Filed Pursuant to Rule 424(b)(5)
Registration No.33-50513
PROSPECTUS SUPPLEMENT
(To Prospectus Dated November 5, 1993)
$200,000,000
COMMERCIAL CREDIT COMPANY
7 7/8% NOTES DUE JULY 15, 2004
------------------------
Commercial Credit Company (the "Company") is offering $200,000,000
principal amount of its 7 7/8% Notes due July 15, 2004 (the "Notes"). Interest
on the Notes is payable on January 15 and July 15, commencing January 15, 1995.
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 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................................. 99.691% .251% 99.440%
Total.................................... $199,382,000 $502,000 $198,880,000
</TABLE>
(1) Plus accrued interest from July 15, 1994 to the date of delivery.
(2) The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933,
as amended.
(3) Before deducting expenses payable by the Company estimated to be
$75,000.
------------------------
The Notes are offered by the Underwriter named herein, subject to prior
sale, when, as and if accepted by the Underwriter 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 July 20, 1994.
------------------------
LEHMAN BROTHERS
July 13, 1994
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSIONER
OF INSURANCE FOR THE STATE OF NORTH CAROLINA, NOR HAS THE COMMISSIONER OF
INSURANCE RULED UPON THE ACCURACY OR THE ADEQUACY OF THIS DOCUMENT.
------------------------
CAPITALIZATION
The following table sets forth the capitalization of the Company at March
31, 1994 and as adjusted to give effect to the issuance and sale of the Notes
and the application of the proceeds therefrom to the repayment of short-term
borrowings, as if such transaction had occurred on March 31, 1994.
<TABLE><CAPTION>
AT MARCH 31, 1994
------------------------
OUTSTANDING AS ADJUSTED
----------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Debt:
Savings accounts, certificates and deposits....................................... $ 62.9 $ 62.9
Short-term borrowings............................................................. 2,482.8 2,282.8
Long-term debt.................................................................... 3,726.0 3,926.0
----------- -----------
Total debt................................................................... $ 6,271.7 $ 6,271.7
Stockholder's equity:
Common stock ($.0l par value)--1,000
shares authorized: issued--1 share.............................................. -- --
Additional paid-in capital........................................................ 142.3 142.3
Retained earnings................................................................. 950.3 950.3
Other............................................................................. .1 .1
----------- -----------
Total stockholder's equity................................................... 1,092.7 1,092.7
----------- -----------
Total capitalization................................................................... $ 7,364.4 $ 7,364.4
----------- -----------
----------- -----------
</TABLE>
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE><CAPTION>
THREE MONTHS YEAR ENDED DECEMBER 31,
ENDED MARCH 31, -----------------------------------------------------
1994 1993 1992 1991 1990 1989
----------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges............... 1.86 2.09 2.12* 1.67 1.54 1.51
</TABLE>
- ---------------
* Included in earnings from continuing operations before income taxes (used in
the computation above) are net gains of $47.0 million resulting from the sale
of stock of Inter-Regional Financial Group, Inc., the sale of the Company's
investment in the common stock of Musicland Stores Corporation and the sale of
50% of Commercial Insurance Resources, Inc. Without giving effect to these net
gains, the ratio of earnings to fixed charges for 1992 would have been 1.99.
The ratio of earnings to fixed charges has been computed by dividing
earnings from continuing operations before income taxes and fixed charges by the
fixed charges. For purposes of these ratios, fixed charges consist of interest
expense and that portion of rentals deemed representative of the appropriate
interest factor.
S-2
<PAGE>
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the Notes
will be added to its general corporate funds and may be used to reduce or
refinance other borrowings, for investments or for general corporate purposes.
In order to fund its financial services 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 $200,000,000 in aggregate principal amount, as
a result of which, as of July 13, 1994, $650,000,000 aggregate principal amount
of 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 July 15, 1994, at the annual
rate set forth on the cover page of this Prospectus Supplement. The Notes will
mature on July 15, 2004. Interest on the Notes will be payable semiannually on
January 15 and July 15, commencing January 15, 1995, to the persons in whose
names the Notes are registered at the close of business on the preceding
December 31 or June 30, 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 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-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
S-3
<PAGE>
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 Underwriter 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
July 13, 1994, which incorporates by reference the Underwriting Agreement Basic
Provisions dated November 28, 1989 (together, the "Underwriting Agreement"), the
Company has agreed to sell to Lehman Brothers Inc. (the "Underwriter"), and the
Underwriter has agreed to purchase, all of the Notes.
The Underwriting Agreement provides that the obligation of the Underwriter
to pay for and accept delivery of the Notes is subject to the approval of
certain legal matters by its counsel and to certain other conditions. The
Underwriter is committed to take and pay for all of the Notes if any are taken.
The Underwriter proposes 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 .225%
of the principal amount under the public offering price. The Underwriter may
allow, and such dealers may reallow, a concession not in excess of .125% of the
principal amount to certain other dealers.
The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
The Company does not intend to apply for listing of the Notes on a national
securities exchange, but has been advised by the Underwriter that it presently
intends to make a market in the Notes, as permitted by applicable laws and
regulations. The Underwriter is 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 Underwriter. Accordingly, no assurance can be given as to the
liquidity of, or trading markets for, the Notes.
The Underwriter and its affiliates may engage in transactions with and
perform services for the Company or one or more of its affiliates in the
ordinary course of business. In connection with the acquisition in 1993 by Smith
Barney Inc. (formerly Smith Barney Shearson Inc.), an affiliate of the Company
("SBI"), and certain of its affiliates of substantially all of the assets of the
domestic retail brokerage business and the asset management business of Lehman
Brothers Holdings Inc. (formerly
S-4
<PAGE>
Shearson Lehman Brothers Holdings Inc.), an affiliate of the Underwriter, the
Underwriter and SBI have entered into agreements with respect to various
relationships between them.
EXPERTS
The consolidated financial statements and schedules of the Company as of
December 31, 1993 and 1992 and for each of the years in the three year period
ended December 31, 1993, included in the Company's Annual Report on Form 10-K
for the year 1993, have been incorporated by reference herein, in reliance upon
the report (also incorporated by reference herein) of KPMG Peat Marwick,
independent certified public accountants, and upon the authority of said firm as
experts in accounting and auditing. The report of KPMG Peat Marwick covering the
December 31, 1993 consolidated financial statements and schedules refers to a
change in the Company's methods of accounting for postretirement benefits other
than pensions and accounting for postemployment benefits in 1993, and its method
of accounting for income taxes in 1992.
LEGAL OPINIONS
The validity of the Notes offered hereby will be passed upon for the
Company by Charles O. Prince, III, Esq., as counsel for the Company, 65 East
55th Street, New York, New York 10022 and for the Underwriter by Dewey
Ballantine, 1301 Avenue of the Americas, New York, New York 10019-6092. Mr.
Prince, Senior Vice President, General Counsel and Secretary of the Company,
beneficially owns, or has rights to acquire under The Travelers Inc. employee
benefit plans, an aggregate of less than 1% of the common stock of The Travelers
Inc. (formerly Primerica Corporation). Dewey Ballantine has from time to time
acted as counsel for The Travelers Inc. and certain of its subsidiaries and may
do so in the future.
S-5
<PAGE>
PROSPECTUS
COMMERCIAL CREDIT COMPANY
Debt Securities
------------------------
Commercial Credit Company (the "Company") has offered or may offer, from
time to time, its debt securities (the "Securities"), from which the Company
will receive proceeds of up to $850,000,000 (or the equivalent in foreign
denominated currencies or units of two or more currencies, based on the
applicable exchange rate at the time of sale, as shall be designated by the
Company at the time of sale). The Securities will be offered to the public on
terms determined by market conditions at the time of sale. When a particular
series of Securities is offered (the "Offered Securities"), a supplement to this
Prospectus (the "Prospectus Supplement") will be delivered with this Prospectus
setting forth with respect to such series: the specific designation, aggregate
principal amount, denominations, currency, purchase price, maturity, rate (which
may be fixed or variable) and time of payment of interest (if any), redemption
terms and any other variable terms.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The Offered Securities sold by the Company will be sold directly or through
agents designated from time to time, or through underwriters or dealers, which
may be a group of underwriters represented by one or more firms. If any agents
of the Company or any underwriters are involved in the sale by the Company of
the Offered Securities, the names of such agents or underwriters and any
applicable fee, commission, purchase price or discount arrangements with them
will be set forth in the Prospectus Supplement. The net proceeds to the Company
from such sale will be set forth in the Prospectus Supplement. The Company may
also sell Offered Securities directly to investors on its own behalf. This
Prospectus, together with an appropriate Prospectus Supplement, may also be used
by Smith Barney Shearson Inc. ("Smith Barney Shearson"), an affiliate of the
Company, in connection with market-making transactions at negotiated prices
related to prevailing market prices at the time of sale. Smith Barney Shearson
may act as principal or agent in such transactions.
The date of this Prospectus is November 5, 1993
<PAGE>
No person has been authorized to give any information or
to make any representation not contained in this Prospectus or
the accompanying Prospectus Supplement and, if given or made,
such information or representation must not be relied upon as
having been authorized by the Company or Smith Barney
Shearson. This Prospectus and the accompanying Prospectus
Supplement do not constitute an offer of any securities other
than the securities to which the Prospectus Supplement
relates, or an offer to any person in any jurisdiction where
such offer would be unlawful. Neither the delivery of this
Prospectus or any Prospectus Supplement nor any sale made
hereunder or thereunder shall, under any circumstances, create
any implication that there has not been any change in the
affairs of the Company or its subsidiaries since the date
hereof.
------------------------
For North Carolina purchasers: The Commissioner of Insurance for the State
of North Carolina has neither approved or disapproved these Securities, nor has
the Commissioner passed upon the accuracy or adequacy of this Prospectus.
------------------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at: Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549; Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; and Seven World Trade Center, New York, New York 10048.
Copies of such material can also be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C.
20549, at prescribed rates. Such reports and other information can also be
inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005, where certain of the Company's debt securities are listed.
------------------------
The Company has filed with the Commission Registration Statements on Form
S-3 under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Securities offered hereby. For further information with respect
to the Company and the Securities offered hereby, reference is made to the
Registration Statements and exhibits thereto. Statements contained in this
Prospectus as to the contents of any contract or other document are not
necessarily complete, and in each instance reference is made to the copy of such
contract or document filed as an exhibit to the Registration Statements, each
such statement being qualified in all respects by such reference.
------------------------
IN CONNECTION WITH THE OFFERING OF CERTAIN SECURITIES, THE UNDERWRITERS MAY
OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES
OF SUCH SECURITIES OR OTHER SECURITIES OF THE COMPANY AT A LEVEL ABOVE THAT
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company incorporates by reference the following documents heretofore
filed with the Commission pursuant to the Exchange Act:
1. Annual Report on Form 10-K of the Company for the fiscal year ended
December 31, 1992;
2. Quarterly Reports on Form 10-Q of the Company for the fiscal
quarters ended March 31, 1993 and June 30, 1993; and
3. Current Reports on Form 8-K of the Company, dated February 8, 1993,
February 9, 1993, February 23, 1993, April 8, 1993, April 14, 1993, June
16, 1993, July 19, 1993, September 3, 1993 and October 18, 1993.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
later of (i) the termination of the offering being made hereby and (ii) the date
on which Smith Barney Shearson ceases offering and selling securities pursuant
to this Prospectus shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the date of filing such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein,
in an accompanying Prospectus Supplement or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement or data so superseded or
modified shall not be deemed to constitute a part of this Prospectus except as
so superseded or modified.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents incorporated by reference in the
Registration Statements of which this Prospectus forms a part, other than
exhibits to such documents unless such exhibits are specifically incorporated by
reference into such documents. Requests should be directed to Patricia A.
Rouzer, Corporate Communications and Investor Relations, Commercial Credit
Company, 300 St. Paul Place, Baltimore, Maryland 21202; telephone (410) 332-
3888.
3
<PAGE>
THE COMPANY
The Company, which is a wholly owned subsidiary of Primerica Corporation
("Primerica"), is a financial services holding company engaged, through
subsidiaries, principally in the business of consumer finance and insurance
services. This Prospectus relates only to the Securities of the Company and not
to the securities of any of its affiliates. As of August 31, 1993, the Company's
consumer finance business, which includes lending services, credit-related
insurance and credit card services, maintained 741 loan offices in 41 states.
The Company's insurance services business includes property and casualty
insurance and specialty lines of insurance.
The Company's lending services consist of loans to consumers, including
secured and unsecured personal loans, real estate-secured loans and consumer
goods financing. Through its bank subsidiaries, the Company provides credit card
services to individuals and to affinity groups nationwide. American Health and
Life Insurance Company, a subsidiary of the Company, underwrites or arranges for
credit-related insurance, which is offered to customers of the Company's
consumer finance business.
The Company's principal property and casualty insurance business, Gulf
Insurance Company, offers automobile liability and physical damage, workers'
compensation, other liability, fire and related homeowners' insurance and
commercial multiple peril insurance, as well as certain specialty lines of
insurance. These product offerings, with policies written primarily through
Gulf, include directors' and officers' liability and various forms of
nonprofessional errors and omissions, fidelity bonds, commercial umbrella
coverages and contingent liability coverages; coverages relating to the
entertainment industry; and standard commercial property and casualty products
for specific niche markets. In December 1992, in connection with Primerica's
acquisition of approximately 27% of the common stock of The Travelers
Corporation ("Travelers"), the Company sold to Travelers 50% of the Company's
equity in the parent of Gulf Insurance Company in exchange for approximately
5.5% of Travelers' common stock, and one of the Company's Subsidiaries purchased
additional shares directly from Travelers. In September 1993, Primerica and
Travelers agreed to merge, subject to the satisfaction of certain conditions,
including approval of the merger by the stockholders of both companies and
receipt of the necessary regulatory approvals.
In December 1988, the Company made an investment of $500 million in the
$45,000 Cumulative Redeemable Preferred Stock, Series A (the "PHI Preferred
Stock") of Primerica Holdings, Inc., then a wholly owned subsidiary of Primerica
("Primerica Holdings"). In December 1992 Primerica Holdings was merged (the
"Merger") into Primerica and the Company's investment in the PHI Preferred Stock
was converted into $45,000 Cumulative Redeemable Preferred Stock, Series Z of
Primerica (the "Preferred Stock"), with the same terms as the PHI Preferred
Stock. After giving effect to subsequent repurchases, the Company holds 2,222
shares of the Preferred Stock having an aggregate value of $99,990,000. The
purchase price paid for the repurchases was equal to the liquidation value of
such shares plus accrued and unpaid dividends on such shares to the date of
repurchase.
The principal offices of the Company are located at 300 St. Paul Place,
Baltimore, Maryland 21202; telephone (410) 332-3000. The Company was
incorporated in Delaware in 1968.
USE OF PROCEEDS
Unless otherwise set forth in the applicable Prospectus Supplement, the
Company intends to apply the net proceeds from the sale of the Offered
Securities to fund its financial services business and for general corporate
purposes, which may include the reduction or refinancing of other borrowings, or
the making of investments or capital contributions to subsidiaries of the
Company. Also, in order to fund its financial services business, the Company
expects to incur additional indebtedness in the future.
4
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE><CAPTION>
YEAR ENDED DECEMBER 31,
SIX MONTHS ENDED -----------------------------------------------------
JUNE 30, 1993 1992 1991 1990 1989 1988
--------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges.................. 2.02 2.12(1) 1.67 1.54 1.51 1.95
</TABLE>
The ratio of earnings to fixed charges has been computed by dividing
earnings from continuing operations 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.
- ---------------
(1) Included in earnings from continuing operations before income taxes (used in
the computation above) are net gains of $47.0 million resulting from the
sale of stock of Inter-Regional Financial Group, Inc., the sale of the
Company's investment in the common stock of Musicland Stores Corporation and
the sale of 50% of Commercial Insurance Resources, Inc. Without giving
effect to these net gains, the ratio of earnings to fixed charges for 1992
would have been 1.99.
DESCRIPTION OF SECURITIES
The following description of the terms of the Securities sets forth certain
general terms and provisions of the Securities to which any Prospectus
Supplement may relate. The particular terms of the Securities offered by any
Prospectus Supplement (the "Offered Securities") and the extent, if any, to
which such general provisions may apply to the Securities so offered will be
described in the Prospectus Supplement relating to such Offered Securities.
The Securities are to be issued under an Indenture, dated as of December 1,
1986, as supplemented by the First Supplemental Indenture, dated as of June 13,
1990 (as supplemented, the "Indenture") between the Company and Citibank, N.A.
(the "Trustee"), a copy of which Indenture is incorporated by reference as an
exhibit to the Registration Statements.
The following summaries of certain provisions of the Indenture do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all the provisions of the Indenture, including the definitions
therein of certain terms. Wherever particular provisions or defined terms of the
Indenture are referred to, such provisions or defined terms are incorporated
herein by reference. Capitalized terms not otherwise defined herein shall have
the meaning given to them in the Indenture.
General
The Securities will be unsecured obligations of the Company and will not be
subordinated to other indebtedness of the Company.
Securities offered by this Prospectus will be limited to an aggregate
initial public offering price of approximately $850,000,000 or the equivalent
thereof in one or more foreign currencies or composite currencies.
The Indenture does not limit the aggregate principal amount of Securities
which may be issued thereunder and provides that Securities may be issued
thereunder from time to time in one or more series.
Reference is made to the Prospectus Supplement relating to the particular
series of Securities offered thereby for the following terms, when applicable,
of the Offered Securities: (a) the designation of the Offered Securities; (b)
any limit on the aggregate principal amount of the Offered Securities; (c) the
date or dates on which the Offered Securities will mature; (d) the rate or rates
(which may be fixed or variable) per annum at which the Offered Securities will
bear interest, if any, and the date from
5
<PAGE>
which such interest will accrue; (e) the dates on which such interest, if any,
will be payable and the Regular Record Dates for such Interest Payment Dates;
(f) any mandatory or optional sinking fund or purchase fund or analogous
provisions; (g) if applicable, the date after which and the price or prices at
which the Offered Securities may, pursuant to any optional or mandatory
redemption provisions, be redeemed at the option of the Company or the Holder
thereof and the other detailed terms and provisions of such optional or
mandatory redemption; (h) the place or places of payment of principal of (and
premium, if any) and interest on the Offered Securities; (i) special provisions
relating to the issuance of any Bearer Securities of any series; (j) the
currency in Dollars, Foreign Currency or any composite currency of any series;
(k) any deletions from, changes in or additions to Events of Default or
covenants of the Company in the Indenture; (l) the form of Securities and
Coupons, if any; and (m) any other terms of the Offered Securities. (Section
301)
The Securities will be issuable as Registered Securities, as Bearer
Securities or both. Securities of a series may be issuable in the form of one or
more Global Securities, as described below under "Global Securities." Unless the
Prospectus Supplement relating thereto specifies otherwise, Registered
Securities denominated in U.S. dollars will be issued only in denominations of
$1,000 or any integral multiple thereof, and Bearer Securities denominated in
U.S. dollars will be issued only in denominations of $5,000 or any integral
multiple thereof. The Prospectus Supplement relating to a series of Securities
denominated in a foreign or composite currency will specify the denomination
thereof. (Section 302)
At the option of the Holder upon request confirmed in writing, and subject
to the terms of the Indenture, Bearer Securities (with all unmatured coupons,
except as provided below) of any series will be exchangeable into an equal
aggregate principal amount of Registered Securities or Bearer Securities of the
same series (with the same interest rate and maturity date) and Registered
Securities of any series will be exchangeable into an equal aggregate principal
amount of Registered Securities of the same series (with the same interest rate
and maturity date) of different authorized denominations. If a Holder surrenders
Bearer Securities in exchange for Registered Securities between a Regular Record
Date or, in certain circumstances, a Special Record Date, and the relevant
Interest Payment Date, such Holder will not be required to surrender the Coupon
relating to such interest payment date. Registered Securities may not be
exchanged for Bearer Securities. (Section 305)
Securities may be presented for exchange, and Registered Securities (other
than a Global Security) may be presented for registration of transfer (with the
form of transfer endorsed thereon duly executed), at the office of any transfer
agent or at the office of the Security Registrar, without service charge and
upon payment of any taxes and other govermental charges as described in the
Indenture. Such registration of transfer or exchange will be effected upon the
transfer agent's or the Security Registrar's, as the case may be, being
satisfied with the documents of title and identity of the person making the
request. (Section 305). Bearer Securities will be transferable by delivery.
The Company may, in addition to issuing Securities with terms different
from those of Securities previously issued, "reopen" a previous issue of a
series of Securities and issue additional Securities of such series.
Securities may be issued under the Indenture as Original Issue Discount
Securities to be offered and sold at a substantial discount from the principal
amount thereof. If the Offered Securities are Original Issue Discount
Securities, the special Federal income tax, accounting and other considerations
applicable thereto will be described in the Prospectus Supplement relating
thereto. As defined in the Indenture, "Original Issue Discount Security" means
any security which provides for an amount less than the principal amount thereof
to be due and payable upon a declaration of acceleration of the Maturity thereof
upon the occurrence of an Event of Default and the continuation thereof.
(Section 502)
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Payment and Paying Agents
Payment of principal of and premium, if any, on Registered Securities
(other than a Global Security) will be made in the designated currency against
surrender of such Registered Securities at the Corporate Trust Office of the
Trustee in The City of New York. Unless otherwise indicated in the Prospectus
Supplement, payment of any installment of interest on Registered Securities will
be made to the person in whose name such Security is registered at the close of
business on the Regular Record Date for such interest. Unless otherwise
indicated in the Prospectus Supplement, payments of such interest will be made
at the Corporate Trust Office of the Trustee in The City of New York, or by a
check in the designated currency mailed to the Holder at such Holder's
registered address. (Sections 307 and 1001)
Payment of principal of and premium, if any, and interest on Bearer
Securities will be payable in the currency and in the manner designated in the
Prospectus Supplement, subject to any applicable laws and regulations, at such
paying agencies outside the United States as the Company may appoint from time
to time. The paying agents outside the United States initially appointed by the
Company for a series of Securities will be named in the Prospectus Supplement.
The Company may terminate the appointment of any of the paying agents from time
to time, except that the Company will maintain at least one paying agent in The
City of New York for payments with respect to Registered Securities and such
other paying agents as shall be required. (Section 1002)
All moneys paid by the Company to a paying agent for the payment of
principal of or premium, if any, or interest on any Security that remains
unclaimed at the end of three years after such principal, premium or interest
shall have become due and payable will be repaid to the Company and the Holder
of such Security or any Coupon appertaining thereto will thereafter look only to
the Company for payment thereof. (Section 1003)
Global Securities
The Securities of a series may be issued in whole or in part in the form of
one or more Global Securities that will be deposited with, or on behalf of, a
depository identified in the Prospectus Supplement relating to such series.
Global Securities may be issued in either registered or bearer form and in
either temporary or permanent form. (Section 311)
The specific terms of the depository arrangement with respect to a series
of Securities will be described in the Prospectus Supplement relating to such
series. Unless otherwise indicated in an accompanying Prospectus Supplement, the
following provisions will apply to any depository arrangements.
Global Securities will be deposited with, or on behalf of, The Depository
Trust Company ("DTC") and registered in the name of DTC or its nominee. Except
as set forth below or in an accompanying Prospectus Supplement, Global
Securities may not be transferred except as a whole by DTC to a nominee of DTC
or by a nominee of DTC to DTC or another nominee of DTC or by DTC or any nominee
to a successor of DTC or a nominee of such successor.
DTC has advised the Company that it is a limited-purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for persons that have accounts with DTC ("participants") and to
facilitate the clearance and settlement of securities transactions among its
participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of certificates. DTC's participants include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations,
some of which (and/or their representatives) own DTC. Access to DTC's
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book-entry system is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a participant, either directly or indirectly. Persons who are not participants
may beneficially own interests in securities held by DTC only through
participants.
Upon the issuance by the Company of a Global Security, DTC will credit, on
its book-entry registration and transfer system, the respective principal
amounts of the Securities represented by such Global Security to the accounts of
participants. Ownership of beneficial interests in a Global Security will be
limited to participants or persons that may hold interests through participants.
Ownership of beneficial interests in Global Securities will be shown on, and the
transfer of such interests will be effected only through, records maintained by
DTC or its nominee (with respect to beneficial interests of participants) or by
participants or persons that may hold interests through participants (with
respect to beneficial interests of beneficial ownership). The laws of some
states may require that certain purchasers of securities take physical delivery
of such securities in certificated form. Such limits and such laws may impair
the ability to transfer beneficial interests in Global Securities.
So long as DTC or its nominee is the registered owner of the Global
Securities, DTC or its nominee, as the case may be, will be considered the sole
owner or holder of the Securities represented by such Global Securities for all
purposes under the Indenture. Except as provided in an accompanying Prospectus
Supplement, owners of beneficial interests in Global Securities will not be
entitled to have Securities represented by such Global Securities registered in
their names, will not receive or be entitled to receive physical delivery of
such Securities in certificated form and will not be considered the owners or
holders thereof under the Indenture.
Optional Redemption
Reference is made to the Prospectus Supplement relating to each series of
Offered Securities for any optional redemption provisions relating to such
Offered Securities.
Sinking Fund
Reference is made to the Prospectus Supplement relating to each series of
Offered Securities for any sinking fund provisions relating to such Offered
Securities.
Limitations on Liens
The Indenture provides that the Company will not create, assume or suffer
to exist any mortgage, pledge, encumbrance, lien or charge of any kind on any of
its properties or assets, with certain exceptions as to liens created otherwise
than in connection with the borrowing of money or the obtaining of credit (so
long as such lien does not materially impair the value or use of such
properties) and as to liens on properties at the time of their acquisition or
created on properties being constructed or acquired, or to secure a portion of
the cost or purchase price thereof (but only if such lien covers fixed assets or
other physical properties only and such property is not encumbered in excess of
two-thirds of the lesser of the cost or fair value thereof); provided, however,
that the limitations on liens shall apply only to liens which in the aggregate
exceed 5% of the Company's consolidated net worth as of the end of the Company's
most recent accounting period preceding the creation or assumption of any such
lien. (Section 1005)
Restrictions on Related Company Transactions
The Indenture provides that the Company will not, and will not permit any
Subsidiary, directly or indirectly, to: (1) make an acquisition from a Related
Company of any assets, excluding the acquisition of Affiliate-Related
Receivables or the making of Investments in Related Companies, if such
acquisition, in any one transaction or series of related transactions, is one in
which the aggregate consideration
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<PAGE>
to be paid by the Company or Subsidiary shall exceed $50 million, unless the
Company shall have received a written opinion from an investment banking firm of
national reputation or an appraiser commercially experienced in the type of
assets to be acquired to the effect that the purchase price to be paid by the
Company or a Subsidiary for such assets does not exceed the fair market value of
such assets or to the effect that such purchase price is fair to the Company and
Subsidiary from a financial point of view; or (2) make any Investment in any
Related Company unless after the making of such Investment the sum of the
aggregate outstanding Investments in Related Companies owned by the Company and
any Subsidiary shall not exceed 10% of Consolidated Tangible Net Worth; or (3)
purchase any Affiliate-Related Receivable unless after the purchase of such
Affiliate-Related Receivable the sum of the aggregate outstanding
Affiliate-Related Receivables owned by the Company and any Subsidiary shall not
exceed 5% of Consolidated Total Assets; unless both (x) the provisions of
clauses (1), (2) or (3) above are met and (y) the terms and conditions of such
transaction are no more favorable to the Related Company than the terms and
conditions which the Related Company could have obtained, taking into account
all applicable factors including the credit quality of the Related Company, from
a Person which was not the Company or a Subsidiary of the Company. (Section
1008). In the event the opinion of an investment banking firm or appraiser shall
be required, the investment banking firm or appraiser which provides the opinion
will be selected by the Company from time to time, in its sole discretion, and
may include a firm which is, at the time of rendering such opinion, or was
previously, or in the future may be, a Related Company.
"Related Company" is defined in the Indenture as (i) any Person that
directly, or indirectly through one or more intermediaries, controls the Company
(a "Controlling Person") or (ii) any Person (other than the Company or a
Subsidiary of the Company) which is controlled by or is under common control
with a Controlling Person. As used herein, the term "control" means possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
Restrictions on Merger
The Company may not consolidate or merge with or into any other corporation
or sell or transfer all or substantially all of its property and assets to
another Person unless (i) the successor Person is organized and existing under
the laws of the United States of America or a State thereof or the District of
Columbia and assumes payment of the principal of and interest on the Securities
and the performance and the observance of the Indenture, and (ii) such successor
Person shall not, immediately after such merger or consolidation, or such sale
or conveyance, be in default in the performance of any covenant or condition of
the Indenture. (Section 801)
Events of Default
The following are Events of Default under the Indenture with respect to
Securities of any series: (a) failure to pay principal of or premium, if any, on
any Security of that series at its Maturity; (b) failure to pay any interest on
any Security of that series when due, continued for 30 days; (c) failure to
deposit any sinking fund payment, when due, in respect of any Security of that
series; (d) any other defaults in the performance, or breach, of any covenant of
the Company in the Indenture, continued for 60 days after notice of such default
or breach from the Trustee or the Holders of at least 25% in principal amount of
the outstanding Securities of that series; (e) the occurrence of a default in
payment of any debt resulting from borrowing in excess of $10,000,000 or any
interest thereon for a period longer than the specified period of grace which
shall have resulted in acceleration of the maturity thereof without such
acceleration having been rescinded after due notice to the Company of such
default by the Trustee or by such notice to the Company and the Trustee by
Holders of at least 10% of the principal amount of the outstanding Securities of
that series; (f) certain events of bankruptcy, insolvency or reorganization; and
(g) any other Event of Default provided with respect to Securities of that
series. (Section 501)
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If an Event of Default with respect to Outstanding Securities of any series
shall occur and be continuing, either the Trustee or the Holders of at least 25%
in principal amount of the Outstanding Securities of that series may declare the
principal amount (or, if the Securities of that series are Original Issue
Discount Securities, such portion of the principal amount as may be specified in
the terms of that series) of all Securities of that series to be due and payable
immediately. However, at any time after a declaration of acceleration with
respect to Securities of any series has been made, but before a judgment or
decree based on such acceleration has been obtained, the Holders of a majority
in principal amount of Outstanding Securities of that series may, under certain
circumstances, rescind and annul such acceleration. (Section 502). For
information as to waiver of defaults, see "Modification and Waiver." Reference
is made to the Prospectus Supplement relating to each series of Offered
Securities which are Original Issue Discount Securities for the particular
provisions relating to acceleration of the Maturity of a portion of the
principal amount of such Original Issue Discount Securities upon the occurrence
of an Event of Default and the continuation thereof.
The Indenture provides that, subject to the duty of the Trustee during
default to act with the required standard of care, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request or direction of any of the Holders, unless such Holders shall have
offered to the Trustee reasonable indemnity. (Section 603). Subject to such
provisions for indemnification of the Trustee, the Holders of a majority in
principal amount of the Outstanding Securities of any series will have the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee, with respect to the Securities of that series. (Section 512)
The Company will be required to furnish to the Trustee annually a statement
as to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance. (Section 1006)
Defeasance
The Indenture provides that, if specified with respect to the Securities of
a particular series, the Company (a) shall be discharged from its obligations in
respect of the Securities of such series ("defeasance and discharge"), or (b)
may cease to comply with the restrictive covenants ("covenant defeasance") in
Article 8 (Consolidation, Merger or Sale), Section 1005 (Limitations on Liens)
and Section 1008 (Restrictions on Related Company Transactions), and any such
omission shall not be an Event of Default with respect to the Securities of such
series, in each case at any time prior to the Stated Maturity or redemption
thereof, when the Company has irrevocably deposited with the Trustee, in trust,
(i) sufficient funds in the currency or currency unit in which the Securities
are denominated to pay the principal of (and premium, if any), and interest to
Stated Maturity (or redemption) on, the Securities of such series, or (ii) such
amount of direct obligations of, or obligations the principal of and interest on
which are fully guaranteed by, the government which issued the currency in which
the Securities are denominated, and which are not subject to prepayment,
redemption or call, as will, together with the predetermined and certain income
to accrue thereon without consideration of any reinvestment thereof, be
sufficient to pay when due the principal of (and premium, if any), and interest
to Stated Maturity (or redemption) on, the Securities of such series. Such
defeasance and discharge and covenant defeasance are conditioned upon the
Company's delivery of an opinion of counsel that the Holders of the Securities
of such series will have no Federal income tax consequences as a result of such
deposit. Upon such defeasance and discharge, the Holders of the Securities of
such series shall no longer be entitled to the benefits of the Indenture, except
for the purposes of registration of transfer and exchange of the Securities of
such series and replacement of lost, stolen or mutilated Securities and shall
look only to such deposited funds or obligations for payment. The Indenture
contemplates that such defeasance and discharge or covenant defeasance may be
accomplished in a manner otherwise than that set forth above, if so specified in
the terms of the Securities of any series and as disclosed in a Prospectus
Supplement relating to the Securities of such series. (Section 403)
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<PAGE>
Under current Federal income tax law, the defeasance and discharge
contemplated in the preceding paragraph would be treated as a taxable exchange
of the Securities for an interest in the trust. As a consequence, each Holder of
Securities would recognize gain or loss equal to the difference between the
value of the Holder's interest in the trust and the Holder's tax basis for the
Securities deemed exchanged. Thereafter, each Holder would be required to
include in income his share of any income, gain and loss recognized by the
trust. Although a Holder could be subject to Federal income tax on the deemed
exchange of the defeased Securities for an interest in the trust, such Holder
would not receive any cash until the maturity (or an earlier redemption) of such
Securities (except for current interest payments, if any). Under current Federal
income tax law, covenant defeasances would not similarly be treated as a taxable
exchange of such Securities. Prospective investors are urged to consult their
own tax advisors as to the specific consequences of such defeasances and
discharges, including the applicability and effect of tax laws other than the
Federal income tax law.
Modification and Waiver
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the Holders of 66 2/3% in principal amount
of the Outstanding Securities of each series affected thereby; provided,
however, that no such modification or amendment may, without the consent of the
Holder of each Outstanding Security affected thereby, (a) change the stated
maturity date of the principal of, or any installment of principal of or
interest on, any Security, (b) reduce the principal amount of, or the premium,
if any, or interest, if any, on, any Security, (c) reduce the amount of
principal of any Original Issue Discount Security payable upon acceleration of
the Maturity thereof, or (d) reduce the percentage in principal amount of
Outstanding Securities of any series, the consent of the Holders of which is
required for modification or amendment of the Indenture or for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults. (Section 902)
Modifications and amendments of the Indenture may be made by the Company
and the Trustee without the consent of any Holder to evidence a successor to the
Company, to add to the Company's covenants or Events of Default, to permit or
facilitate Securities to be issued by book entry or in bearer form or relating
to the place of payment thereof, to provide for a successor trustee, to
establish forms or terms of Securities, to change or eliminate any provision not
adversely affecting any interests of Holders of outstanding Securities in any
material respect or to cure any ambiguity or inconsistency. (Section 901)
The Holders of 66 2/3% in principal amount of the Outstanding Securities of
any series may on behalf of the Holders of all Securities of that series waive,
insofar as that series is concerned, compliance by the Company with certain
restrictive provisions of the Indenture. (Section 1007). The Holders of a
majority in principal amount of the Outstanding Securities of any series may on
behalf of the Holders of all Securities of that series waive any past default
under the Indenture with respect to Securities of that series, except a default
in the payment of the principal of, or premium, if any, or interest, if any, on,
any Security of that series or in respect of any provision which under the
Indenture cannot be modified or amended without the consent of the Holder of
each Outstanding Security of that series affected. (Section 513)
The Trustee
The Trustee from time to time makes loans to, and acts as depository for
funds of, the Company and affiliates of the Company.
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PLAN OF DISTRIBUTION
The Company may sell the Securities in any of the following ways: (i)
through underwriters or dealers; (ii) directly; (iii) through agents; or (iv)
through a combination of any such methods of sale. The Prospectus Supplement
with respect to an offering of Offered Securities will set forth the terms of
such offering, including the name or names of any underwriters, the purchase
price of the Offered Securities and the proceeds to the Company from such sale,
any underwriting discounts and other items constituting underwriters'
compensation, any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers and any securities exchanges on which
the Offered Securities may be listed.
If underwriters are used in the sale, the Securities will be acquired by
the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. The
Securities may be either offered to the public through underwriting syndicates
represented by one or more managing underwriters or by underwriters without a
syndicate. Unless otherwise set forth in the Prospectus Supplement, the
obligations of the underwriters to purchase the Offered Securities will be
subject to certain conditions precedent and the underwriters will be obligated
to purchase all the Offered Securities if any are purchased. Any initial public
offering price and any discounts or concessions allowed or reallowed or paid to
dealers may be changed from time to time.
Offered Securities may be sold directly by the Company or through agents
designated by the Company from time to time. Any agent involved in the offer or
sale of the Offered Securities in respect of which this Prospectus is delivered
will be named, and the terms of such agency (including any commissions payable
by the Company to such agent) will be set forth, in the Prospectus Supplement.
Unless otherwise indicated in the Prospectus Supplement, any such agent will be
acting on a best efforts basis for the period of its appointment.
As one of the means of direct issuance of the Securities, the Company may
utilize the services of an entity through which it may conduct an electronic
"dutch auction" or similar offering of the Offered Securities among potential
purchasers who are eligible to participate in the auction or offering of such
Offered Securities, if so described in the applicable Prospectus Supplement.
If so indicated in the Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers by certain specified
institutions to purchase Offered Securities from the Company at the public
offering price set forth in the Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in the
future. Such contracts will be subject only to those conditions set forth in the
Prospectus Supplement and the Prospectus Supplement will set forth the
commission payable for solicitation of such contracts.
This Prospectus together with an applicable Prospectus Supplement may also
be used by Smith Barney Shearson in connection with offers and sales of the
Securities in market-making transactions at negotiated prices related to
prevailing market prices at the time of sale. Smith Barney Shearson may act as
principal or agent in such transactions. Smith Barney Shearson has no obligation
to make a market in any of the Securities and may discontinue its market-making
activities at any time without notice, at its sole discretion. The Securities
issued hereunder will be new issues of securities with no established trading
market and no assurance can be made as to the existence or liquidity of a
trading market for such Securities.
Smith Barney Shearson a member of the National Association of Securities
Dealers, Inc. (the "NASD") and an affiliate of the Company, may participate in
distributions of the Offered Securities. Accordingly, the offerings of Offered
Securities will conform with the requirements set forth in any applicable
sections of Schedule E to the By-Laws of the NASD.
Underwriters, dealers and agents may be entitled under agreements entered
into with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the
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Securities Act, and may engage in transactions with, or perform services for,
the Company and affiliates of the Company.
ERISA MATTERS
By virtue of the Company's affiliation with certain subsidiaries of
Primerica, including Smith Barney Shearson, that are involved in investment
advisory and asset management activities, the Company, Primerica and any direct
or indirect subsidiary of either of them may each be considered a "party in
interest" within the meaning of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and a "disqualified person" under corresponding
provisions of the Internal Revenue Code of 1986, as amended (the "Code"), with
respect to many employee benefit plans. "Prohibited transactions" within the
meaning of ERISA and the Code may result if the Securities are acquired by an
employee benefit plan with respect to which the Company, Primerica or any direct
or indirect subsidiary of either is a party in interest, unless the Securities
are acquired pursuant to an applicable exemption. Any employee benefit plan or
other entity subject to such provisions of ERISA or the Code proposing to
acquire the Securities should consult with its legal counsel.
EXPERTS
The consolidated financial statements and schedules of the Company as of
December 31, 1992 and 1991, and for each of the years in the three-year period
ended December 31, 1992, included in the Company's Annual Report on Form 10-K
for the year 1992, have been incorporated by reference herein, in reliance upon
the report (also incorporated by reference herein) of KPMG Peat Marwick,
independent certified public accountants, and upon the authority of said firm as
experts in accounting and auditing. The report of KPMG Peat Marwick covering the
December 31, 1992 consolidated financial statements and schedules refers to a
change in accounting for income taxes. The consolidated financial statements of
The Travelers Corporation as of December 31, 1992 and 1991, and for each of the
years in the three-year period ended December 31, 1992, included in the
Company's Annual Report on Form 10-K for the year 1992, have been incorporated
by reference herein, in reliance upon the report (also incorporated by reference
herein) of Coopers & Lybrand, independent accountants, which report includes an
explanatory paragraph referring to changes in the method of accounting for
postretirement benefits other than pensions, accounting for income taxes and
accounting for foreclosed assets in 1992, and upon the authority of said firm as
experts in accounting and auditing.
LEGAL MATTERS
The validity of the Securities offered hereby will be passed upon for the
Company by Charles O. Prince, III, Esq., as counsel for the Company, 65 East
55th Street, New York, New York, or by counsel to be identified in the
Prospectus Supplement. Mr. Prince, Senior Vice President, General Counsel and
Secretary of the Company, beneficially owns, or has rights to acquire under
Primerica employee benefit plans, an aggregate of less than 1% of Primerica's
Common Stock.
The validity of the Securities offered hereby will be passed upon for the
Underwriters or agents by counsel to be identified in the Prospectus Supplement.
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====================================================== ========================
No dealer, salesman 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 the Underwriter. $200,000,000
Neither the delivery of this Prospectus
Supplement and the Prospectus nor any sale Commercial Credit
made hereunder or thereunder shall Company
under any circumstances create an implication
that there has been no change in the affairs 7 7/8% Notes due July 15, 2004
of the Company since the date hereof. This
Prospectus Supplement and the Prospectus are
not an offer to sell or a solicitation of an
offer to buy any security in any jurisdiction in
which it is unlawful to make such offer or solicitation.
---------------------------
TABLE OF CONTENTS
Page
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PROSPECTUS SUPPLEMENT
Capitalization.................................. S-2
Ratio of Earnings to Fixed Charges.............. S-2 -------------
Use of Proceeds................................. S-3 PROSPECTUS SUPPLEMENT
Description of Notes............................ S-3 July 13, 1994
Underwriting.................................... S-4 -------------
Experts......................................... S-5
Legal Opinions.................................. S-5
PROSPECTUS
Available Information........................... 2
Incorporation of Certain Documents
by Reference.................................. 3
The Company..................................... 4
Use of Proceeds................................. 4
Ratio of Earnings to Fixed Charges.............. 5 LEHMAN BROTHERS
Description of Securities....................... 5
Plan of Distribution............................ 12
ERISA Matters................................... 13
Experts......................................... 13
Legal Matters................................... 13
====================================================== ========================
