date, the holder's Exchange Right as described in the
Pricing Supplement dated April 17, 2000 relating to the Notes (the "Pricing
Supplement"). Capitalized terms not defined herein have the meanings given to
such terms in the Pricing Supplement.
Please date and acknowledge receipt of this notice in the place provided
below on the date of receipt, and fax a copy to the fax number indicated,
whereupon Salomon Smith Barney Holdings shall cause our affiliate, Salomon Smith
Barney Inc., to deliver the required number of Underlying Securities to the
Paying Agent through the facilities of DTC; the Paying Agent will in turn be
obligated to deliver the required number of Baskets of Underlying Securities
three Business Days after the Exchange Date in accordance with the delivery
instructions set forth below, as long as the Paying Agent has received delivery
of the Notes being exchanged on the Exchange Date.
Very truly yours,
--------------------------------------
[Name of Holder]
By:
--------------------------------------
[Title]
--------------------------------------
[Fax No.]
$
--------------------------------------
Principal Amount of Notes being
Exchanged
[must be $1,000 or integral multiple
thereof]
A-1
<PAGE> 24
Delivery Instructions
for Baskets of Underlying Securities:
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
Receipt of the above Official Notice of
Exchange is hereby acknowledged:
SALOMON SMITH BARNEY INC., as Calculation Agent
CITIBANK, N.A., as Paying Agent.
By: CITIBANK, N.A., as Paying Agent.
By:
- ---------------------------------------------------
Name:
Title:
Date and Time of Acknowledgement:
- ---------------------------------------------
A-2
