PROSPECTUS SUPPLEMENT
(To Prospectus dated February 14, 1995)
$1,500,000,000
[ CHRYSLER FINANCIAL CORPORATION logotype ]
Medium-Term Notes, Series N
Due 9 Months or More From Date of Issue
----------------
Chrysler Financial Corporation (the "Company") may offer from time
to time its Medium-Term Notes, Series N (the "Notes") with an aggregate
initial public offering price or purchase price of up to $1,500,000,000 or
the equivalent thereof in one or more foreign or composite currencies,
subject to reduction as a result of the sale of other securities of the
Company. Each Note will mature nine months or more from its date of issue
and may be subject to redemption at the option of the Company or repayment
at the option of the Holder thereof, in each case, in whole or in part,
prior to maturity, as set forth therein and specified in a pricing
supplement to this Prospectus Supplement (each, a "Pricing Supplement").
Each Note will be denominated in the currency designated by the Company
(the "Specified Currency"). Unless otherwise described in the applicable
Pricing Supplement, Notes denominated in U.S. Dollars will be issued in
denominations of $1,000 or any integral multiple of $1,000. If the Notes
are to be denominated in one or more foreign currencies or currency units,
then the provisions with respect thereto (including authorized
denominations) and currency exchange rate information will be set forth in
the applicable Pricing Supplement.
Each Note will bear interest from the date of original issuance at a
fixed rate (a "Fixed Rate Note"), which may be zero in the case of certain
Notes issued at a price representing a discount from the principal amount
payable at maturity, or at a floating rate (a "Floating Rate Note")
determined by reference to one or more of the Commercial Paper Rate,
LIBOR, the Treasury Rate, the CD Rate, the Federal Funds Rate, the Prime
Rate or such other base rate or interest rate formula as may be specified
in the applicable Pricing Supplement, and may be adjusted by a "Spread"
and/or "Spread Multiplier," if any, each as defined herein. Unless
otherwise indicated in the applicable Pricing Supplement, interest on each
Fixed Rate Note will be payable semiannually in arrears on each March 15
and September 15 and at maturity or, if applicable, upon redemption or
repayment. The Specified Currency, interest rate or interest rate formula,
issue price, maturity, interest payment dates, redemption provisions and
certain other terms with respect to each Note will be established at the
time of issuance and set forth in a Pricing Supplement.
Each Note will initially be represented by a global security
registered in the name of a nominee of The Depository Trust Company
("DTC") or another depositary (DTC or such other depositary, if any,
described in the applicable Pricing Supplement is herein referred to as
the "Depository") (a "Book-Entry Note"). Beneficial ownership interests in
Book-Entry Notes will be shown on, and the transfer thereof will be
effected only through, records maintained by the Depository's
participants. Owners of beneficial interests in Book-Entry 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 "Book-Entry System." Owners of
beneficial interests in Book-Entry Notes will not be considered the
holders thereof.
----------------
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, ANY PRICING SUPPLEMENT OR THE
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================
Price to Agents' Discounts and Proceeds to
Public(1) Commissions(2) Company(2)(3)
<S> <C> <C> <C>
Per Note................ 100% .125%-.925% 99.875%-99.075%
Total(4)................ $1,500,000,000 $1,875,000-$13,875,000 $1,498,125,000-$1,486,125,000
<FN>
==================================================================================================
(1) Unless otherwise specified in the applicable Pricing Supplement, the
price to public will be 100% of the principal amount.
(2) The Company will pay a commission to Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated or Salomon Brothers Inc
(each an "Agent" and together the "Agents") in the form of a discount,
ranging from .125% to .925% of the principal amount of the Notes sold
through such Agent, depending upon its Stated Maturity (as defined
herein) and the rating assigned to such Notes by nationally recognized
securities rating agencies, except that the commission payable by the
Company to the Agents with respect to Notes with maturities of greater
than thirty years will be negotiated at the time the Company issues
such Notes. The Company has reserved the right to sell Notes directly
to investors on its own behalf, in which case no commission will be
payable. The Company may sell Notes to an Agent, as principal, at a
discount for resale to one or more investors and other purchasers at
varying prices related to prevailing market prices at the time of
resale, as determined by such Agent, or, if so agreed, on a fixed
public offering price basis. Unless otherwise indicated in the
applicable Pricing Supplement, any Note sold to an Agent as principal
will be purchased by such Agent at a price equal to 100% of the
principal amount thereof less a percentage equal to the commission
applicable to an agency sale of a Note with an identical Stated
Maturity, and may be resold by such Agent to investors and other
purchasers as described above.
(3) Before deducting expenses payable by the Company estimated to be
$625,000. The Company has agreed to indemnify each Agent against
certain liabilities, including liabilities under the Securities Act of
1933.
(4) Or the equivalent thereof in one or more foreign or composite
currencies.
</TABLE>
----------------
The Notes are being offered on a continuous basis by the Company
through the Agents, each of which has agreed to use their reasonable
efforts to solicit offers to purchase Notes. The Company may also sell
Notes to any Agent, acting as principal, for resale to one or more
investors and other purchasers. The Company also may sell Notes directly
on its own behalf. Unless otherwise indicated in the applicable Pricing
Supplement, the Notes will not be listed on any securities exchange and
there can be no assurance that the maximum amount of Notes offered by this
Prospectus Supplement will be sold or that there will be a secondary
market for the Notes. The Company reserves the right to withdraw, cancel
or modify the offer made hereby without notice. The Company or any Agent
may reject any offer to purchase Notes, in whole or in part. See "Plan of
Distribution."
----------------
Merrill Lynch & Co. Salomon Brothers Inc
----------------
The date of this Prospectus Supplement is February 14, 1995.
<PAGE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
COMMISSIONER OF INSURANCE FOR THE STATE OF NORTH CAROLINA NOR HAS THE
COMMISSIONER PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS
SUPPLEMENT, ANY PRICING SUPPLEMENT OR THE PROSPECTUS.
----------------
PRIOR SALES
The Company commenced offering the Notes on December 6, 1994. As of
January 31, 1995, the Company has issued $367,750,000 principal amount of
Notes.
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes
offered hereby (referred to in the accompanying Prospectus as the "Debt
Securities") supplements, and to the extent inconsistent therewith
replaces, the description of the general terms and provisions of the Debt
Securities set forth under the heading "Description of Debt Securities" in
the Prospectus, to which reference is hereby made. The following
description will apply to each Note unless otherwise specified in the
applicable Pricing Supplement. Capitalized terms not defined herein have
the meanings ascribed to them in the Indenture (defined below) and/or the
Notes.
GENERAL
The Notes constitute a single series of Debt Securities of the
Company issued under an Indenture dated as of February 15, 1988, as
amended (the "Indenture"), between the Company and Manufacturers Hanover
Trust Company, which has been succeeded by United States Trust Company of
New York as successor trustee (the "Trustee"), which Indenture is more
fully described in the accompanying Prospectus. See the Prospectus for a
further description of the Trustee and the Notes, including the covenants,
modification provisions and events of default relating to the Notes.
The Notes are being offered on a continuous basis by the Company
through the Agents. The Notes will rank pari passu with all existing and
future unsecured and unsubordinated indebtedness of the Company. The
Indenture does not limit the aggregate principal amount of Debt Securities
that may be issued thereunder. As of the date of this Prospectus
Supplement, the Company has authorized the issuance and sale of up to
$1,500,000,000 (or the equivalent thereof denominated in one or more
foreign currencies or composite currencies) aggregate principal amount of
Notes, subject to reduction as a result of the sale of other securities of
the Company. Each Note will mature nine months or more from its date of
issue, as selected by the purchaser and agreed to by the Company and may
be subject to redemption or repayment prior to its Stated Maturity (as
defined below). Notes may be issued at significant discounts from their
principal amount payable on the Stated Maturity (or on any prior date on
which the principal or an installment of principal of a Note becomes due
and payable, whether by the declaration of acceleration, call for
redemption at the option of the Company, repayment at the option of the
holder or otherwise) (each such date, a "Maturity"), and some Notes may
not bear interest. See "Redemption" and "Repayment at the Option of the
Holder" below. Unless otherwise indicated in the applicable Pricing
Supplement, currency amounts in this Prospectus Supplement, the
accompanying Prospectus and any Pricing Supplement are stated in United
States dollars ("$", "U.S.$" or "U.S. Dollars").
Unless otherwise specified in such Note and described in the
applicable Pricing Supplement, the Notes will be denominated in U.S.
Dollars and payments of principal, premium, if any, and any interest on
the Notes will be made in U.S. Dollars. If any Note is to be denominated
other than exclusively in U.S. Dollars, or if the principal of, premium,
if any, or any interest on the Note is to be payable in one or more
currencies (or currency units or in amounts determined by reference to an
index or indices) other than that in which such Note is denominated,
additional information with respect thereto (including authorized
denominations and applicable exchange rate information) will be provided
in the applicable Pricing Supplement. Unless otherwise described in the
applicable Pricing Supplement, Notes denominated in U.S. Dollars will be
issued in denominations of $1,000 or any integral multiple of $1,000.
Interest rates offered by the Company with respect to the Notes may
differ depending upon, among other things, the aggregate principal amount
of the Notes purchased in any single transaction. Interest rates, interest
rate formulae and other variable terms of the Notes are subject to change
by the Company from time to time, but no such change will affect any Note
already issued or as to which an offer to purchase has been accepted by
the Company.
Each Note will be issued initially as a Book-Entry Note in fully
registered form without coupons. Except as set forth under "Book-Entry
System," owners of beneficial interests in Book-Entry Notes will not be
entitled to physical delivery of Notes in certificated form (each a
"Certificated Note"). Beneficial interests in Book-Entry Notes may be
transferred through a participating member of the Depository. All
references herein to holders will be, with respect to Book-Entry Notes, to
the Depository or its nominee. See "Book-Entry System."
Upon issuance thereof in the limited circumstances described in
"Book-Entry System," Certificated Notes will be exchangeable for
Certificated Notes in other authorized denominations, in an equal
aggregate principal amount and otherwise bearing identical terms and
provisions, in accordance with the provisions of the Indenture.
Certificated Notes may be presented for registration of transfer or for
exchange at the office of the Registrar in The City of New York designated
for such purpose. No service charge will be made for any transfer or
exchange of any Certificated Note, but the Company may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith.
The Pricing Supplement relating to a Note will describe the
following terms: (i) whether such Note is a Fixed Rate Note or a Floating
Rate Note; (ii) whether such Note is a Discount Note (as defined below),
and, if so, the total amount of original issue discount, the amount of
original issue discount allocable to the initial accrual period, and the
yield to maturity of such Note; (iii) the price (expressed as a percentage
of the aggregate principal amount thereof) at which such Note will be
issued (the "Issue Price"); (iv) the date on which such Note will be
issued (the "Original Issue Date"); (v) the date on which such Note will
mature (the "Stated Maturity"); (vi) if such Note is a Fixed Rate Note,
the rate per annum at which such Note will bear interest, if any; (vii) if
such Note is a Floating Rate Note, the Base Rate (as defined below), the
Initial Interest Rate, the Interest Reset Period, the Interest Payment
Dates, the Index Maturity, the Maximum Interest Rate, if any, the Minimum
Interest Rate, if any, the Spread and/or Spread Multiplier, if any (all as
defined below) and any other terms relating to the particular method of
calculating the interest rate for such Note; (viii) whether such Note may
be redeemed at the option of the Company, or repaid at the option of the
holder, prior to the Stated Maturity, and, if so, the provisions relating
to such redemption or repayment, including, in the case of a Discount
Note, the information necessary to determine the amount due upon
redemption or repayment; (ix) the Specified Currency in which such Note is
denominated; and (x) any other terms of such Note not inconsistent with
the provisions of the relevant Indenture.
Unless otherwise specified in a Note and described in the applicable
Pricing Supplement, "Business Day" with respect to any Note means any day,
other than a Saturday or Sunday, that is (i) not a day on which banking
institutions are authorized or required by law or regulation to be closed
in The City of New York and (ii) if such Note is a LIBOR Note (as defined
below), a London Business Day. "London Business Day" means (a) if the
Index Currency (as defined below) is other than the European Currency Unit
("ECU"), any day on which dealings in deposits in such Index Currency are
transacted in the London interbank market or (b) if the Index Currency is
the ECU, any day that is not designated as an ECU Non-Settlement Date by
the ECU Banking Association in Paris or otherwise generally regarded in
the ECU interbank market as a day on which payments on ECUs shall not be
made.
Notes may be issued as discounted securities (bearing no interest or
interest at rates which at the time of issuance are below market rates),
at prices below their stated principal amounts, which securities will
provide that upon redemption or acceleration of the maturity thereof
amounts less than the principal amounts thereof shall become due and
payable, or as other Notes which for United States Federal income tax
purposes would be considered to have original issue discount ("Discount
Notes"). See "Certain United States Federal Income Tax Considerations."
Certain additional considerations relating to any Discount Notes may be
described in the Pricing Supplement relating thereto.
Unless otherwise specified in a Note and described in the applicable
Pricing Supplement, if the principal of any Discount Note is declared to
be, or automatically becomes, due and payable immediately as described in
the accompanying Prospectus under "Description of Debt Securities --
Events of Default," the amount of principal due and payable with respect
to such Note shall be the Amortized Face Amount of such Note calculated as
of the date of such acceleration of the maturity of such Note. The
"Amortized Face Amount" of a Discount Note as of any date for which a
calculation is being made shall be an amount equal to (i) the Issue Price
set forth in the applicable Pricing Supplement plus (ii) the portion of
the difference between the Issue Price and the principal amount of such
Notes that has accrued at the yield to maturity set forth in the Pricing
Supplement (computed in accordance with generally accepted United States
bond yield computation principles) to the date with respect to which such
calculation is being made, but in no event shall the Amortized Face Amount
of a Discount Note exceed its principal amount.
The initial Paying Agent, Registrar and Transfer Agent for the Notes
is Chemical Bank, acting through its principal corporate trust offices in
The City of New York. The Company reserves the right at any time to vary
or terminate the appointment of the Paying Agent, Registrar and the
Transfer Agent and to appoint additional Paying Agents, Registrars and
Transfer Agents and to approve any change in the office through which the
Paying Agent, Registrar or Transfer Agent acts, provided that, so long as
any Notes remain outstanding, there will at all times be a Paying Agent in
The City of New York and the Company will maintain in The City of New York
one or more offices or agencies where Notes may be presented for
registration of transfer and exchange.
Payments of principal of, and premium and interest, if any, on
Book-Entry Notes will be made by the Company through the Paying Agent to
the Depository. See "Book-Entry System."
Upon issuance thereof in the limited circumstances described in
"Book-Entry System," payments of interest on a Certificated Note (other
than interest payable at Maturity) will be made, except as provided below,
by check mailed to the Person in whose name such Note is registered in the
Security Register (the "Registered Holder"). Notwithstanding the
foregoing, a Holder of $10,000,000 or more in aggregate principal amount
of Certificated Notes of like tenor and term shall be entitled to receive
such U.S. dollar payments by wire transfer of immediately available funds,
but only if appropriate wire transfer instructions have been received in
writing by the Trustee not later than fifteen calendar days prior to the
applicable Interest Payment Date. Principal and any premium and interest
payable at the Maturity of a Certificated Note will be paid in immediately
available funds upon surrender of such Note at the corporate trust office
or agency of the Paying Agent in The City of New York.
INTEREST
General
Unless otherwise specified in an applicable Pricing Supplement, each
Note will bear interest from and including its Original Issue Date at the
rate per annum or, in the case of a Floating Rate Note, pursuant to the
interest rate formula stated therein and in the applicable Pricing
Supplement until the principal thereof is paid or made available for
payment. Interest will be payable in arrears on each date specified in the
applicable Pricing Supplement on which an installment of interest is due
and payable (each such day being an "Interest Payment Date") and at
Maturity. Unless otherwise specified in the applicable Pricing Supplement,
the "Regular Record Date" with respect to any Interest Payment Date for a
Floating Rate Note shall be the date (whether or not a Business Day)
fifteen calendar days immediately preceding such Interest Payment Date,
and for a Fixed Rate Note (unless otherwise specified in the applicable
Pricing Supplement) shall be the March 1 or September 1 (whether or not a
Business Day) immediately preceding such Interest Payment Date. Interest
payable and punctually paid or duly provided for on any Interest Payment
Date will be paid to the Registered Holder at the close of business on the
Regular Record Date immediately preceding such Interest Payment Date;
provided, however, that in the case of a Note issued between a Regular
Record Date and the related Interest Payment Date, interest for the period
beginning on the Original Issue Date for such Note and ending on such
Interest Payment Date shall be paid on the first succeeding Interest
Payment Date to the Registered Holder of such Note on the related Regular
Record Date, and provided, further, that interest payable at Maturity will
be payable to the Person to whom principal shall be payable.
Fixed Rate Notes
Unless otherwise specified in an applicable Pricing Supplement, each
Fixed Rate Note will bear interest from, and including, its Original Issue
Date, or the most recent date to which interest has been paid or duly
provided for, to, but excluding, the Interest Payment Date or Maturity, as
the case may be, at the rate per annum stated on the face thereof until
the principal amount thereof is paid or made available for payment. Unless
otherwise set forth in the applicable Pricing Supplement, interest on each
Fixed Rate Note will be payable semiannually in arrears on each March 15
and September 15 and at Maturity. Each payment of interest on a Fixed Rate
Note in respect of an Interest Payment Date shall include interest accrued
through the day before such Interest Payment Date. Unless otherwise
specified in an applicable Pricing Supplement, interest on Fixed Rate
Notes will be computed on the basis of a 360-day year of twelve 30-day
months. Any payment required to be made in respect of a Fixed Rate Note on
a date that is not a Business Day for such Note need not be made on such
date, but may be made on the first succeeding Business Day with the same
force and effect as if made on such date, and no additional interest shall
accrue as a result of such delayed payment.
Floating Rate Notes
Each Floating Rate Note will bear interest from and including its
Original Issue Date in accordance with the interest rate formula specified
therein until the principal thereof is paid or otherwise made available
for payment. The interest rate on such Note for each Interest Reset Period
(as defined below) will be determined by reference to an interest rate
basis (the "Base Rate"), plus or minus the Spread, if any, and/or
multiplied by the Spread Multiplier, if any, or pursuant to an interest
rate formula. The "Spread" is the number of basis points (one basis point
equals one one-hundredth of a percentage point) that may be specified in
the applicable Pricing Supplement as being applicable to such Note, and
the "Spread Multiplier" is the percentage that may be specified in the
applicable Pricing Supplement as being applicable to such Note. The
applicable Pricing Supplement will designate one or more of the following
Base Rates as applicable to a Floating Rate Note: (i) LIBOR (a "LIBOR
Note"), (ii) the Commercial Paper Rate (a "Commercial Paper Rate Note"),
(iii) the Treasury Rate (a "Treasury Rate Note"), (iv) the CD Rate (a "CD
Rate Note"), (v) the Federal Funds Rate (a "Federal Funds Rate Note"),
(vi) the Prime Rate (a "Prime Rate Note") or (vii) such other Base Rate or
interest rate formula as is set forth in such Pricing Supplement and in
such Note. In addition, a Floating Rate Note may bear interest in respect
of two or more Base Rates. The "Index Maturity" for any Note is the period
of maturity of the instrument or obligation from which the Base Rate is
calculated. "H.15(519)" means the publication entitled "Statistical
Release H.15(519), Selected Interest Rates," or any successor publication,
published by the Board of Governors of the Federal Reserve System.
Unless otherwise provided in the applicable Pricing Supplement, each
Base Rate shall be the rate determined in accordance with the applicable
provisions below. Except as set forth above or in an applicable Pricing
Supplement, the interest rate in effect on each day shall be (a) if such
day is an Interest Reset Date (as defined below), the interest rate
determined with respect to the Interest Determination Date (as defined
below) immediately preceding such Interest Reset Date or (b) if such day
is not an Interest Reset Date, the interest rate determined with respect
to the Interest Determination Date immediately preceding the next
preceding Interest Reset Date.
As specified in the applicable Pricing Supplement, a Floating Rate
Note may also have either or both of the following (in each case expressed
as a rate per annum on a simple interest basis); (i) a maximum limitation,
or ceiling, on the rate at which interest may accrue during any interest
period ("Maximum Interest Rate") and (ii) a minimum limitation, or floor,
on the rate at which interest may accrue during any interest period
("Minimum Interest Rate"). In addition to any Maximum Interest Rate that
may be applicable to any Floating Rate Note, the interest rate on a
Floating Rate Note will in no event be higher than the maximum rate
permitted by New York law, as the same may be modified by United States
law of general application.
The Company will appoint, and enter into an agreement with, First
Trust of New York, National Association (the "Calculation Agent") to
calculate interest rates on Floating Rate Notes. The interest rate on each
Floating Rate Note will be reset daily, weekly, monthly, quarterly,
semiannually or annually (such period being the "Interest Reset Period"
for such Note, and the first day of each Interest Reset Period being an
"Interest Reset Date") as specified in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
Interest Reset Date will be, in the case of Floating Rate Notes that reset
daily, each Business Day; in the case of Floating Rates Notes (other than
Treasury Rate Notes) that reset weekly, Wednesday of each week; in the
case of Treasury Rate Notes that reset weekly, Tuesday of each week
(except as provided below); in the case of Floating Rate Notes that reset
monthly, the third Wednesday of each month; in the case of Floating Rate
Notes that reset quarterly, the third Wednesday of March, June, September
and December of each year; in the case of Floating Rate Notes that reset
semiannually, the third Wednesday of the two months specified in the
applicable Pricing Supplement; and, in the case of Floating Rate Notes
that reset annually, the third Wednesday of the month specified in the
applicable Pricing Supplement; provided, however, that, unless otherwise
specified in the applicable Pricing Supplement, the interest rate in
effect from the Original Issue Date to but excluding the first Interest
Reset Date with respect to such Floating Rate Note will be the Initial
Interest Rate (as set forth in the applicable Pricing Supplement). If any
Interest Reset Date for any Floating Rate Note would otherwise be a day
that is not a Business Day, such Interest Reset Date shall be postponed to
the first succeeding Business Day, except that, in the case of a LIBOR
Note, if such Business Day is in the next succeeding calendar month, such
Interest Reset Date shall be the immediately preceding Business Day.
Unless otherwise specified in the applicable Pricing Supplement,
interest payable in respect of Floating Rate Notes shall be the accrued
interest from and including the Original Issue Date or the last date to
which interest has been paid, as the case may be, to but excluding the
applicable Interest Payment Date or Maturity, as the case may be.
With respect to a Floating Rate Note, accrued interest shall be
calculated by multiplying the principal amount of such Note by an accrued
interest factor. Such accrued interest factor will be computed by adding
the interest factors calculated for each day in the period for which
accrued interest is being calculated. Unless otherwise specified in the
applicable Pricing Supplement, the interest factor for each such day will
be computed by dividing the interest rate in effect on such day by 360, in
the case of LIBOR Notes, Commercial Paper Rate Notes, CD Rate Notes,
Federal Funds Rate Notes and Prime Rate Notes, or by the actual number of
days in the year, in the case of Treasury Rate Notes. Unless otherwise
specified in an applicable Pricing Supplement, the interest factor for
Notes for which the interest rate is calculated with reference to two or
more Base Rates will be calculated in each period in the same manner as if
only one of the applicable Base Rates applied. For purposes of making the
foregoing calculation, the interest rate in effect on any Interest Reset
Date will be the applicable rate as reset on such date.
Unless otherwise specified in the applicable Pricing Supplement, all
percentages resulting from any calculation of the rate of interest of a
Floating Rate Note will be rounded, if necessary, to the nearest one
hundred-thousandth of a percentage point, with five one-millionths of a
percentage point rounded upward (e.g., 9.876545% (or .09876545) being
rounded to 9.87655% (or .0987655) and 9.876544% (or .09876544) being
rounded to 9.87654% (or .0987654)), and all dollar amounts used in or
resulting from such calculation on Floating Rate Notes will be rounded to
the nearest cent (with one-half cent being rounded upward).
Unless otherwise indicated in the applicable Pricing Supplement and
except as provided below, interest will be payable, in the case of
Floating Rate Notes that reset daily, weekly, or monthly, on the third
Wednesday of each month or on the third Wednesday of March, June,
September and December of each year, as specified in the applicable
Pricing Supplement; in the case of Floating Rate Notes that reset
quarterly, on the third Wednesday of March, June, September and December
of each year; in the case of Floating Rate Notes that reset semiannually,
on the third Wednesday of the two months of each year specified in the
Pricing Supplement; and, in the case of Floating Rate Notes that reset
annually, on the third Wednesday of the month of each year specified in
the applicable Pricing Supplement and, in all such cases, at Maturity. If
an Interest Payment Date with respect to any Floating Rate Note (other
than an Interest Payment Date at Maturity) would otherwise be a day that
is not a Business Day, such Interest Payment Date shall be postponed to
the first succeeding Business Day, except that, in the case of a LIBOR
Note, if such Business Day falls in the next calendar month, such Interest
Payment Date shall be the immediately preceding Business Day. If the
Maturity of a Floating Rate Note falls on a day that is not a Business
Day, the payment of principal, premium, if any, and interest will be made
on the next succeeding Business Day, and no interest on such payment shall
accrue for the period from and after such Maturity.
The interest rate applicable to each Interest Reset Period
commencing on the Interest Reset Date with respect to such Interest Reset
Period will be the rate determined as of the applicable "Interest
Determination Date." Unless otherwise specified in the applicable Pricing
Supplement, the Interest Determination Date with respect to the CD Rate,
the Commercial Paper Rate, the Federal Funds Rate and the Prime Rate will
be the second Business Day preceding each Interest Reset Date for the
related Note; the Interest Determination Date with respect to LIBOR will
be the second London Business Day preceding each Interest Reset Date. With
respect to the Treasury Rate, unless otherwise specified in an applicable
Pricing Supplement, the Interest Determination Date will be the day in the
week in which the related Interest Reset Date falls on which day Treasury
bills (as defined below) are normally auctioned (Treasury bills are
normally sold at auction on Monday of each week, unless that day is a
legal holiday, in which case the auction is normally held on the following
Tuesday, except that such auction may be held on the preceding Friday);
provided, however, that if an auction is held on the Friday of the week
preceding the related Interest Reset Date, the related Interest
Determination Date will be such preceding Friday; and provided, further,
that if an auction falls on any Interest Reset Date, then the related
Interest Reset Date will instead by the first Business Day following such
auction. Unless otherwise specified in the applicable Pricing Supplement,
the Interest Determination Date pertaining to a Floating Rate Note the
interest rate of which is determined with reference to two or more Base
Rates will be the latest Business Day which is at least two Business Days
prior to such Interest Reset Date for such Floating Rate Note on which
each Base Rate is determinable. Each Base Rate will be determined as of
such date, and the applicable interest rate will take effect on the
related Interest Reset Date. Unless otherwise specified in the applicable
Pricing Supplement, the "Calculation Date," if applicable, pertaining to
any Interest Determination Date will be the earlier of (i) the tenth
calendar day after such Interest Determination Date, or, if such day is
not a Business Day, the next succeeding Business Day or (ii) the Business
Day preceding the applicable Interest Payment Date or Maturity, as the
case may be.
Upon the request of the Holder of any Floating Rate Note, the
Calculation Agent will provide the interest rate then in effect and, if
determined, the interest rate that will become effective on the next
Interest Reset Date with respect to such Note.
Commercial Paper Rate Notes. Each Commercial Paper Rate Note will
bear interest for each Interest Reset Period at the interest rate
calculated with reference to the Commercial Paper Rate and the Spread
and/or Spread Multiplier, if any, specified in such Note and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement,
"Commercial Paper Rate" means, with respect to any Interest Determination
Date relating to a Commercial Paper Rate Note or any Floating Rate Note
for which the interest rate is determined with reference to the Commercial
Paper Rate (a "Commercial Paper Rate Determination Date"), the Money
Market Yield (calculated as described below) on such Commercial Paper Rate
Determination Date of the rate for commercial paper having the Index
Maturity specified in the applicable Pricing Supplement, as such rate
shall be published by the Board of Governors of the Federal Reserve System
in H.15(519) under the heading "Commercial Paper." In the event that such
rate is not so published prior to 9:00 a.m., New York City time, on the
Calculation Date pertaining to such Commercial Paper Rate Determination
Date, then the "Commercial Paper Rate" shall be the Money Market Yield on
such Commercial Paper Rate Determination Date of the rate for commercial
paper of the specified Index Maturity as published by the Federal Reserve
Bank of New York in its daily statistical release "Composite 3:30 p.m.
Quotations for U.S. Government Securities" or any successor publication of
the Federal Reserve Bank of New York ("Composite Quotations") under the
heading "Commercial Paper" (with an Index Maturity of one month or three
months being deemed to be equivalent to an Index Maturity of 30 days or 90
days, respectively). If by 3:00 p.m., New York City time, on such
Calculation Date such rate is not yet published in either H.15(519) or
Composite Quotations, then the "Commercial Paper Rate" for such Commercial
Paper Rate Determination Date shall be calculated by the Calculation Agent
and shall be the Money Market Yield of the arithmetic mean of the offered
per annum rates (quoted on a bank discount basis), as of 11:00 a.m., New
York City time, on such Commercial Paper Rate Determination Date, of three
leading dealers of commercial paper in The City of New York (any of which
may be an Agent or an affiliate of an Agent) selected by the Calculation
Agent for commercial paper of the specified Index Maturity placed for an
industrial issuer whose bond rating is "AA" or the equivalent, from a
nationally recognized rating agency; provided, however, that if the
dealers selected as aforesaid by the Calculation Agent are not quoting
offered rates as mentioned in this sentence, the "Commercial Paper Rate"
for such Commercial Paper Rate Determination Date will be the same as the
Commercial Paper Rate in effect on such Commercial Paper Rate
Determination Date.
"Money Market Yield" shall be a yield (expressed as a percentage
rounded upwards to the nearest one hundred-thousandth of a percentage
point) calculated in accordance with the following formula:
D x 360
Money Market Yield = ------------- X 100
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper
quoted on a bank discount basis and expressed as a decimal, and "M" refers
to the actual number of days in the interest period for which interest is
being calculated.
LIBOR Notes. Each LIBOR Note will bear interest for each Interest
Reset Period at the interest rate calculated with reference to LIBOR and
the Spread and/or Spread Multiplier, if any, specified in such Note and in
the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement,
"LIBOR" means the rate determined by the Calculation Agent in accordance
with the following provisions:
(i) With respect to an Interest Determination Date relating
to a LIBOR Note or any Floating Rate Note for which the interest
rate is determined with reference to LIBOR (a "LIBOR Determination
Date"), LIBOR will be either: (a) if "LIBOR Reuters" is specified in
the applicable Pricing Supplement, the arithmetic mean of the
offered rates (unless the specified Designated LIBOR Page (as
defined below) by its terms provides only for a single rate, in
which case such single rate shall be used) for deposits in the Index
Currency (as defined below) having the Index Maturity designated in
the applicable Pricing Supplement, commencing on the second London
Business Day immediately following that LIBOR Determination Date,
that appear on the Designated LIBOR Page specified in the applicable
Pricing Supplement as of 11:00 a.m. London time, on that LIBOR
Determination Date, if at least two such offered rates appear
(unless, as aforesaid, only a single rate is required) on such
Designated LIBOR Page, or (b) if "LIBOR Telerate" is specified in
the applicable Pricing Supplement, the rate for deposits in the
Index Currency having the Index Maturity designated in the
applicable Pricing Supplement commencing on the second London
Business Day immediately following that LIBOR Determination Date
that appears on the Designated LIBOR Page specified in the
applicable Pricing Supplement as of 11:00 a.m. London time, on that
LIBOR Determination Date. If fewer than two offered rates appear, or
no rate appears, as applicable, LIBOR in respect of the related
LIBOR Determination Date will be determined as if the parties had
specified the rate described in clause (ii) below.
(ii) With respect to a LIBOR Determination Date on which
fewer than two offered rates appear, or no rate appears, as the case
may be, on the applicable Designated LIBOR Page as specified in
clause (i) above, the Calculation Agent will request the principal
London offices of each of four major reference banks in the London
interbank market, as selected by the Calculation Agent, to provide
the Calculation Agent with its offered quotation for deposits in the
Index Currency for the period of the Index Maturity designated in
the applicable Pricing Supplement, commencing on the second London
Business Day immediately following such LIBOR Determination Date, to
prime banks in the London interbank market at approximately 11:00
a.m., London time, on such LIBOR Determination Date and in a
principal amount that is representative for a single transaction in
such Index Currency in such market at such time. If at least two
such quotations are provided, LIBOR determined on such LIBOR
Determination Date will be the arithmetic mean of such quotations.
If fewer than two quotations are provided, LIBOR determined on such
LIBOR Determination Date will be the arithmetic mean of the rates
quoted at approximately 11:00 a.m., (or such other time specified in
the applicable Pricing Supplement), in the applicable Principal
Financial Center (as defined below), on such LIBOR Determination
Date by three major banks in such Principal Financial Center
selected by the Calculation Agent for loans in the Index Currency to
leading European banks, having the Index Maturity designated in the
applicable Pricing Supplement and in a principal amount that is
representative for a single transaction in such Index Currency in
such market at such time; provided, however, that if the banks so
selected by the Calculation Agent are not quoting as mentioned in
this sentence, LIBOR determined on such LIBOR Determination Date
will be LIBOR in effect on such LIBOR Determination Date.
"Index Currency" means the currency (including composite currencies)
specified in the applicable Pricing Supplement as the currency for which
LIBOR shall be calculated. If no such currency is specified in the
applicable Pricing Supplement, the Index Currency shall be U.S. Dollars.
"Designated LIBOR Page" means either (a) if "LIBOR Reuters" is
designated in the applicable Pricing Supplement, the display on the
Reuters Monitor Money Rates Service for the purpose of displaying the
London interbank rates of major banks for the applicable Index Currency,
or (b) if "LIBOR Telerate" is designated in the applicable Pricing
Supplement, the display on the Dow Jones Telerate Service for the purpose
of displaying the London interbank rates of major banks for the applicable
Index Currency. If neither LIBOR Reuters nor LIBOR Telerate is specified
in the applicable Pricing Supplement, LIBOR for the applicable Index
Currency will be determined as if LIBOR Telerate (and, if the U.S. Dollar
is the Index Currency, LIBOR Page) has been specified.
"Principal Financial Center" will be the capital city of the country
of the specified Index Currency, except that with respect to U.S. dollars
and ECUs, the Principal Financial Center shall be The City of New York and
Luxembourg, respectively.
Treasury Rate Notes. Each Treasury Rate Note will bear interest for
each Interest Reset Period at the interest rate calculated with reference
to the Treasury Rate and the Spread and/or Spread Multiplier, if any,
specified in such Note and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement,
"Treasury Rate" means, with respect to any Interest Determination Date
relating to a Treasury Rate Note or any Floating Rate Note for which the
interest rate is determined by reference to the Treasury Rate (a "Treasury
Rate Determination Date"), the rate applicable to the most recent auction
of direct obligations of the United States ("Treasury bills") having the
Index Maturity specified in the applicable Pricing Supplement, as such
rate shall be published in H.15(519) under the heading "U.S. Government
Securities -- Treasury bills -- auction average (investment)" or, in the
event that such rate is not so published by 3:00 p.m., New York City time,
on the Calculation Date pertaining to such Treasury Rate Determination
Date, the auction average rate (expressed as a bond equivalent on the
basis of a year of 365 or 366 days, as applicable, and applied on a daily
basis) on such Treasury Rate Determination Date as otherwise announced by
the United States Department of the Treasury. In the event that the
results of the auction of Treasury bills having the specified Index
Maturity are not published or reported as provided above by 3:00 p.m., New
York City time, on such Calculation Date, or if no such auction is held in
a particular week, then the "Treasury Rate" for such Interest Reset Period
shall be calculated by the Calculation Agent and shall be the yield to
maturity (expressed as a bond equivalent on the basis of a year of 365 or
366 days, as applicable, and applied on a daily basis) of the arithmetic
mean of the secondary market bid rates, as of approximately 3:30 p.m.,
New York City time, on such Treasury Rate Determination Date, of three
leading primary United States government securities dealers (any of which
may be an Agent or an affiliate of an Agent) selected by the Calculation
Agent, for the issue of Treasury bills with a remaining maturity closest
to the specified Index Maturity; provided, however, that if the dealers
selected as aforesaid by the Calculation Agent are not quoting bid rates
as mentioned in this sentence, the "Treasury Rate" with respect to such
Treasury Rate Determination Date will be the Treasury Rate in effect on
such Treasury Rate Determination Date.
CD Rate Notes. Each CD Rate Note will bear interest for each
Interest Reset Period at the interest rate calculated with reference to
the CD Rate and the Spread and/or Spread Multiplier, if any, specified in
such Note and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CD
Rate" means, with respect to any Interest Determination Date relating to a
CD Rate Note or any Floating Rate Note for which the interest rate is
determined with reference to the CD Rate (a "CD Rate Determination Date"),
the rate on such CD Rate Determination Date for negotiable certificates of
deposit having the Index Maturity designated in the applicable Pricing
Supplement, as such rate shall be published in H.15(519) under the heading
"CDs (Secondary Market)." In the event that such rate is not so published
prior to 3:00 p.m., New York City time, on the Calculation Date pertaining
to such CD Rate Determination Date, then the "CD Rate" for such Interest
Reset Period shall be the rate on such CD Rate Determination Date for
negotiable certificates of deposit of the specified Index Maturity as
published in Composite Quotations under the heading "Certificates of
Deposit." If, by 3:00 p.m., New York City time, on such Calculation Date,
such rate is not yet published in either H.15(519) or Composite
Quotations, then the "CD Rate" on such CD Rate Interest Determination Date
shall be calculated by the Calculation Agent and will be the arithmetic
mean of the secondary market offered rates as of 10:00 a.m., New York City
time, on such CD Rate Determination Date, of three leading nonbank dealers
in negotiable U.S. dollar certificates of deposit in The City of New York
(any of which may be an Agent or an affiliate of an Agent) selected by the
Calculation Agent for negotiable certificates of deposit of major United
States money market banks, of the highest credit standing (in the market
for negotiable certificates of deposit) with a remaining maturity closest
to the Index Maturity designated in the applicable Pricing Supplement in
an amount that is representative for a single transaction in that market
at that time; provided, however, that if the dealers selected as aforesaid
by the Calculation Agent are not quoting as mentioned in this sentence,
the CD Rate with respect to such CD Rate Determination Date will be the CD
Rate in effect on such CD Rate Determination Date.
Federal Funds Rate Notes. Each Federal Funds Rate Note will bear
interest for each Interest Reset Period at the interest rate calculated
with reference to the Federal Funds Rate and the Spread and/or Spread
Multiplier, if any, specified in such Note and in the applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement,
"Federal Funds Rate" means, with respect to any Interest Determination
Date relating to a Federal Funds Rate Note or any Floating Rate Note for
which the interest rate is determined with reference to the Federal Funds
Rate (a "Federal Funds Rate Determination Date"), the rate on such Federal
Funds Rate Determination Date for Federal Funds as such rate shall be
published in H.15(519) under the heading "Federal Funds (Effective)." In
the event that such rate is not so published prior to 3:00 p.m., New York
City time, on the Calculation Date pertaining to such Federal Funds Rate
Determination Date, then the "Federal Funds Rate" on such Federal Funds
Rate Determination Date shall be the rate as published in Composite
Quotations under the heading "Federal Funds/Effective Rate." If, by 3:00
p.m., New York City time, on such Calculation Date, such rate is not yet
published in either H.15(519) or Composite Quotations, then the "Federal
Funds Rate" for such Federal Funds Determination Date will be calculated
by the Calculation Agent and will be the arithmetic mean of the rates for
the last transaction in overnight United States Dollar federal funds
arranged by three leading brokers of federal funds transactions in The
City of New York selected by the Calculation Agent prior to 9:00 a.m., New
York City time, on such Federal Funds Rate Determination Date; provided,
however, that if the brokers selected as aforesaid by the Calculation
Agent are not quoting as mentioned in this sentence, the Federal Funds
Rate with respect to such Federal Funds Rate Determination Date will be
the Federal Funds Rate in effect on such Federal Funds Rate Determination
Date.
Prime Rate Notes. Each Prime Rate Note will bear interest for each
Interest Reset Period at the interest rate calculated with reference to
the Prime Rate and the Spread and/or Spread Multiplier, if any, specified
in such Note and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Prime Rate" means, with respect to any Interest Determination Date
relating to a Prime Rate Note or any Floating Rate Note for which the
interest rate is determined with reference to the Prime Rate (a "Prime
Rate Determination Date"), the rate on such date as such rate is published
in H.15(519) under the heading "Bank Prime Loan." If such rate is not
published prior to 9:00 a.m., New York City time, on the Calculation Date,
then the Prime Rate shall be the arithmetic mean of the rates of interest
publicly announced by each bank that appears on the Reuters Screen NYMF
Page (as defined below) as such bank's prime rate or base lending rate as
in effect for that Prime Rate Determination Date. If fewer than four such
rates but more than one such rate appear on the Reuters Screen NYMF Page
for such Prime Rate Determination Date, the Prime Rate shall be the
arithmetic mean of the prime rates quoted on the basis of the actual
number of days in the year divided by a 360-day year as of the close of
business on such Prime Rate Determination Date by four major money center
banks in The City of New York selected by the Calculation Agent. If fewer
than two such rates appear on the Reuters Screen NYMF Page, the Prime Rate
will be determined by the Calculation Agent on the basis of the rates
furnished in The City of New York by the appropriate number of substitute
banks or trust companies organized and doing business under the laws of
the United States, or any State thereof, having total equity capital of at
least U.S. $500,000,000 and being subject to supervision or examination by
Federal or State authority, selected by the Calculation Agent to provide
such rate or rates; provided, however, that if the banks or trust
companies selected as aforesaid are not quoting as mentioned in this
sentence, the Prime Rate for such Prime Rate Determination Date will be
the Prime Rate as determined based on the last such rate published in
H.15(519). "Reuters Screen NYMF Page" means the display designated as page
"NYMF" on the Reuters Monitor Money Rates Service (or such other page as
may replace the NYMF page on that service for the purpose of displaying
prime rates or base lending rates of major United States banks).
REDEMPTION
Unless otherwise specified in an applicable Pricing Supplement, the
Notes will not be subject to any sinking fund. If provided in an
applicable Pricing Supplement, Notes may be subject to redemption, in
whole or in part, prior to their Stated Maturity at the option of the
Company or through operation of a mandatory or optional sinking fund or
analogous provisions. Such Pricing Supplement will set forth the detailed
terms of such redemption, including, but not limited to, the date after or
on which and the price or prices (including premium, if any) at which such
Notes may be redeemed. Unless otherwise specified in the applicable
Pricing Supplement, the Company may redeem any Notes that are redeemable
and remain outstanding either in whole or in part upon not less than 30
nor more than 60 days' notice.
REPAYMENT AT THE OPTION OF THE HOLDER
If provided in an applicable Pricing Supplement, Notes will be
subject to repayment at the option of the Holders thereof in accordance
with the terms of such Notes on their respective optional repayment dates,
if any, as agreed upon by the Company and the purchasers thereof at the
time of sale (each, an "Optional Repayment Date"). If no Optional
Repayment Date is indicated with respect to a Note, such Note will not be
repayable at the option of the Holder thereof prior to its Stated
Maturity. Unless otherwise specified in the applicable Pricing Supplement,
on any Optional Repayment Date with respect to any Note, such Note will be
repayable in whole or in part in increments of $1,000 (provided that any
remaining principal amount of such Note shall not be less than the minimum
denomination of such Note) at the option of the Holder thereof at a
repayment price equal to 100% of the principal amount to be repaid,
together with interest thereon payable to the date of repayment.
Unless otherwise specified in the applicable Pricing Supplement, in
order for a Note to be repaid at the option of the Holder, the applicable
Trustee must receive the Note, at least 30 days but not more than 60 days
prior to the repayment date, with the section entitled "Option to Elect
Repayment" on the reverse of the Note duly completed. Exercise of a
repayment option by the Holder of a Note will be irrevocable.
OTHER PROVISIONS; ADDENDA
Any provisions with respect to Notes, including the determination of
a Base Rate, calculation of the interest rate applicable to a Floating
Rate Note, its Interest Payment Dates or any other matter relating thereto
may be modified by the terms as specified under "Other Provisions" on the
face thereof or in an Addendum relating thereto, if so specified on the
face thereof and in the applicable Pricing Supplement.
FOREIGN-CURRENCY NOTES
If any Note is not to be denominated in U.S. Dollars, certain
provisions with respect thereto will be set forth in an applicable Pricing
Supplement which will specify the currency or currencies, including
composite currencies such as the ECU, in which the principal, premium, if
any, and interest, if any, with respect to such Note are to be paid, along
with any other terms relating to the non-U.S. Dollar denomination.
INDEXED NOTES
Notes also may be issued with the principal amount payable at
Maturity and/or interest to be paid thereon to be determined with
reference to the price or prices of specified commodities or stocks, the
exchange rate of one or more specified currencies (including a composite
currency such as the ECU relative to an indexed currency, or such other
price or exchange rate as may be specified in a Pricing Supplement
relating to such Note ("Indexed Notes"). Holders of such Notes may receive
a principal amount at Maturity that is greater than or less than the face
amount of the Notes depending upon the relative value at Maturity of the
specified indexed item. Information as to the method for determining the
principal amount payable at Maturity, certain historical information with
respect to the specified indexed item and tax considerations associated
with investment in Indexed Notes will be set forth in the applicable
Pricing Supplement.
RISKS ASSOCIATED WITH INDEXED NOTES
An investment in Notes indexed, as to principal or interest or both,
to one or more values of currencies (including exchange rates between
currencies), commodities or interest rate indices entails significant
risks that are not associated with similar investments in a conventional
fixed-rate debt security. If the interest rate of such a Note is so
indexed, it may result in an interest rate that is less than that payable
on a conventional fixed-rate debt security issued at the same time,
including the possibility that no interest will be paid, and, if the
principal amount of such Note is so indexed, the principal amount payable
at maturity may be less than the original purchase price of such Note if
allowed pursuant to the terms of such Note, including the possibility that
no principal will be paid. The secondary market for such Notes will be
affected by a number of factors, independent of the creditworthiness of
the issuer and the value of the applicable currency, commodity or interest
rate index, including the volatility of the applicable currency, commodity
or interest rate index, the time remaining to the maturity of such Notes,
the amount outstanding of such Notes and market interest rates. The value
of the applicable currency, commodity or interest rate index depends on a
number of interrelated factors, including economic, financial and
political events, over which the Company has no control. Additionally, if
the formula used to determine the principal amount or interest payable
with respect to such Notes contains a multiple or leverage factor, the
effect of any change in the applicable currency, commodity or interest
rate index will be increased. The historical experiences of the relevant
currencies, commodities or interest rate indices should not be taken as an
indication of future performance of such currencies, commodities or
interest rate indices during the term of any Note. The credit ratings
assigned to the Company's medium-term note program are a reflection of the
Company's credit status, and, in no way, are a reflection of the potential
impact of the factors discussed above, or any other factors, on the market
value of the Notes. Accordingly, prospective investors should consult
their own financial and legal advisors as to the risks entailed by an
investment in such Notes and the suitability of such Notes in light of
their particular circumstances.
BOOK-ENTRY SYSTEM
The Notes will initially be issued in whole or in part as Book-Entry
Notes represented by a Global Security (as defined in the accompanying
Prospectus) deposited with, or on behalf of, the Depository and registered
in the name of the Depository or a nominee of the Depository. Unless
otherwise specified in the applicable Pricing Supplement, DTC will be the
Depository.
So long as the Depository for a Global Security, or a nominee of the
Depository, is the registered owner of the Global Security, the Depository
or its nominee, as the case may be, will be considered the sole owner or
holder of the Book-Entry Notes represented by such Global Security for all
purposes under the Indenture. Except as provided below, owners of
beneficial interests in Book-Entry Notes represented by a Global Security
will not be considered the owners or holders thereof under the Indenture,
will not be entitled to have Book-Entry Notes represented by such Global
Security registered in their names and will not be entitled to physical
delivery of Notes in certificated form evidencing their respective
beneficial interests therein. A Global Security may not be transferred
except as a whole by the Depository to a nominee of the Depository or by a
nominee of the Depository to the Depository or another nominee of the
Depository or by the Depository or any nominee to a successor of the
Depository or a nominee of such successor.
Payments of principal of and any premium and interest on Book-Entry
Notes represented by a Global Security registered in the name of a
Depository or its nominee will be made to the Depository or its nominee,
as the case may be, as the registered owner of the Global Security.
Neither the Company, the Trustee, any Paying Agent nor the Registrar will
have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests
in Book-Entry Notes represented by a Global Security or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
The Company expects that the Depository or its nominee, upon receipt
of any payment of principal, premium, if any, or interest, if any, in
respect of a Global Security, will credit immediately participants'
accounts with payments in amounts proportionate to their respective
beneficial interests in the principal amount of such Global Security as
shown on the records of such Depository or its nominee. The Company also
expects that payments by participants to owners of beneficial interests in
Book-Entry Notes represented by such Global Security held through such
participants will be governed by standing customer instructions and
customary practices, as is now the case with securities held for the
accounts of customers in bearer form or registered in "street name", and
will be the responsibility of such participants.
If the Depository with respect to any Global Security 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 of such time,
the Company will issue Certificated Notes in exchange for each Book-Entry
Note represented by such Global Security. In addition, the Company may at
any time and in its sole discretion determine not to have the Notes
represented by a Global Security and, in such event, will issue
Certificated Notes in exchange for the Book-Entry Notes represented by
such Global Security. In either instance, an owner of a beneficial
interest in a Book-Entry Note will be entitled to have a Certificated Note
or Notes equal in principal amount to such beneficial interest registered
in its name and will be entitled to physical delivery of such Note or
Notes.
DTC has advised the Company and the Agents as follows: DTC 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 Securities Exchange Act of 1934. 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
movements of securities certificates. DTC's participants include
securities brokers and dealers (including the Agents), banks, trust
companies, clearing corporations, and certain other organizations, some of
whom (and/or their representatives) own DTC. Access to DTC's 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 securities held by DTC only through
participants.
DTC has also advised the Company and the Agents that, upon the
issuance by the Company of Book-Entry Notes represented by a Global
Security, DTC will credit on its book-entry registration and transfer
system the respective principal amounts of the Book-Entry Notes
represented by such Global Security to the accounts of participants. The
accounts to be credited shall be designated by the applicable Agent or by
the Company if such Notes are offered and sold directly by the Company.
Ownership of beneficial interests in Book-Entry Notes represented by a
Global Security registered in the name of DTC or its nominee will be
limited to participants or persons that may hold interests through
participants. Ownership of beneficial interests in Book-Entry Notes
represented by a Global Security registered in the name of DTC or its
nominee will be shown on, and the transfer of that ownership 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 persons other than participants). 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 Book-Entry
Notes.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary of certain United States Federal income tax
consequences of the purchase, ownership and disposition of the Notes is
based upon laws, regulations, rulings and decisions now in effect, all of
which are subject to change (including changes in effective dates) or
possible differing interpretations. It deals only with Notes held as
capital assets and does not purport to deal with persons in special tax
situations, such as financial institutions, insurance companies, regulated
investment companies, dealers in securities or currencies, persons holding
Notes as a hedge against currency risks or as a position in a "straddle"
for tax purposes, or persons whose functional currency is not the United
States dollar. It also does not deal with holders other than original
purchasers (except where otherwise specifically noted). Persons
considering the purchase of the Notes should consult their own tax
advisors concerning the application of United States Federal income tax
laws to their particular situations as well as any consequences of the
purchase, ownership and disposition of the Notes arising under the laws of
any other taxing jurisdiction.
As used herein, the term "U.S. Holder" means a beneficial owner of a
Note that is for United States Federal income tax purposes (i) a citizen
or resident of the United States, (ii) a corporation, partnership or other
entity created or organized in or under the laws of the United States or
of any political subdivision thereof, (iii) an estate or trust the income
of which is subject to United States Federal income taxation regardless of
its source or (iv) any other person whose income or gain in respect of a
Note is effectively connected with the conduct of a United States trade or
business. As used herein, the term "non-U.S. Holder" means a beneficial
owner of a Note that is not a U.S. Holder.
U.S. HOLDERS
Payments of Interest. Payments of interest on a Note generally will
be taxable to a U.S. Holder as ordinary interest income at the time such
payments are accrued or are received (in accordance with the U.S. Holder's
regular method of tax accounting).
Original Issue Discount. The following summary is a general
discussion of the United States Federal income tax consequences to U.S.
Holders of the purchase, ownership and disposition of Notes issued with
original issue discount ("Discount Notes"). The following summary is based
upon final Treasury regulations (the "OID Regulations") issued by the
Internal Revenue Service ("IRS") on January 27, 1994 under the original
issue discount provisions of the Internal Revenue Code of 1986, as amended
(the "Code").
For United States Federal income tax purposes, original issue
discount is the excess of the stated redemption price at maturity of a
Note over its issue price, if such excess equals or exceeds a de minimis
amount (generally 1/4 of 1% of the Note's stated redemption price at
maturity multiplied by the number of complete years to its maturity from
its issue date or, in the case of a Note providing for the payment of any
amount other than qualified stated interest (as defined below) prior to
maturity, multiplied by the weighted average maturity of such Note). The
issue price of each Note in an issue of Notes equals the first price at
which a substantial amount of such Notes has been sold (ignoring sales to
bond houses, brokers or similar persons or organizations acting in the
capacity of underwriters, placement agents or wholesalers). The stated
redemption price at maturity of a Note is the sum of all payments provided
by the Note other than "qualified stated interest" payments. The term
"qualified stated interest" generally means stated interest that is
unconditionally payable in cash or property (other than debt instruments
of the issuer) at least annually at a single fixed rate. In addition,
under the OID Regulations, if a Note bears interest for one or more
accrual periods at a rate below the rate applicable for the remaining term
of such Note (e.g., Notes with teaser rates or interest holidays), and if
the greater of either the resulting foregone interest on such Note or any
"true" discount on such Note (i.e., the excess of the Note's stated
principal amount over its issue price) equals or exceeds a specified de
minimis amount, then the stated interest on the Note would be treated as
original issue discount rather than qualified stated interest.
Payments of qualified stated interest on a Note are taxable to a
U.S. Holder as ordinary interest income at the time such payments are
accrued or are received (in accordance with the U.S. Holder's regular
method of tax accounting). A U.S. Holder of a Discount Note must include
original issue discount in income as ordinary interest for United States
Federal income tax purposes as it accrues under a constant yield method in
advance of receipt of the cash payments attributable to such income,
regardless of such U.S. Holder's regular method of tax accounting. In
general, the amount of original issue discount included in income by the
initial U.S. Holder of a Discount Note is the sum of the daily portions of
original issue discount with respect to such Discount Note for each day
during the taxable year (or portion of the taxable year) on which such
U.S. Holder held such Discount Note. The "daily portion" of original issue
discount on any Discount Note is determined by allocating to each day in
any accrual period a ratable portion of the original issue discount
allocable to that accrual period. An "accrual period" may be of any length
and the accrual periods may vary in length over the term of the Discount
Note, provided that each accrual period is no longer than one year and
each scheduled payment of principal or interest occurs either on the final
day of an accrual period or on the first day of an accrual period. The
amount of original issue discount allocable to each accrual period is
generally equal to the difference between (i) the product of the Discount
Note's adjusted issue price at the beginning of such accrual period and
its yield to maturity (determined on the basis of compounding at the close
of each accrual period and appropriately adjusted to take into account the
length of the particular accrual period) and (ii) the amount of any
qualified stated interest payments allocable to such accrual period. The
"adjusted issue price" of a Discount Note at the beginning of any accrual
period is the sum of the issue price of the Discount Note plus the amount
of original issue discount allocable to all prior accrual periods minus
the amount of any prior payments on the Discount Note that were not
qualified stated interest payments. Under these rules, U.S. Holders
generally will have to include in income increasingly greater amounts of
original issue discount in successive accrual periods.
A U.S. Holder who purchases a Discount Note for an amount that is
greater than its adjusted issue price as of the purchase date and less
than or equal to the sum of all amounts payable on the Discount Note after
the purchase date other than payments of qualified stated interest will be
considered to have purchased the Discount Note at an "acquisition
premium." Under the acquisition premium rules, the amount of original
issue discount which such U.S. Holder must include in its gross income
with respect to such Discount Note for any taxable year (or portion
thereof in which the U.S. Holder holds the Discount Note) will be reduced
(but not below zero) by the portion of the acquisition premium properly
allocable to the period.
Under the OID Regulations, Floating Rate Notes and Indexed Notes
("Variable Notes") are subject to special rules whereby a Variable Note
will qualify as a "variable rate debt instrument" if (a) its issue price
does not exceed the total noncontingent principal payments due under the
Variable Note by more than a specified de minimis amount and (b) it
provides for stated interest, paid or compounded at least annually, at
current values of (i) one or more qualified floating rates, (ii) a single
fixed rate and one or more qualified floating rates, (iii) a single
objective rate, or (iv) a single fixed rate and a single objective rate
that is a qualified inverse floating rate.
A "qualified floating rate" is any variable rate where variations in
the value of such rate can reasonably be expected to measure
contemporaneous variations in the cost of newly borrowed funds in the
currency in which the Variable Note is denominated. Although a multiple of
a qualified floating rate will generally not itself constitute a qualified
floating rate, a variable rate equal to the product of a qualified
floating rate and a fixed multiple that is greater than zero but not more
than 1.35 will constitute a qualified floating rate. A variable rate equal
to the product of a qualified floating rate and a fixed multiple that is
greater than zero but not more than 1.35, increased or decreased by a
fixed rate, will also constitute a qualified floating rate. In addition,
under the OID Regulations, two or more qualified floating rates that can
reasonably be expected to have approximately the same values throughout
the term of the Variable Note (e.g., two or more qualified floating rates
with values within 25 basis points of each other as determined on the
Variable Note's issue date) will be treated as a single qualified floating
rate. Notwithstanding the foregoing, a variable rate that would otherwise
constitute a qualified floating rate but which is subject to one or more
restrictions such as a maximum numerical limitation (i.e., a cap) or a
minimum numerical limitation (i.e., a floor) may, under certain
circumstances, fail to be treated as a qualified floating rate under the
OID Regulations unless such cap or floor is fixed throughout the term of
the Note. An "objective rate" is a rate that is not itself a qualified
floating rate but which is determined using a single fixed formula and
which is based upon (i) one or more qualified floating rates, (ii) one or
more rates where each rate would be a qualified floating rate for a debt
instrument denominated in a currency other than the currency in which the
Variable Note is denominated, (iii) either the yield or changes in the
price of one or more items of actively traded personal property (other
than stock or debt of the issuer or a related party) or (iv) a combination
of objective rates. The OID Regulations also provide that other variable
interest rates may be treated as objective rates if so designated by the
IRS in the future. Despite the foregoing, a variable rate of interest on a
Variable Note will not constitute an objective rate if it is reasonably
expected that the average value of such rate during the first half of the
Variable Note's term will be either significantly less than or
significantly greater than the average value of the rate during the final
half of the Variable Note's term. A "qualified inverse floating rate" is
any objective rate where such rate is equal to a fixed rate minus a
qualified floating rate, as long as variations in the rate can reasonably
be expected to inversely reflect contemporaneous variations in the cost of
newly borrowed funds. The OID Regulations also provide that if a Variable
Note provides for stated interest at a fixed rate for an initial period of
less than one year followed by a variable rate that is either a qualified
floating rate or an objective rate and if the variable rate on the
Variable Note's issue date is intended to approximate the fixed rate
(e.g., the value of the variable rate on the issue date does not differ
from the value of the fixed rate by more than 25 basis points), then the
fixed rate and the variable rate together will constitute either a single
qualified floating rate or objective rate, as the case may be.
If a Variable Note that provides for stated interest at either a
single qualified floating rate or a single objective rate throughout the
term thereof qualifies as a "variable rate debt instrument" under the OID
Regulations, then any stated interest on such Note which is
unconditionally payable in cash or property (other than debt instruments
of the issuer) at least annually will constitute qualified stated interest
and will be taxed accordingly. Thus, a Variable Note that provides for
stated interest at either a single qualified floating rate or a single
objective rate throughout the term thereof and that qualifies as a
"variable rate debt instrument" under the OID Regulations will generally
not be treated as having been issued with original issue discount unless
the Variable Note is issued at a "true" discount (i.e., at a price below
the Note's stated principal amount) in excess of a specified de minimus
amount. Original issue discount on such a Variable Note arising from
"true" discount is allocated to an accrual period using the constant yield
method described above by assuming that the variable rate is a fixed rate
equal to (i) in the case of a qualified floating rate or qualified inverse
floating rate, the value as of the issue date, of the qualified floating
rate or qualified inverse floating rate, or (ii) in the case of an
objective rate (other than a qualified inverse floating rate), a fixed
rate that reflects the yield that is reasonably expected for the Floating
Rate Note.
In general, any other Variable Note that qualifies as a "variable
rate debt instrument" will be converted into an "equivalent" fixed rate
debt instrument for purposes of determining the amount and accrual of
original issue discount and qualified stated interest on the Variable
Note. The OID Regulations generally require that such a Variable Note be
converted into an "equivalent" fixed rate debt instrument by substituting
any qualified floating rate or qualified inverse floating rate provided
for under the terms of the Variable Note with a fixed rate equal to the
value of the qualified floating rate or qualified inverse floating rate,
as the case may be, as of the Variable Note's issue date. Any objective
rate (other than a qualified inverse floating rate) provided for under the
terms of the Variable Note is converted into a fixed rate that reflects
the yield that is reasonably expected for the Variable Note. In the case
of a Variable Note that qualifies as a "variable rate debt instrument" and
provides for stated interest at a fixed rate in addition to either one or
more qualified floating rates or a qualified inverse floating rate, the
fixed rate is initially converted into a qualified floating rate (or a
qualified inverse floating rate, if the Variable Note provides for a
qualified inverse floating rate). Under such circumstances, the qualified
floating rate or qualified inverse floating rate that replaces the fixed
rate must be such that the fair market value of the Variable Note as of
the Variable Note's issue date is approximately the same as the fair
market value of an otherwise identical debt instrument that provides for
either the qualified floating rate or qualified inverse floating rate
rather than the fixed rate. Subsequent to converting the fixed rate into
either a qualified floating rate or a qualified inverse floating rate, the
Variable Note is then converted into an "equivalent" fixed rate debt
instrument in the manner described above.
Once the Variable Note is converted into an "equivalent" fixed rate
debt instrument pursuant to the foregoing rules, the amount of original
issue discount and qualified stated interest, if any, are determined for
the "equivalent" fixed rate debt instrument by applying the general
original issue discount rules to the "equivalent" fixed rate debt
instrument and a U.S. Holder of the Variable Note will account for such
original issue discount and qualified stated interest as if the U.S.
Holder held the "equivalent" fixed rate debt instrument. Each accrual
period appropriate adjustments will be made to the amount of qualified
stated interest or original issue discount assumed to have been accrued or
paid with respect to the "equivalent" fixed rate debt instrument in the
event that such amounts differ from the actual amount of interest accrued
or paid on the Variable Note during the accrual period.
U.S. Holders should be aware that on December 15, 1994, the IRS
released proposed amendments to the OID Regulations which would broaden
the definition of an objective rate and would further clarify certain
other provisions contained in the OID Regulations. If ultimately adopted,
these amendments to the OID Regulations generally would be effective for
debt instruments issued 60 days or more after the date on which such
proposed amendments are finalized.
If a Variable Note does not qualify as a "variable rate debt
instrument" under the OID Regulations, then the Variable Note would be
treated as a contingent payment debt obligation. It is not entirely clear
under current law how a Variable Note would be taxed if such Note were
treated as a contingent payment debt obligation. The proper United States
Federal income tax treatment of Variable Notes that are treated as
contingent payment debt obligations will be more fully described in the
applicable Pricing Supplement.
Certain of the Notes (i) may be redeemable at the option of the
Company prior to their stated maturity (a "call option") and/or (ii) may
be repayable at the option of the holder prior to their stated maturity (a
"put option"). Notes containing such features may be subject to rules that
differ from the general rules discussed above. Investors intending to
purchase Notes with such features should consult their own tax advisors,
since the original issue discount consequences will depend, in part, on
the particular terms and features of the purchased Notes.
U.S. Holders may generally, upon election, include in income all
interest (including stated interest, acquisition discount, original issue
discount, de minimis original issue discount, market discount, de minimis
market discount, and unstated interest, as adjusted by any amortizable
bond premium or acquisition premium) that accrues on a debt instrument by
using the constant yield method applicable to original issue discount,
subject to certain limitations and exceptions.
Short-Term Notes. Notes that have a fixed maturity of one year or
less ("Short-Term Notes") will be treated as having been issued with
original issue discount. In general, an individual or other cash method
U.S. Holder is not required to accrue such original issue discount unless
the U.S. Holder elects to do so. If such an election is not made, any gain
recognized by the U.S. Holder on the sale, exchange or maturity of the
Short-Term Note will be ordinary income to the extent of the original
issue discount accrued on a straight-line basis, or upon election under
the constant yield method (based on daily compounding), through the date
of sale or maturity, and a portion of the deductions otherwise allowable
to the U.S. Holder for interest on borrowings allocable to the Short-Term
Note will be deferred until a corresponding amount of income is realized.
U.S. Holders who report income for United States Federal income tax
purposes under the accrual method, and certain other holders including
banks and dealers in securities, are required to accrue original issue
discount on a Short-Term Note on a straight-line basis unless an election
is made to accrue the original issue discount under a constant yield
method (based on daily compounding).
Market Discount. If a U.S. Holder purchases a Note, other than a
Discount Note, for an amount that is less than its issue price (or, in the
case of a subsequent purchaser, its stated redemption price at maturity)
or, in the case of a Discount Note, for an amount that is less than its
adjusted issue price as of the purchase date, such U.S. Holder will be
treated as having purchased such Note at a "market discount," unless such
difference is less than a specified de minimis amount.
Under the market discount rules, a U.S. Holder will be required to
treat any partial principal payment (or, in the case of a Discount Note,
any payment that does not constitute qualified stated interest) on, or any
gain realized on the sale, exchange, retirement or other disposition of, a
Note as ordinary income to the extent of the lesser of (i) the amount of
such payment or realized gain or (ii) the market discount which has not
previously been included in income and is treated as having accrued on
such Note at the time of such payment or disposition. Market discount will
be considered to accrue ratably during the period from the date of
acquisition to the maturity date of the Note, unless the U.S. Holder
elects to accrue market discount on the basis of semiannual compounding.
A U.S. Holder may be required to defer the deduction of all or a
portion of the interest paid or accrued on any indebtedness incurred or
maintained to purchase or carry a Note with market discount until the
maturity of the Note or certain earlier dispositions, because a current
deduction is only allowed to the extent that the interest expense exceeds
an allocable portion of market discount. A U.S. Holder may elect to
include market discount in income currently as it accrues (on either a
ratable or semiannual compounding basis), in which case the rules
described above regarding the treatment as ordinary income of gain upon
the disposition of the Note and upon the receipt of certain cash payments
and regarding the deferral of interest deductions will not apply.
Generally, such currently included market discount is treated as ordinary
interest for United States Federal income tax purposes. Such an election
will apply to all debt instruments acquired by the U.S. Holder on or after
the first day of the taxable year to which such election applies and may
be revoked only with the consent of the IRS.
Premium. If a U.S. Holder purchases a Note for an amount that is
greater than the sum of all amounts payable on the Note after the purchase
date other than payments of qualified stated interest, such U.S. Holder
will be considered to have purchased the Note with "amortizable bond
premium" equal in amount to such excess. A U.S. Holder may elect to
amortize such premium using a constant yield method over the remaining
term of the Note and may offset interest otherwise required to be included
in respect of the Note during any taxable year by the amortized amount of
such excess for the taxable year. However, if the Note may be optionally
redeemed after the U.S. Holder acquires it at a price in excess of its
stated redemption price at maturity, special rules would apply which could
result in a deferral of the amortization of some bond premium until later
in the term of the Note. Any election to amortize bond premium applies to
all taxable debt obligations then owned and thereafter acquired by the
U.S. Holder and may be revoked only with the consent of the IRS.
Disposition of a Note. Except as discussed above, upon the sale,
exchange or retirement of a Note, a U.S. Holder generally will recognize
taxable gain or loss equal to the difference between the amount realized
on the sale, exchange or retirement (other than amounts representing
accrued and unpaid interest) and such U.S. Holder's adjusted tax basis in
the Note. A U.S. Holder's adjusted tax basis in a Note generally will
equal such U.S. Holder's initial investment in the Note increased by any
original issue discount included in income (and accrued market discount,
if any, if the U.S. Holder has included such market discount in income)
and decreased by the amount of any payments, other than qualified stated
interest payments, received and amortizable bond premium taken with
respect to such Note. Such gain or loss generally will be long-term
capital gain or loss if the Note were held for more than one year.
NOTES DENOMINATED OR ON WHICH INTEREST IS PAYABLE IN A FOREIGN CURRENCY
As used herein, "Foreign Currency" means a currency or currency unit
other than U.S. Dollars.
Payments of Interest in a Foreign Currency.
Cash Method. A U.S. Holder who uses the cash method of accounting
for United States Federal income tax purposes and who receives a payment
of interest on a Note (other than original issue discount or market
discount) will be required to include in income the U.S. dollar value of
the Foreign Currency payment (determined on the date such payment is
received) regardless of whether the payment is in fact converted to U.S.
dollars at that time, and such U.S. dollar value will be the U.S. Holder's
tax basis in such Foreign Currency.
Accrual Method. A U.S. Holder who uses the accrual method of
accounting for United States Federal income tax purposes, or who otherwise
is required to accrue interest prior to receipt, will be required to
include in income the U.S. dollar value of the amount of interest income
(including original issue discount or market discount and reduced by
amortizable bond premium to the extent applicable) that has accrued and is
otherwise required to be taken into account with respect to a Note during
an accrual period. The U.S. dollar value of such accrued income will be
determined by translating such income at the average rate of exchange for
the accrual period or, with respect to an accrual period that spans two
taxable years, at the average rate for the partial period within the
taxable year. A U.S. Holder may elect, however, to translate such accrued
interest income using the rate of exchange on the last day of the accrual
period or, with respect to an accrual period that spans two taxable years,
using the rate of exchange on the last day of the taxable year. If the
last day of an accrual period is within five business days of the date of
receipt of the accrued interest, a U.S. Holder may translate such interest
using the rate of exchange on the date of receipt. The above election will
apply to other debt obligations held by the U.S. Holder and may not be
changed without the consent of the IRS. A U.S. Holder should consult a tax
advisor before making the above election. A U.S. Holder will recognize
exchange gain or loss (which will be treated as ordinary income or loss)
with respect to accrued interest income on the date such income is
received. The amount of ordinary income or loss recognized will equal the
difference, if any, between the U.S. dollar value of the Foreign Currency
payment received (determined on the date such payment is received) in
respect of such accrual period and the U.S. dollar value of interest
income that has accrued during such accrual period (as determined above).
Purchase, Sale and Retirement of Notes. A U.S. Holder who purchases
a Note with previously owned Foreign Currency will recognize ordinary
income or loss in an amount equal to the difference, if any, between such
U.S. Holder's tax basis in the Foreign Currency and the U.S. dollar fair
market value of the Foreign Currency used to purchase the Note, determined
on the date of purchase.
Except as discussed above with respect to Short-Term Notes, upon the
sale, exchange or retirement of a Note, a U.S. Holder will recognize
taxable gain or loss equal to the difference between the amount realized
on the sale, exchange or retirement and such U.S. Holder's adjusted tax
basis in the Note. Such gain or loss generally will be capital gain or
loss (except to the extent of any accrued market discount not previously
included in the U.S. Holder's income) and will be long-term capital gain
or loss if at the time of sale, exchange or retirement the Note has been
held by such U.S. Holder for more than one year. To the extent the amount
realized represents accrued but unpaid interest, however, such amounts
must be taken into account as interest income, with exchange gain or loss
computed as described in "Payments of Interest in a Foreign Currency"
above. If a U.S. Holder receives Foreign Currency on such a sale, exchange
or retirement the amount realized will be based on the U.S. dollar value
of the Foreign Currency on (i) the date of receipt of such Foreign
Currency in the case of a cash basis U.S. Holder and (ii) the date of
disposition in the case of an accrual basis U.S. Holder. In the case of a
Note that is denominated in Foreign Currency and is traded on an
established securities market, a cash basis U.S. Holder (or, upon
election, an accrual basis U.S. Holder) will determine the U.S. dollar
value of the amount realized by translating the Foreign Currency payment
at the spot rate of exchange on the settlement date of the sale. A U.S.
Holder's adjusted tax basis in a Note will equal the cost of the Note to
such holder, increased by the amounts of any market discount or original
issue discount previously included in income by the holder with respect to
such Note and reduced by any amortized acquisition or other premium and
any principal payments received by the holder. A U.S. Holder's tax basis
in a Note, and the amount of any subsequent adjustments to such holder's
tax basis, will be the U.S. dollar value of the Foreign Currency amount
paid for such Note, or of the Foreign Currency amount of the adjustment,
determined on the date of such purchase or adjustment.
Gain or loss realized upon the sale, exchange or retirement of a
Note that is attributable to fluctuations in currency exchange rates will
be ordinary income or loss which will not be treated as interest income or
expense. Gain or loss attributable to fluctuations in exchange rates will
equal the difference between the U.S. dollar value of the Foreign Currency
principal amount of the Note, determined on the date such payment is
received or the Note is disposed of, and the U.S. dollar value of the
Foreign Currency principal amount of the Note, determined on the date the
U.S. Holder acquired the Note. Such Foreign Currency gain or loss will be
recognized only to the extent of the total gain or loss realized by the
U.S. Holder on the sale, exchange or retirement of the Note.
Original Issue Discount. In the case of a Discount Note or
Short-Term Note, (i) original issue discount is determined in units of the
Foreign Currency, (ii) accrued original issue discount is translated into
U.S. dollars as described in "Payments of Interest in a Foreign Currency
- -- Accrual Method" above and (iii) the amount of Foreign Currency gain or
loss on the accrued original issue discount is determined by comparing the
amount of income received attributable to the discount (either upon
payment, maturity or an earlier disposition), as translated into U.S.
dollars at the rate of exchange on the date of such receipt, with the
amount of original issue discount accrued, as translated above.
Premium and Market Discount. In the case of a Note with market
discount, (i) market discount is determined in units of the Foreign
Currency, (ii) accrued market discount taken into account upon the receipt
of any partial principal payment or upon the sale, exchange, retirement or
other disposition of the Note (other than accrued market discount required
to be taken into account currently) is translated into U.S. dollars at the
exchange rate on such disposition date (and no part of such accrued market
discount is treated as exchange gain or loss) and (iii) accrued market
discount currently includible in income by a U.S. Holder for any accrual
period is translated into U.S. dollars on the basis of the average
exchange rate in effect during such accrual period, and the exchange gain
or loss is determined upon the receipt of any partial principal payment or
upon the sale, exchange, retirement or other disposition of the Note in
the manner described in "Payments of Interest in a Foreign Currency --
Accrual Method" above with respect to computation of exchange gain or loss
on accrued interest.
With respect to a Note issued with amortizable bond premium, such
premium is determined in the relevant Foreign Currency and reduces
interest income in units of the Foreign Currency. Although not entirely
clear, a U.S. Holder should recognize exchange gain or loss equal to the
difference between the U.S. dollar value of the bond premium amortized
with respect to a period, determined on the date the interest attributable
to such period is received, and the U.S. dollar value of the bond premium
determined on the date of the acquisition of the Note.
Exchange of Foreign Currencies. A U.S. Holder will have a tax basis
in any Foreign Currency received as interest or on the sale, exchange or
retirement of a Note equal to the U.S. dollar value of such Foreign
Currency, determined at the time the interest is received or at the time
of the sale, exchange or retirement. Any gain or loss realized by a U.S.
Holder on a sale or other disposition of Foreign Currency (including its
exchange for U.S. dollars or its use to purchase Notes) will be ordinary
income or loss.
NON-U.S. HOLDERS
A non-U.S. Holder will not be subject to United States Federal
income taxes on payments of principal, premium (if any) or interest
(including original issue discount, if any) on a Note, unless such
non-U.S. Holder is a direct or indirect 10% or greater shareholder of the
Company, a controlled foreign corporation related to the Company or a bank
receiving interest described in section 881(c)(3)(A) of the Code. To
qualify for the exemption from taxation, the last United States payor in
the chain of payment prior to payment to a non-U.S. Holder (the
"Withholding Agent") must have received in the year in which a payment of
interest or principal occurs, or in either of the two preceding calendar
years, a statement that (i) is signed by the beneficial owner of the Note
under penalties of perjury, (ii) certifies that such owner is not a U.S.
Holder and (iii) provides the name and address of the beneficial owner.
The statement may be made on an IRS Form W-8 or a substantially similar
form, and the beneficial owner must inform the Withholding Agent of any
change in the information on the statement within 30 days of such change.
If a Note is held through a securities clearing organization or certain
other financial institutions, the organization or institution may provide
a signed statement to the Withholding Agent. However, in such case, the
signed statement must be accompanied by a copy of the IRS Form W-8 or the
substitute form provided by the beneficial owner to the organization or
institution. The Treasury Department is considering implementation of
further certification requirements aimed at determining whether the issuer
of a debt obligation is related to holders thereof.
Generally, a non-U.S. Holder will not be subject to Federal income
taxes on any amount which constitutes capital gain upon retirement or
disposition of a Note, provided the gain is not effectively connected with
the conduct of a trade or business in the United States by the non-U.S.
Holder. Certain other exceptions may be applicable, and a non-U.S. Holder
should consult its tax advisor in this regard.
The Notes will not be includible in the estate of a non-U.S. Holder
unless the individual is a direct or indirect 10% or greater shareholder
of the Company or, at the time of such individual's death, payments in
respect of the Notes would have been effectively connected with the
conduct by such individual of a trade or business in the United States.
BACKUP WITHHOLDING
Backup withholding of United States Federal income tax at a rate of
31% may apply to payments made in respect of the Notes to registered
owners who are not "exempt recipients" and who fail to provide certain
identifying information (such as the registered owner's taxpayer
identification number) in the required manner. Generally, individuals are
not exempt recipients, whereas corporations and certain other entities
generally are exempt recipients. Payments made in respect of the Notes to
a U.S. Holder must be reported to the IRS, unless the U.S. Holder is an
exempt recipient or establishes an exemption. Compliance with the
identification procedures described in the preceding section would
establish an exemption from backup withholding for those non-U.S. Holders
who are not exempt recipients.
In addition, upon the sale of a Note to (or through) a broker, the
broker must withhold 31% of the entire purchase price, unless either (i)
the broker determines that the seller is a corporation or other exempt
recipient or (ii) the seller provides, in the required manner, certain
identifying information and, in the case of a non-U.S. Holder, certifies
that such seller is a non-U.S. Holder (and certain other conditions are
met). Such a sale must also be reported by the broker to the IRS, unless
either (i) the broker determines that the seller is an exempt recipient or
(ii) the seller certifies its non-U.S. status (and certain other
conditions are met). Certification of the registered owner's non-U.S.
status would be made normally on an IRS Form W-8 under penalties of
perjury, although in certain cases it may be possible to submit other
documentary evidence.
Any amounts withheld under the backup withholding rules from a
payment to a beneficial owner would be allowed as a refund or a credit
against such beneficial owner's United States Federal income tax provided
the required information is furnished to the IRS.
PLAN OF DISTRIBUTION
The Notes are offered on a continuing basis by the Company through
the Agents, each of which has agreed to use its reasonable efforts to
solicit purchases of the Notes. The Company will pay each Agent a
commission ranging from .125% to .925% of the principal amount of Notes
sold through such Agent, depending on the maturity of the Notes sold and
the rating assigned to such Note, by nationally recognized securities
rating agencies, except that the commission payable by the Company to the
Agents with respect to Notes with maturities of greater than thirty years
will be negotiated at the time the Company issues such Notes. The Company
has also agreed to reimburse the Agents for certain of their expenses.
The Company may also sell the Notes to any Agent, as principal, at a
discount for resale to one or more investors and other purchasers at
varying prices related to prevailing market prices at the time of resale,
as determined by such Agent, or, if so agreed, on a fixed public offering
price basis. The Company reserves the right to sell Notes directly on its
own behalf in those jurisdictions where it is authorized to do so. No
commission will be payable on any sales made directly by the Company.
In addition, each Agent may offer the Notes they have purchased as
principal, to or through dealers and, unless otherwise specified in the
applicable Pricing Supplement, such dealers may receive compensation in
the form of discounts, concessions or commissions from the Agents not in
excess of the discount or commission received by the Agent from the
Company.
Unless otherwise indicated in the applicable Pricing Supplement, any
Note sold to an Agent as principal will be purchased by such Agent at a
price equal to 100% of the principal amount thereof less a percentage
equal to the commission applicable to an agency sale of a Note of
identical maturity, and may be resold by the Agent to investors and other
purchasers as described above. After the initial public offering of Notes
to be resold to investors and other purchasers the public offering price
(in the case of Notes to be sold at a fixed public offering price), the
concession and the discount may be changed. The applicable Pricing
Supplement may set forth further information with respect to distribution
of the Notes.
The Company will have the sole right to accept offers to purchase
Notes and may reject any proposed purchase of Notes. Each Agent will have
the right, in its sole discretion, to reject any offer received by it.
Payment of the purchase price of Notes will be required to be made in
immediately available funds.
Each Agent may be deemed to be an "underwriter" within the meaning
of the Securities Act of 1933, as amended (the "Securities Act"). The
Company has agreed to indemnify the Agents against certain liabilities,
including liabilities under the Securities Act.
The Notes are a new issue of securities with no established trading
market. The Agents have informed the Company that they intend to make a
market in the Notes, but are under no obligation to do so and such market
making may be discontinued at any time. No assurance can be given as to
the liquidity of a trading market for the Notes.
Concurrently with the offering of Notes described herein, the
Company may issue other Debt Securities described in the accompanying
Prospectus pursuant to the Indenture.
<PAGE>
PROSPECTUS
[ CHRYSLER FINANCIAL CORPORATION logotype ]
DEBT SECURITIES AND WARRANTS
Chrysler Financial Corporation (the "Company") may offer from time
to time its debt securities consisting of senior debentures, notes, bonds
and/or other evidences of indebtedness ("Debt Securities"), and warrants
to purchase Debt Securities ("Warrants") up to an aggregate initial public
offering price of approximately $6,421,200,850 or the equivalent thereof
in one or more foreign currencies or composite currencies. Debt Securities
and Warrants may be offered, separately or together, in separate series in
amounts, at prices and on terms to be set forth in supplements to this
Prospectus. Unless otherwise provided in any such supplement, the Debt
Securities and Warrants will be sold only for U.S. dollars, and the
principal of and any interest on the Debt Securities will likewise be
payable only in U.S. dollars.
The Debt Securities will rank pari passu in right of payment with
all existing and future unsecured and unsubordinated indebtedness of the
Company. See "Description of Debt Securities".
Debt Securities of a series may be issuable in registered form
without coupons ("Registered Securities"), in bearer form with coupons
attached ("Bearer Securities") or in the form of one or more global
securities (each a "Global Security"). Warrants of a series may be
issuable in registered form ("Registered Warrants") and may be issuable in
bearer form ("Bearer Warrants"). Bearer Securities and Bearer Warrants
will be offered only to non-United States persons and to offices located
outside the United States of certain United States financial institutions.
The terms of the Debt Securities and/or Warrants in respect of which
this Prospectus is being delivered, including, where applicable, the
specific designation, aggregate principal amount, currency, denominations,
maturity, premium, rate (which may be fixed or variable) and time of
payment of interest, the nature of any liens securing the Debt Securities,
terms for redemption at the option of the Company or the holder, terms for
sinking fund payments, terms for exercising the Warrants, the initial
public offering price, the names of, and the principal amounts to be
purchased by, underwriters and the compensation of any agents and
underwriters and other terms in connection with the offering and sale of
such Debt Securities and/or Warrants are set forth in the accompanying
Prospectus Supplement (the "Prospectus Supplement").
The Company may offer and sell Debt Securities and Warrants,
separately or together, to or through underwriters, and also may offer and
sell Debt Securities and Warrants, separately or together, directly to
other purchasers or through agents. See "Plan of Distribution". If any
agents of the Company or any underwriters are involved in the sale of any
Debt Securities in respect of which this Prospectus is being delivered,
the names of such agents or underwriters and any applicable commissions or
discounts will be set forth in the applicable Prospectus Supplement. The
net proceeds to the Company from such sale also will be set forth in the
applicable Prospectus Supplement. This Prospectus may not be used to
consummate sales of Debt Securities or Warrants unless accompanied by a
Prospectus Supplement.
----------------
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 COM-
MISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
The date of this Prospectus is February 14, 1995.
<PAGE>
AVAILABLE INFORMATION
The Company and Chrysler Corporation are subject to the
informational requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and, in accordance therewith, file reports
and other information with the Securities and Exchange Commission (the
"Commission"). Such reports and other information may be inspected and
copies may be obtained at the principal office of the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C. 20549 and
at the following regional offices of the Commission: Northwestern Atrium
Center, Suite 1400, 500 West Madison Street, Chicago, Illinois 60661-2511;
and Seven World Trade Center, 13th Floor, New York, New York, 10048.
Copies of such material can be obtained from the Public Reference Section
of the Commission at Room 1024 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. Reports and other information concerning the
Company can be inspected at the offices of the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005, on which certain of the
Company's debt securities are listed.
The Company has filed with the Commission a Registration Statement
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Debt Securities and Warrants offered hereby. This
Prospectus does not contain all of the information included in the
Registration Statement and the exhibits and schedules thereto. For further
information with respect to the Company and the Debt Securities and
Warrants, reference is hereby made to the Registration Statement and the
exhibits and schedules thereto.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for its fiscal year ended
December 31, 1994, which was previously filed with the Commission pursuant
to the Exchange Act, is incorporated herein by reference.
All documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to the termination of the offering of the Debt Securities and
Warrants shall be deemed to be incorporated by reference into 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 the 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 so modified or superceded shall not be deemed, except as so
modified or superceded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a
copy of this Prospectus is delivered, upon written or oral request, a copy
of any and all documents incorporated by reference as a part of the
Registration Statement, other than exhibits to such documents unless such
exhibits are specifically incorporated by reference into the information
that the Prospectus incorporates. Requests should be directed to: Office
of the Secretary, Chrysler Financial Corporation, 27777 Franklin Road,
Southfield, Michigan 48034 (telephone: (810) 948-3060).
The Commissioner of Insurance of the State of North Carolina has not
approved or disapproved this offering nor has the Commissioner passed upon
the accuracy or adequacy of this Prospectus.
<PAGE>
CHRYSLER FINANCIAL CORPORATION
GENERAL
The Company is a financial services organization engaged in
automotive retail and wholesale financing, servicing commercial leases and
loans, secured small business financing, property, casualty and other
insurance, and automotive dealership facility development and management.
All of the Company's common stock is owned by Chrysler Corporation, a
Delaware corporation (together with its subsidiaries, "Chrysler"). The
Company's primary objective is to provide financing for automotive dealers
and retail purchasers of Chrysler's products. The Company sells
significant amounts of automotive receivables acquired in transactions
subject to limited recourse provisions. The Company remains as servicer to
such receivables for which it is paid a servicing fee. At the end of 1994,
the Company had nearly 3,100 employees and its portfolio of receivables
managed, which includes receivables owned and serviced for others, totaled
$32.9 billion. The Company's executive offices are located at 27777
Franklin Road, Southfield, Michigan 48034; telephone (810) 948-3060.
This Prospectus contains brief summaries of certain more detailed
information contained in documents incorporated herein by reference. Such
summaries are qualified in their entirety by the more detailed information
contained in the incorporated documents.
COMPANY OPERATIONS
The Company's portfolio of finance receivables managed includes
receivables owned and receivables serviced for others. Receivables
serviced for others primarily represent sold receivables which the Company
services for a fee. At December 31, 1994, receivables serviced for others
accounted for 61% of the Company's portfolio of receivables managed. Total
finance receivables managed at the end of each of the five most recent
years were as follows:
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
(in millions of dollars)
<S> <C> <C> <C> <C> <C>
Automotive financing.......... $30,092 $25,011 $22,481 $24,220 $25,117
Nonautomotive financing....... 2,775 3,251 7,657 9,486 10,709
Total......................... $32,867 $28,262 $30,138 $33,706 $35,826
</TABLE>
Automotive Financing. The Company conducts its automotive finance
business principally through its subsidiaries Chrysler Credit Corporation,
Chrysler Credit Canada Ltd., and, in Mexico, Chrysler Comercial S.A. de
C.V. (collectively, "Chrysler Credit"). Chrysler Credit is the major
source of car and truck wholesale financing (also referred to as "floor
plan") and retail financing for Chrysler vehicles throughout North
America. Chrysler Credit also offers its floor plan dealers working
capital loans, real estate and equipment financing and financing plans for
fleet buyers, including daily rental car companies independent of, and
affiliated with, Chrysler. The automotive financing operations of Chrysler
Credit and such other subsidiaries are conducted through 94 branches in
the United States, Canada and Mexico.
During 1994, the Company financed or leased approximately 830,000
vehicles at retail, including approximately 525,000 new Chrysler cars and
trucks representing 24 percent of Chrysler's U.S. retail and fleet
deliveries. The Company also financed at wholesale approximately 1,647,000
new Chrysler cars and trucks representing 73 percent of Chrysler's U.S.
factory shipments in 1994. Wholesale vehicle financing accounted for 74
percent of the total automotive financing volume of the Company in 1994
and represented 31 percent of gross automotive finance receivables
outstanding at December 31, 1994.
Nonautomotive Financing. The Company has downsized its nonautomotive
operations through sales and liquidations over the last several years.
During 1993 and 1992, the Company realized $3.3 billion in aggregate cash
proceeds from the sales of nonautomotive assets.
Chrysler Capital Corporation ("Chrysler Capital") manages commercial
leases and loans to clients in over 15 industries throughout the United
States. At December 31, 1994 Chrysler Capital managed $2.3 billion of
commercial finance receivables compared to $2.7 billion at December 31,
1993. In addition, the Company managed a portfolio of secured small
business loans totaling $.5 billion at December 31, 1994.
RISK FACTORS
Prior to deciding to invest in the Debt Securities, potential
purchasers should carefully consider the following factors, together with
the information herein contained and incorporated herein by reference.
Liquidity and Capital Resources. The Company has significant
liquidity requirements. If cash provided by operations, borrowings under
bank credit lines, continued receivable sales and the placement of term
debt does not provide the necessary liquidity, the Company would be
required to restrict its financing of Chrysler products and dealers. A
significant reduction in such financing support would have a material
adverse effect on the Company and Chrysler. Additionally, an impairment of
the Company's ability to sell or securitize its receivables, a reduction
in Chrysler's automotive product sales, and a variety of other factors
could affect the Company's ability to repay its debt at maturity. See,
"Chrysler Financial Corporation Selected Consolidated Financial Data --
Liquidity and Capital Resources."
Relationship with Chrysler. Due to the significant portion of the
Company's business that relates to Chrysler and the Company's increasing
dependence upon Chrysler, lower levels of production and sales of Chrysler
automotive products would likely result in a reduction in the level of
finance operations of the Company. The Company's results of operations
during the next several years will depend significantly upon the success
of Chrysler's new products. The success of Chrysler's new products will
depend upon a number of factors, including the economy, competition,
consumer acceptance, Chrysler's ability to fund its new product
development and facility modernization programs, the effect of
governmental regulation and the strength of Chrysler's marketing and
dealer networks. See "Information Concerning Chrysler Corporation --
Results of Operations."
<PAGE>
CHRYSLER FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected financial data of the Company for the five
years ended December 31, 1994 have been derived from the consolidated
financial statements of the Company. The consolidated financial statements
as of December 31, 1994 and 1993 and for each of the years in the
three-year period ended December 31, 1994 and the report of Deloitte &
Touche llp thereon are incorporated herein by reference. The following
selected consolidated financial data should be read in conjunction with
such consolidated finanicial statements, related notes and other financial
information incorporated herein by reference.
<TABLE>
<CAPTION>
Year Ended December 31,
1994 1993 1992 1991 1990
(dollars in millions)
<S> <C> <C> <C> <C> <C>
EARNINGS STATEMENT DATA:(1)
Total interest income................. $ 1,357 $ 1,418 $ 1,939 $ 2,598 $ 3,293
Interest expense ..................... 754 791 1,022 1,446 2,051
Interest margin....................... 603 627 917 1,152 1,242
Other revenues........................ 627 621 636 623 481
Operating expenses.................... 497 463 595 614 566
Provision for credit losses........... 203 216 309 421 339
Earnings before income taxes and
cumulative effect of changes in
accounting principles................ 315 267 295 402 476
Net earnings(2)....................... 195 129 231 276 313
<CAPTION>
December 31,
1994 1993 1992 1991 1990
(dollars in millions)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:(1)
Finance receivables -- net............ $12,553 $ 9,626 $10,200 $15,579 $20,927
Retained interests in sold receivables
and other related amounts -- net..... 2,251 2,620 2,759 2,885 1,272
Cash and cash equivalents............. 174 265 433 522 266
Marketable securities................. 583 348 333 298 310
Assets held for sale.................. -- -- 2,393 -- --
Amounts due from affiliated companies. 66 -- -- 67 --
Repossessed collateral................ 162 269 192 182 93
Dealership properties leased -- net... 407 423 454 469 464
Equipment leased to others -- net .... 104 176 333 836 883
Other assets.......................... 348 524 451 442 487
Total assets...................... $16,648 $14,251 $17,548 $21,280 $24,702
Short-term notes (primarily commercial
paper).............................. $ 4,315 $ 2,772 $ 352 $ 339 $ 1,114
Bank borrowings....................... -- -- 5,924 6,633 6,241
Senior term debt...................... 6,069 5,139 4,436 6,742 9,233
Subordinated term debt................ 27 77 585 949 1,686
Other debt............................ 260 447 455 518 431
Accounts payable, accrued expenses and
other ............................... 1,155 1,147 1,270 1,777 1,712
Amounts due to affiliated companies... -- 24 35 -- 224
Deferred income taxes................. 1,549 1,514 1,493 1,480 1,272
Total Liabilities................. 13,375 11,120 14,550 18,438 21,913
Shareholder's investment:
Preferred........................... -- -- -- 75 285
Common(3)........................... 3,273 3,131 2,998 2,767 2,504
Total shareholder's investment.... 3,273 3,131 2,998 2,842 2,789
Total liabilities and
shareholder's investment ....... $16,648 $14,251 $17,548 $21,280 $24,702
<FN>
- ---------------
(1) Prior periods reclassified to conform to current classifications.
(2) Net earnings for 1993 included a $30 million after-tax charge from the
adoption of Statement of Financial Accounting Standards ("SFAS") No.
106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions" and SFAS No. 112, "Employers' Accounting for Postemployment
Benefits," while 1992 net earnings included a $51 million favorable
after-tax adjustment from the adoption of SFAS No. 109, "Accounting
for Income Taxes" and an after-tax one-time $24 million charge for the
write-off of goodwill.
(3) The Company declared cash dividends totalling $40 million in respect
of its common stock during 1994. The Company declared no cash
dividends in respect of its common stock during 1993, 1992 or 1991 and
in 1990 declared cash dividends of $150 million.
</TABLE>
FINANCIAL CONDITION
The Company's primary objective is to provide financing support for
automotive dealers and retail customers of Chrysler's products. Total
assets increased during 1994 for the first time since 1989 due to higher
volumes of automotive receivables acquired and lower levels of automotive
retail receivable sales. The Company paid $40 million in dividends to
Chrysler during 1994, the first such dividends paid since 1990.
The Company's portfolio of receivables managed, which includes
receivables owned and receivables serviced for others, totaled $32.9
billion at December 31, 1994, up from $28.3 billion and $30.1 billion at
December 31, 1993 and 1992, respectively. The increase in receivables
managed reflects higher volumes of automotive receivables acquired,
partially offset by continued liquidations of nonautomotive finance
receivables.
Receivables serviced for others primarily represent sold receivables
which the Company services for a fee. Receivables serviced for others
totaled $20.1 billion at December 31, 1994, compared to $18.4 billion and
$17.8 billion at December 31, 1993 and 1992, respectively.
The Company's total allowance for credit losses, including
receivables sold subject to limited recourse provisions, totaled $512
million, $494 million and $573 million at December 31, 1994, 1993 and
1992, respectively. Nonearning finance rceivables, including receivables
sold subject to limited recourse provisions, declined to $282 million at
year-end 1994 from $333 million at year-end 1993. The total allowance for
credit losses as a percentage of related finance receivables managed was
1.66%, 1.78% and 1.94% at December 31, 1994, 1993 and 1992, respectively.
The decline in the allowance for credit losses as a percentage of related
finance receivables managed reflects improvement in automotive credit loss
experience.
Total assets at December 31, 1994 increased to $16.6 billion from
$14.3 billion at December 31, 1993. Total debt outstanding at December 31,
1994 was $10.7 billion compared to $8.4 billion at December 31, 1993. The
Company's debt-to-equity ratio increased to 3.3 to 1 at December 31, 1994
compared to 2.7 to 1 at December 31, 1993, reflecting increased use of
term debt and commercial paper to fund the Company's asset growth.
RESULTS OF OPERATIONS
Earnings before income taxes and cumulative effect of changes in
accounting principles for 1994 totaled $315 million, which compared to
$267 million and $295 million in 1993 and 1992, respectively. The increase
in 1994 earnings before income taxes and cumulative effect of changes in
accounting principles resulted from higher volumes of automotive
financing, improved credit loss experience and lower costs of bank
facilities. The decline in 1993 earnings before income taxes and
cumulative effect of changes in accounting principles from 1992 resulted
largely from higher borrowing costs incurred under the Company's revolving
credit agreements.
The Company's net earnings were $195 million, $129 million and
$231 million in 1994, 1993 and 1992, respectively. Net earnings for 1993
included charges totaling $30 million from the adoption of SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions"
and SFAS No. 112, "Employers' Accounting for Postemployment Benefits". Net
earnings for 1992 included a $51 million favorable adjustment from the
adoption of SFAS No. 109, "Accounting for Income Taxes".
Net credit loss experience, including net losses on receivables sold
subject to limited recourse provisions, for the years ended December 31,
1994, 1993 and 1992 was as follows:
<TABLE>
<CAPTION>
Net Credit Losses
1994 1993 1992
(in millions of dollars)
<S> <C> <C> <C>
Automotive financing.................... $117 $109 $163
Nonautomotive financing................. 41 88 147
Total............................... $158 $197 $310
<CAPTION>
Net Credit Losses to Average
Gross Receivables Outstanding
1994 1993 1992
<S> <C> <C> <C>
Automotive financing.................... .42% .44% .68%
Nonautomotive financing................. 1.05% 1.73% 1.50%
Total............................... .50% .66% .92%
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
Term debt borrowings, commercial paper borrowings and receivable
sales represent the Company's primary funding sources. The Company raised
$1.8 billion from term debt placements in 1994 and increased its
commercial paper outstanding by $1.5 billion during the year.
During the second quarter of 1994, the Company replaced its U.S. and
Canadian revolving credit and receivable sale agreements, which were
originally scheduled to expire in 1995. The new agreements provide for
lower total commitments, reductions in borrowing spreads and commitment
fees and less restrictive financial covenants, including the relaxation of
dividend restrictions and the removal of security interests in the
Company's U.S. assets. These agreements contain covenants which, among
other restrictions, require the Company to maintain a minimum net worth of
$1.5 billion.
At December 31, 1994, the Company's credit facilities consist of
$4.6 billion of U.S. and $.6 billion of Canadian credit facilities which
expire in May 1998. The Company's automotive receivables sale agreements
consist of a $1.5 billion U.S. agreement (of which $.5 billion expires in
May 1995, and $1.0 billion expires in May 1998) and a $.2 billion Canadian
agreement (of which $.1 billion expires in May 1995, and $.1 billion
expires in May 1998). As of December 31, 1994 no amounts were outstanding
under the Company's revolving credit or receivable sale agreements.
Receivable sales continued to be a significant source of funding
during 1994 as the Company realized $6.4 billion of net proceeds from
sales of automotive retail receivables, compared to $7.8 billion for the
year ended December 31, 1993. In addition, revolving wholesale receivable
sale arrangements provided funding which aggregated $3.8 billion and $4.6
billion at December 31, 1994 and 1993, respectively.
As of December 31, 1994, the Company had contractual debt maturities
of $5.1 billion in 1995 (including $4.3 billion of short-term notes), $1.7
billion in 1996, $.7 billion in 1997, $1.0 billion in 1998, $1.2 billion
in 1999, and $1.0 billion in years thereafter.
During 1993 and 1992, the Company realized $3.3 billion in aggregate
cash proceeds from the sales of nonautomotive assets.
For additional information regarding the results of operations and
financial condition of the Company, see the Company's Annual Report on
Form 10-K for the year ended December 31, 1994, incorporated by reference
into this Prospectus.
NEW ACCOUNTING STANDARDS
In May 1993, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 114, "Accounting by Creditors for Impairment of a Loan,"
which amends SFAS No. 5, "Accounting for Contingencies," by requiring
creditors to evaluate the collectibility of both contractual interest and
principal of receivables when evaluating the need for a loss accrual. In
October 1994, the FASB issued SFAS No. 118, "Accounting by Creditors for
Impairment of a Loan -- Income Recognition," which amends SFAS No. 114 to
clarify the standard's income recognition provisions. The Company will
adopt these new standards effective January 1, 1995. The Company does not
expect the implementation of these standards to materially impact its
results of operations or financial position.
INFORMATION CONCERNING CHRYSLER CORPORATION
The results of operations and balance sheet data set forth below for
Chrysler reflect the full consolidation of the accounts of all significant
majority-owned subsidiaries and entities over which Chrysler has a
controlling financial interest.
<TABLE>
<CAPTION>
Year Ended December 31,
1994 1993 1992
Results of Operations Data (in millions of dollars)
<S> <C> <C> <C>
Sales of manufactured products.................... $49,363 $40,831 $33,548
Finance and insurance income...................... 1,373 1,429 1,953
Other income...................................... 1,488 1,340 1,396
Total Revenues.................................... 52,224 43,600 36,897
Total Expenses.................................... 46,394 39,762 35,963
Earnings Before Income Taxes and Cumulative Effect
of Changes in Accounting Principles.............. 5,830 3,838 934
Provision for income taxes........................ 2,117 1,423 429
Earnings Before Cumulative Effect of Changes in
Accounting Principles............................ 3,713 2,415 505
Cumulative effect of changes in accounting
principles....................................... -- (4,966) 218
Net Earnings (Loss)............................... $ 3,713 $(2,551) $ 723
Preferred stock dividends......................... 80 80 69
Net Earnings (Loss) on Common Stock............... $ 3,633 $(2,631) $ 654
<CAPTION>
December 31,
1994 1993 1992
Balance Sheet Data (in millions of dollars)
<S> <C> <C> <C>
Cash, cash equivalents and marketable securities.. $ 8,371 $ 5,095 $ 3,649
Total assets...................................... 49,539 43,679 40,690
Total debt........................................ 13,106 11,451 15,551
Shareholders' equity.............................. 10,694 6,836 7,538
</TABLE>
RESULTS OF OPERATIONS
Chrysler reported earnings before income taxes and the cumulative
effect of changes in accounting principles of $5.8 billion in 1994,
compared with $3.8 billion in 1993. The earnings in 1993 included a gain
on sales of automotive assets and investments totaling $265 million.
Excluding the effects of these items, Chrysler's pretax earnings for 1993
were $3.6 billion.
Chrysler reported net earnings for 1994 of $3.7 billion, or $10.11
per common share, compared to a net loss for 1993 of $2.6 billion, or
$7.62 per common share. Net earnings for 1994 included favorable tax
adjustments aggregating $132 million. The net loss for 1993 resulted from
a charge of $4.68 billion, or $13.57 per common share, for the cumulative
effect of a change in accounting principle related to the adoption of SFAS
No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions." Also included in the 1993 results was a charge of $283 million,
or $0.82 per common share, for the cumulative effect of a change in
accounting principle relating to the adoption of SFAS No. 112, "Employers'
Accounting for Postemployment Benefits" and a $72 million favorable
adjustment of Chrysler's deferred tax assets and liabilities as a result
of the increased U.S. federal income tax rate.
The improvement in earnings in 1994 over 1993 was primarily the
result of an increase in sales volume, a reduction in lower-margin fleet
sales in proportion to total retail sales and reduced sales incentives,
partially offset by increased profit-based employee costs. During 1994,
Chrysler's worldwide factory sales of cars increased 2 percent to
1,051,750 units, while worldwide factory sales of trucks increased 18
percent to 1,710,353 units. Combined U.S. and Canadian dealers' days
supply of vehicles increased to 69 days at December 31, 1994 from 63 days
at December 31, 1993.
During 1994 and 1993, Chrysler continued to take various actions to
strengthen its financial condition, improve liquidity and add to its
equity base in order to ensure its ability to carry out its capital
spending plans. During 1994 and 1993, Chrysler contributed a total of $6.1
billion to its pension fund. At December 31, 1994, Chrysler had plan
assets in excess of its projected pension benefit obligation ("PBO") of
$244 million, compared to a PBO in excess of plan assets of $3.9 billion
at December 31, 1992. During 1993, Chrysler issued 52 million shares of
common stock for net proceeds of $1.95 billion. During 1994 and 1993,
Chrysler sold assets and investments for proceeds totaling approximately
$786 million.
Chrysler's revenues and results of operations are principally
derived from the U.S. and Canada automotive marketplace. During 1994,
combined U.S. and Canada automobile industry sales increased 8 percent
from the 1993 levels, as the economic recoveries in the U.S. and Canada
continued. Overall, Chrysler experienced sales growth consistent with the
U.S. and Canada automobile industry. In response to the economic recovery,
Chrysler intends to increase its worldwide production capacity by
approximately 500,000 units per year by 1996.
Chrysler vehicles manufactured in Mexico represented approximately 9
percent of Chrysler's 1994 worldwide factory car and truck sales.
Approximately two-thirds of these vehicles were exported to the U.S.,
Canada and other markets. Sales in Mexico of vehicles manufactured in the
U.S. and Canada were not significant in 1994. The economic uncertainty in
Mexico following the devaluation of the Peso may result in reduced vehicle
sales in Mexico in 1995. The devaluation of the Peso did not significantly
impact Chrysler's 1994 operating results. Chrysler cannot predict the
impact that the devaluation of the Peso and the resulting uncertainty
surrounding the Mexican economic and political environments will have on
its operating results in 1995.
During the first half of 1995, Chrysler will begin production of its
all-new minivans, and will cease production of its existing minivan
models. Chrysler expects this changeover will result in a decline in
minivan production in 1995 which Chrysler currently estimates at
approximately 65,000 units.
Chrysler has benefitted from several factors, including: (1)
continuing economic recoveries (including low interest rates) and strong
automobile sales in the U.S. and Canada, where Chrysler's sales are
concentrated, (2) a cost advantage in comparison to vehicles manufactured
in Japan (or vehicles containing significant material components
manufactured in Japan) as a result of favorable exchange rates between the
Japanese Yen and the U.S. Dollar, and (3) a shift in U.S. and Canada
consumer preferences toward trucks, as Chrysler manufactures a higher
proportion of trucks to total vehicles than its principal competitors in
the U.S. and Canada. A significant deterioration of any of these factors
could adversely affect Chrysler's operating results.
Chrysler's automotive operations, including product design and
development efforts, manufacturing operations and sales, are conducted
mainly in North America. The automotive industry in North America is
highly competitive with respect to a number of factors, including product
quality, price, appearance, size, special options, distribution
organization, warranties, reliability, fuel economy, dealer service and
financing terms. As a result, Chrysler's ability to increase vehicle
prices and to use retail sales incentives effectively are significantly
affected by the pricing actions and sales programs of its principal
competitors. Moreover, the introduction of new products by other
manufacturers may adversely affect the market shares of competing products
made by Chrysler. Also, many of Chrysler's competitors have larger
worldwide sales volumes and greater financial resources, which may place
Chrysler at a competitive disadvantage in responding to substantial
changes in consumer preferences, governmental regulations, or adverse
economic conditions in North America.
Chrysler's long-term profitability depends upon its ability to
introduce and market its new products effectively. The success of
Chrysler's new products will depend on a number of factors, including the
economy, competition, consumer acceptance, new product development, the
effect of governmental regulation and the strength of Chrysler's marketing
and dealer networks. As both Chrysler and its competitors plan to
introduce new products, Chrysler cannot predict the market shares its new
products will achieve. Moreover, Chrysler is substantially committed to
its product plans and would be adversely affected by events requiring a
major shift in product development.
LIQUIDITY AND CAPITAL RESOURCES
Chrysler's combined cash, cash equivalents and marketable securities
totaled $8.4 billion at December 31, 1994 (including $757 million held by
the Company), compared to $5.1 billion and $3.6 billion at December 31,
1993 and 1992, respectively. The increase in 1994 was the result of cash
generated by operating activities, partially offset by capital
expenditures and pension contributions. The increase in 1993 was the
result of cash generated by operating activities, the issuance of 52
million shares of new common stock and the sale of assets and investments,
partially offset by debt repayments, pension contributions and capital
expenditures.
Chrysler's long-term profitability will depend on its ability to
develop and market its products successfully. Chrysler's expenditures for
new product development and the acquisition of productive assets were
$13.7 billion for the three-year period ended December 31, 1994.
Expenditures for these items during the succeeding three-year period are
expected to be at similar or higher levels. At December 31, 1994, Chrysler
had commitments for capital expenditures, including commitments for assets
currently under construction, totaling approximately $1.0 billion.
Chrysler's pension assets exceeded its PBO by $244 million at
December 31, 1994, compared to a PBO in excess of plan assets of $2.2
billion and $3.9 billion at December 31, 1993 and 1992, respectively.
These reductions in the unfunded pension obligation resulted from
Chrysler's contributions of $2.6 billion and $3.5 billion to the pension
fund in 1994 and 1993, respectively. In addition to the contributions in
1994, the projected pension benefit obligation was reduced by an increase
in the discount rate used to measure the obligation. The favorable impact
of the 1993 contributions was partially offset by increases in the PBO
caused by the reduction in the discount rate used to measure the
obligation and pension benefit increases which were included in Chrysler's
new national labor agreements with its principal collective bargaining
units.
During 1994, Chrysler replaced its $1.5 billion revolving credit
agreement, which was to expire in June 1996, with a new $1.7 billion
agreement, expiring in July 1999. The new agreement provides for reduced
interest rates and commitment fees, less restrictive financial covenants
and the removal of the lenders' ability to obtain security interests in
Chrysler's assets. None of the commitment was drawn upon at December 31,
1994.
At December 31, 1994, Chrysler (excluding the Company), had debt
maturities totaling $695 million for the three year period ended December
31, 1997. In December 1994, Chrysler's Board of Directors approved a $1
billion common stock repurchase program commencing in the first quarter of
1995, subject to market conditions.
FINANCING BY THE COMPANY
Chrysler's ability to market its products successfully depends
significantly on the availability of vehicle financing for its dealers
and, to a lesser extent, the availability of financing for retail and
fleet purchasers of its products, both of which the Company provides. The
Company provided inventory financing for approximately 73 percent of the
vehicles Chrysler sold to dealers in the United States in 1994. The
Company also provided financing for approximately 24 percent of Chrysler's
U.S. retail and fleet deliveries in 1994.
RATIO OF EARNINGS TO FIXED CHARGES
The ratios of earnings to fixed charges of the Company Consolidated
and Chrysler Consolidated for each of the last five years were as follows:
<TABLE>
<CAPTION>
Years Ended December 31,
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
The Company Consolidated.............. 1.41X 1.33X 1.28X 1.27X 1.23X
Chrysler Consolidated................. 5.52X 3.62X 1.48X 0.59X 1.03X
</TABLE>
The Company Consolidated. The ratios of earnings to fixed charges
have been computed by dividing earnings before taxes on income and fixed
charges by fixed charges. Fixed charges consist of interest, amortization
of debt discount and expense, and rentals. Rentals included in fixed
charges are the portion of total rent expense representative of the
interest factor (deemed to be one-third).
Chrysler Consolidated. For purposes of computing the ratios of
earnings to fixed charges, earnings are determined by adding back fixed
charges to earnings (loss) from continuing operations (including equity in
net earnings of unconsolidated subsidiaries) before taxes on income and
excluding undistributed earnings from less than 50% owned affiliates.
Fixed charges consist of interest expense, credit line commitment fees and
the interest portion of rent expense. In 1991, earnings were not
sufficient to cover fixed charges. The coverage deficiency was $897
million.
USE OF PROCEEDS
Unless otherwise provided in the applicable Prospectus Supplement,
the net proceeds to be received by the Company from the sale of the Debt
Securities and Warrants and the exercise of Warrants will be added to its
general corporate funds and may be used to repay long-term or short-term
borrowings and for other general corporate purposes. If the Company elects
at the time of the issuance of Debt Securities or Warrants to make
different or more specific use of proceeds other than as set forth herein,
such use will be described in the Prospectus Supplement.
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities set
forth certain general terms and provisions of the Debt Securities to which
any Prospectus Supplement may relate. The particular terms of the Debt
Securities offered by any Prospectus Supplement and the extent, if any, to
which such general provisions may apply to the Debt Securities so offered
will be described in the Prospectus Supplement relating to such Debt
Securities.
The Debt Securities are to be issued under an Indenture dated as of
February 15, 1988, as amended (the "Indenture"), between the Company and
Manufacturers Hanover Trust Company, which has been succeeded by United
States Trust Company of New York as successor Trustee (the "Trustee"). The
Indenture is incorporated by reference as an exhibit to the Registration
Statement. The following summary of certain provisions of the Indenture
does not purport to be complete and is qualified in its entirety by
reference to the provisions of the Indenture. Numerical references in
parentheses below are to sections of the Indenture. Wherever particular
sections or defined terms of the Indenture are referred to, it is intended
that such sections or defined terms shall be incorporated herein by
reference.
GENERAL
Debt Securities and Warrants offered by this Prospectus will be
limited to an aggregate initial public offering price of approximately
$6,421,200,850 or the equivalent thereof in one or more foreign currencies
or composite currencies. The Indenture provides that Debt Securities in an
unlimited amount may be issued thereunder from time to time in one or more
series. (Section 301)
The Securities will rank pari passu in right of payment with all
existing and future unsecured and unsubordinated indebtedness of the
Company.
Reference is hereby made to the Prospectus Supplement relating to
the particular series of Debt Securities offered thereby for the terms of
such Debt Securities, including, where applicable: (i) the designation,
aggregate principal amount, currency or currencies and denominations of
such Debt Securities; (ii) the price (expressed as a percentage of the
aggregate principal amount thereof) at which such Debt Securities will be
issued; (iii) the date or dates on which such Debt Securities will mature;
(iv) the currency or currencies in which such Debt Securities are being
sold and in which the principal of and any interest on such Debt
Securities will be payable, whether the holder of any such Debt Securities
may elect the currency in which payments thereon are to be made and, if
so, the manner of such election; (v) the rate or rates (which may be fixed
or variable) per annum at which such Debt Securities will bear interest;
(vi) the date from which such interest on such Debt Securities will
accrue, the dates on which such interest will be payable and the date on
which payment of such interest will commence; (vii) the dates on which and
the price or prices at which such Debt Securities will, pursuant to any
mandatory sinking fund provision, or may, pursuant to any optional
redemption or required repayment provisions, be redeemed or repaid and the
other terms and provisions of any such optional redemption or required
repayment; (viii) whether such Debt Securities are to be issuable as
Registered Securities, Bearer Securities or both and the terms upon which
any Bearer Securities of such series may be exchanged for Registered
Securities of such series; (ix) whether such Debt Securities are to be
issued in whole or in part in the form of one or more Global Securities
and, if so, the identity of the Depositary for such Global Security or
Securities; (x) any special provisions for the payment of additional
amounts with respect to such Debt Securities; (xi) if a temporary Global
Security is to be issued with respect to such series, whether any interest
thereon payable on an interest payment date prior to the issuance of a
permanent Global Security or definitive Bearer Securities will be credited
to the account of the persons entitled thereto on such interest payment
date; (xii) if a temporary Global Security is to be issued with respect to
such series, the terms upon which interests in such temporary Global
Security may be exchanged for interests in a permanent Global Security or
for definitive Debt Securities of the series and the terms upon which
interests in a permanent Global Security, if any, may be exchanged for
definitive Debt Securities of the series; (xiii) any additional
restrictive covenants included for the benefit of holders of such Debt
Securities; (xiv) additional Events of Default provided with respect to
such Debt Securities; and (xv) the terms of any Warrants offered together
with such Debt Securities.
The Debt Securities may be issuable as Registered Securities, Bearer
Securities or both. Debt Securities of a series may be issuable in whole
or in part 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 the denomination of $5,000. See, however, "Limitations on
Issuance of Bearer Securities and Bearer Warrants" below. One or more
Global Securities may be issued in a denomination or aggregate
denominations equal to the aggregate principal amount of Outstanding Debt
Securities of the series to be represented by such Global Security or
Securities. The Prospectus Supplement relating to a series of Debt
Securities denominated in a foreign or composite currency will specify the
denomination thereof. No service charge will be made for any transfer or
exchange of Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith. (Sections 302 and 305)
At the option of the Holder upon request confirmed in writing, and
subject to the terms of the applicable 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 (if the Debt Securities of such series are issuable as
Registered Securities) or Bearer Securities of the same series (with the
same interest rate and maturity date), but no Bearer Security will be
delivered in or to the United States, and Registered Securities of any
series (other than a Global Security, except as set forth below) 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)
Debt Securities may be presented for exchange, and Registered
Securities (other than a Global Security) may be presented for 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 governmental
charges as described in the applicable Indenture. (Section 305) Bearer
Securities will be transferable by delivery.
Debt Securities may be issued under the Indenture as Original Issue
Discount Securities to be offered and sold at a discount below their
stated principal amount. Federal income tax consequences and other special
considerations applicable to any such Original Issue Discount Securities
will be described in the Prospectus Supplement relating thereto. "Original
Issue Discount Securities" means any Debt Securities that provide 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 101)
GLOBAL SECURITIES
The Debt 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 depositary (the "Depositary") 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. Unless and until it is exchanged in whole or in part for Debt
Securities in definitive form, a Global Security may not be transferred
except as a whole by the Depositary for such Global Security to a nominee
of such Depositary or by a nominee of such Depositary to such Depositary
or another nominee of such Depositary or by such Depositary or any such
nominee to a successor of such Depositary or a nominee of such successor.
(Sections 303 and 305)
The specific terms of the depositary arrangement with respect to any
Debt Securities of a series will be described in the Prospectus Supplement
relating to such series. The Company anticipates that the following
provisions will apply to all depositary arrangements.
Upon the issuance of a Global Security, the Depositary for such
Global Security will credit, on its book-entry registration and transfer
system, the respective principal amounts of the Debt Securities
represented by such Global Security to the accounts of institutions that
have accounts with such Depositary ("participants"). The accounts to be
credited shall be designated by the underwriters of such Debt Securities
or by the Company, if such Debt Securities are offered and sold directly
by the Company. 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 such Global Security
will be shown on, and the transfer of that ownership will be effected only
through, records maintained by participants or persons that hold through
participants. The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form.
Such limits and such laws may impair the ability to transfer beneficial
interests in a Global Security.
So long as the Depositary for a Global Security, or its nominee, is
the owner of such Global Security, such Depositary or such nominee, as the
case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
Indenture governing such Debt Securities. Except as set forth below,
owners of beneficial interests in a Global Security will not be entitled
to have Debt Securities of the series represented by such Global Security
registered in their names, will not receive or be entitled to receive
physical delivery of Debt Securities of such series in definitive form and
will not be considered the owners or holders thereof under the Indenture.
Subject to the restrictions discussed under "Limitations on Issuance
of Bearer Securities and Bearer Warrants" below, principal, premium, if
any, and interest payments on Debt Securities registered in the name of or
held by a Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner or the holder of the
Global Security representing such Debt Securities. None of the Company,
the Trustee for such Debt Securities, any Paying Agent or the Security
Registrar for such Debt Securities will have any responsibility or
liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests in a Global Security for such
Debt Securities or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
The Company expects that the Depositary for Debt Securities of a
series, upon receipt of any payment of principal, premium or interest in
respect of a permanent Global Security, will credit immediately
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global
Security as shown on the records of such Depositary. The Company also
expects that payments by participants to owners of beneficial interests in
such Global Security held through such participants will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers in bearer form or registered
in "street name", and will be the responsibility of such participants.
Receipt by owners of beneficial interests in a temporary Global Security
of payments in respect of such temporary Global Security will be subject
to the restrictions discussed under "Limitations on Issuance of Bearer
Securities and Bearer Warrants" below.
If a Depositary for Debt Securities of a series is at any time
unwilling or unable to continue as depositary and a successor depositary
is not appointed by the Company within ninety days, the Company will issue
Debt Securities of such series in definitive form in exchange for all of
the Global Securities representing the Debt Securities of such series. In
addition, the Company may at any time and in its sole discretion determine
not to have any Debt Securities of a series represented by one or more
Global Securities and, in such event, will issue Debt Securities of such
series in definitive form in exchange for all of the Global Securities
representing such Debt Securities. Further, if the Company so specifies
with respect to the Debt Securities of a series, an owner of a beneficial
interest in a Global Security representing Debt Securities of such series
may, on terms acceptable to the Company and the Depositary for such Global
Security, receive Debt Securities of such series in definitive form. In
any such instance, an owner of a beneficial interest in a Global Security
will be entitled to physical delivery in definitive form of Debt
Securities of the series represented by such Global Security equal in
principal amount to such beneficial interest and to have such Debt
Securities registered in its name (if the Debt Securities of such series
are issuable as Registered Securities). Debt Securities of such series so
issued in definitive form will be issued (a) as Registered Securities in
denominations, unless otherwise specified by the Company, of $1,000 and
integral multiples thereof if the Debt Securities of such series are
issuable as Registered Securities, (b) as Bearer Securities in the
denomination, unless otherwise specified by the Company, of $5,000 if the
Debt Securities of such series are issuable as Bearer Securities or (c) as
either Registered or Bearer Securities, if the Debt Securities of such
series are issuable in either form. (Section 305) See, however,
"Limitations on Issuance of Bearer Securities and Bearer Warrants" below
for a description of certain restrictions on the issuance of a Bearer
Security in definitive form in exchange for an interest in a Global
Security.
PAYMENT AND PAYING AGENTS
Payment of principal of and premium, if any, and interest on Bearer
Securities will be payable in the currency 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. Any such payment may be made by a check in the designated currency.
No payment with respect to any Bearer Securities will be made at the
Corporate Trust Office of the Trustee or any other paying agency
maintained by the Company in the United States nor will any such payment
be made by transfer to an account, or by mail to an address, in the United
States. Notwithstanding the foregoing, payments of principal of and
premium, if any, and interest on Bearer Securities will be made in U.S.
dollars at the Corporate Trust Office of the Trustee in The City of New
York if payment of the full amount thereof at all paying agencies outside
the United States is illegal or effectively precluded by exchange controls
or other similar restrictions. (Section 1002)
Payment of principal of and premium, if any, on Registered
Securities will be made in the designated currency against surrender of
such Registered Securities at the Corporate Trust Office of the Paying
Agent 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 Debt
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 Paying Agent in The City of New York, or by a check in the
designated currency mailed to each Holder at such Holder's registered
address. (Sections 307 and 1001)
The paying agents outside the United States initially appointed by
the Company for a series of Debt 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 at least one paying agent in a city
in Europe so long as any Bearer Securities are outstanding where Bearer
Securities may be presented for payment and may be surrendered for
exchange, provided that so long as any series of Debt Securities is listed
on The International Stock Exchange of the United Kingdom and the Republic
of Ireland or the Luxembourg Stock Exchange or any other stock exchange
located outside the United States and such stock exchange shall so
require, the Company will maintain a paying agent in London or Luxembourg
or any other required city located outside the United States, as the case
may be, for such series of Debt Securities. (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 Debt Security that
remains unclaimed at the end of two years after such principal, premium or
interest shall have become due and payable may be repaid to the Company
and the Holder of such Debt Security or any coupon appertaining thereto
will thereafter look only to the Company for payment thereof.
(Section 1003)
COVENANTS
The Indenture imposes the following restrictive covenants on the
Company.
LIMITATION ON LIENS. The Company will not subject its assets or
assets of a Restricted Subsidiary to liens without securing the Debt
Securities equally and ratably with other indebtedness for borrowed money
so secured except for (1) liens securing exports to or marketing of goods
in foreign countries other than Canada, (2) liens on receivables payable
in foreign currencies to secure borrowings in foreign countries other than
Canada, (3) deposits in connection with public obligations or legal
proceedings, (4) liens securing intercompany indebtedness, (5) purchase
money mortgages on fixed assets hereafter acquired by the Company or any
of its Restricted Subsidiaries for use in the Finance Business or the
Finance-Related Insurance Business, liens on such property at the time of
its acquisition or liens on fixed assets used in the Finance Business or
the Finance-Related Insurance Business existing when a company becomes a
Subsidiary, and (6) renewals of the foregoing. (Section 1004) The term
"Restricted Subsidiary" means any Subsidiary of the Company engaged in the
Finance Business or in the Finance-Related Insurance Business other than
Subsidiaries that are organized or conduct a major portion of their
business outside the United States, Puerto Rico or Canada. The term
"Subsidiary" means a corporation a majority of the outstanding voting
stock of which is owned, directly or indirectly, by the Company.
(Section 101)
LIMITATION ON DIVIDENDS. Cash dividends on or acquisitions for
value of capital stock of the Company subsequent to December 31, 1984 are
limited to the sum of (i) consolidated net income of the Company and its
consolidated Subsidiaries calculated in accordance with generally accepted
accounting principles and (ii) net proceeds from cash sales of or cash
contributions to capital stock, subsequent to December 31, 1984.
Substantially concurrent acquisitions of capital stock out of the net
proceeds of sales of capital stock are excluded. (Section 1005)
RESTRICTED SUBSIDIARY STOCK AND DEBT. The Company will not, and
will not permit any Subsidiary to, sell or otherwise dispose of any shares
of stock or indebtedness for borrowed money of any Restricted Subsidiary
except to the Company or to a Restricted Subsidiary unless simultaneously
therewith all shares of stock and such indebtedness of such Restricted
Subsidiary at the time owned by the Company and all Subsidiaries are sold
or transferred. The Company will not permit any Restricted Subsidiary to
issue, sell or dispose of, except to the Company or to a Restricted
Subsidiary, (i) any preferred stock, except to any holders of the stock of
such Restricted Subsidiary in the exercise of a pre-emptive right to
subscribe to such preferred stock, or (ii) any other class of stock except
on the condition that the proportionate amount of shares of stock of such
class and of the total number of shares of stock of such Restricted
Subsidiary held by persons other than the Company and its Restricted
Subsidiaries shall not be increased and except for directors' qualifying
shares. (Sections 1007 and 1008)
MODIFICATION OF THE INDENTURES
The Indenture permits the Company and the Trustee, with the consent
of the holders of not less than 66 2/3% in principal amount of the Debt
Securities at the time outstanding thereunder and affected thereby, to
execute a supplemental indenture modifying the Indenture or the rights of
the holders of such Debt Securities and any related coupons, provided that
no such modification shall, without the consent of the holder of each Debt
Security affected thereby, (i) change the maturity of any Debt Security or
coupon, or reduce the principal amount thereof, or reduce the rate or
change the time of payment of interest thereon, or change any Place of
Payment or change the coin or currency in which a Debt Security or coupon
is payable or affect the right of any holder to institute suit for the
enforcement of payment in accordance with the foregoing, or (ii) reduce
the aforesaid percentage of Debt Securities, the consent of the holders of
which is required for any such modification. (Section 902)
The Indenture contains provisions for convening meetings of the
Holders of Debt Securities of a series if Debt Securities of that series
are issuable in whole or in part as Bearer Securities. (Section 1401) A
meeting may be called at any time by the Trustee, or upon the request of
the Company or the Holders of at least 10% in principal amount of the
outstanding Debt Securities of such series, in any such case upon notice
given in accordance with the Indenture. (Section 1402) The quorum at any
meeting called to adopt a resolution, and at any reconvened meeting, will
be persons holding or representing a majority in principal amount of the
outstanding Debt Securities of a series; provided, however, that if any
action is to be taken at such meeting with respect to a consent or waiver
which may be given by the Holders of not less than 66 2/3% in principal
amount of the outstanding Debt Securities of a series, the persons holding
or representing 66 2/3% in principal amount of the outstanding Debt
Securities of such series will constitute a quorum. (Section 1404) Except
as limited by the proviso in the preceding paragraph, any resolution
presented at a meeting or adjourned meeting at which a quorum is present
may be adopted by the affirmative vote of the Holders of a majority in
principal amount of the outstanding Debt Securities of that series;
provided, however, that, except as limited by the proviso in the preceding
paragraph, any resolution with respect to any consent or waiver that may
be given by the Holders of not less than 66 2/3% in principal amount of
the outstanding Debt Securities of a series may be adopted at a meeting or
an adjourned meeting at which a quorum is present only by the affirmative
vote of 66 2/3% in principal amount of the outstanding Debt Securities of
that series; and provided further that, except as limited by the proviso
in the preceding paragraph, any resolution with respect to any demand,
consent, waiver or other action that may be made, given or taken by the
Holders of a specified percentage, which is less than a majority, in
principal amount of outstanding Debt Securities of a series may be adopted
at a meeting or adjourned meeting at which a quorum is present by the
affirmative vote of the Holders of such specified percentage in principal
amount of the outstanding Debt Securities of that series.
Any resolution passed or decision taken at any meeting of Holders of
Debt Securities of any series duly held in accordance with the Indenture
will be binding on all Holders of Debt Securities of that series and the
related coupons.
EVENTS OF DEFAULT
The Indenture provides that the following shall constitute Events of
Default with respect to any series of Debt Securities thereunder: (i)
default in payment of principal of or premium, if any, on any Debt
Security of such series when due; (ii) default for 30 days in payment of
interest on any Debt Security of such series when due; (iii) default in
the deposit of any sinking fund payment on any Debt Security of such
series when due; (iv) default in performance of any other covenant in such
Indenture, continued for 30 days after written notice thereof by the
Trustee thereunder or the holders of 25% in principal amount of the Debt
Securities of such series at the time outstanding; (v) default resulting
in acceleration of maturity of any other indebtedness of the Company or
any Restricted Subsidiary provided that such acceleration has not been
rescinded or annulled within 10 days of written notice; and (vi) certain
events of bankruptcy, insolvency or reorganization. (Section 501) The
Company is required to file with each Trustee annually an Officers'
Certificate as to the absence of certain defaults under the terms of the
Indenture. (Section 1010)
The Indenture provides that if an Event of Default specified therein
shall occur and be continuing, either the Trustee or the holders of 25% in
principal amount of the Debt Securities of such series then outstanding
may declare the principal of all such Debt Securities (or in the case of
Original Issue Discount Securities, such portion of the principal amount
thereof as may be specified in the terms thereof) to be due and payable.
(Section 502) In certain cases, the holders of a majority in principal
amount of the outstanding Debt Securities of any series may on behalf of
the holders of all such Debt Securities and any related coupons waive any
past default or event of default except a default not theretofore cured in
payment of the principal of or premium, if any, or interest on any of the
Debt Securities of such series and any related coupons.
(Sections 502 and 513)
The Indenture contains a provision entitling the Trustee, subject to
the duty of such Trustee during default to act with the required standard
of care, to be indemnified by the holders of the Debt Securities of any
series or any related coupons before proceeding to exercise any right or
power under the Indenture with respect to such series at the request of
such holders. (Section 603) The Indenture provides that no holder of any
Debt Securities of any series or any related coupons may institute any
proceeding, judicial or otherwise, to enforce the Indenture except in the
case of failure of the Trustee, for 60 days, to act after it is given
notice of default, a request to enforce the Indenture by the holders of
not less than 25% in aggregate principal amount of the then outstanding
Debt Securities of such series and an offer of reasonable indemnity to
such Trustee. (Section 507) This provision will not prevent any holder of
Debt Securities or any related coupons from enforcing payment of the
principal thereof and premium, if any, and interest thereon at the
respective due dates thereof. (Section 508) The holders of a majority in
aggregate principal amount of the Debt Securities of any series then
outstanding may direct the time, method and place of conducting any
proceedings for any remedy available to the Trustee or exercising any
trust or power conferred on it with respect to the Debt Securities of such
series. However, the Trustee may refuse to follow any direction that
conflicts with law or the Indenture or which would be unjustly prejudicial
to holders not joining therein. (Section 512)
The Indenture provides that the Trustee thereunder will, within 90
days after the occurrence of a default with respect to any series of Debt
Securities thereunder known to it, give to the holders of the Debt
Securities of such series notice of such default if not cured or waived;
but, except in the case of a default in the payment of principal of (or
premium, if any), or interest on, any Debt Securities, the Trustee shall
be protected in withholding such notice if it determines in good faith
that the withholding of such notice is in the interests of the holders of
such Debt Securities. (Section 602)
DEFEASANCE
The Company may terminate certain of its obligations under the
Indenture with respect to Debt Securities of any series, including its
obligations to comply with the covenants described under the heading
"Restrictive Covenants" above, with respect to the Debt Securities of such
series, on the terms and subject to the conditions contained in the
Indenture, by depositing in trust with the Trustee money or Government
Obligations sufficient to pay the principal of and interest on the Debt
Securities of such series to maturity. Such deposit and termination is
conditioned upon the Company's delivery of (a) an opinion of nationally
recognized independent counsel that the holders of the Debt Securities of
such series will have no federal income tax consequences as a result of
such deposit and termination, (b) an officer's certificate and (c) if the
Debt Securities of such series are then listed on the New York Stock
Exchange, an opinion of counsel that the Debt Securities of such series
will not be delisted as a result of the exercise of this option. Such
termination will not relieve the Company of its obligation to pay when due
the principal of or interest on the Debt Securities of such series if the
Debt Securities of such series are not paid from the money or Government
Obligations held by the Trustee for the payment thereof. (Section 1301)
CONCERNING THE TRUSTEE
The Trustee is also trustee under indentures dated as of June 15,
1984 and September 15, 1986 between it and the Company.
DESCRIPTION OF WARRANTS
The following description of the terms of the Warrants sets forth
certain general terms and provisions of the Warrants to which any
Prospectus Supplement may relate. The particular terms of the Warrants
offered by any Prospectus Supplement and the extent, if any, to which such
general provisions may apply to the Warrants so offered will be described
in the Prospectus Supplement relating to such Warrants.
Warrants may be offered independently or together with any series of
Debt Securities offered by a Prospectus Supplement and may be attached to
or separate from such Debt Securities. Each series of Warrants will be
issued under a separate warrant agreement ("Warrant Agreement") to be
entered into between the Company and a bank or trust company, as Warrant
Agent (the "Warrant Agent"), all as set forth in the Prospectus Supplement
relating to such series of Warrants. The Warrant Agent will act solely as
the agent of the Company in connection with the certificates for the
Warrants (the "Warrant Certificates") of such series and will not assume
any obligation or relationship of agency or trust for or with any holders
of Warrant Certificates or beneficial owners of Warrants. Copies of the
forms of Warrant Agreements, including the forms of Warrant Certificates,
are filed as an exhibit to the Registration Statement to which this
Prospectus pertains. The following summaries of certain provisions of the
forms of Warrant Agreements and Warrant Certificates do not purport to be
complete and are subject to, and are qualified in their entirety by
reference to, all the provisions of the Warrant Agreements and the Warrant
Certificates. Numerical references in parentheses below are to sections of
the Warrant Agreements. Wherever particular sections or defined terms of
the Warrant Agreement are referred to, it is intended that such sections
or defined items shall be incorporated herein by reference.
GENERAL
Reference is hereby made to the Prospectus Supplement relating to
the particular series of Warrants, if any, offered thereby for the terms
of such Warrants, including, where applicable: (i) the offering price;
(ii) the currency or currencies in which such Warrants are being offered;
(iii) the designation, aggregate principal amount, currency or currencies,
denominations and terms of the series of Debt Securities purchasable upon
exercise of such Warrants; (iv) the designation and terms of the series of
Debt Securities with which such Warrants are being offered and the number
of such Warrants being offered with each such Debt Security; (v) the date
on and after which such Warrants and the related series of Debt Securities
will be transferable separately; (vi) the principal amount of the series
of Debt Securities purchasable upon exercise of each such Warrant and the
price at which and currency or currencies in which such principal amount
of Debt Securities of such series may be purchased upon such exercise;
(vii) the date on which the right to exercise such Warrants shall commence
and the date (the "Expiration Date") on which such right shall expire;
(viii) whether such Warrants are to be issuable as Bearer Warrants and the
terms upon which any Bearer Warrants of such series may be exchanged for
Registered Warrants of such series; (ix) federal income tax consequences;
and (x) any other terms of such Warrants.
Warrant Certificates of each series will be issuable as Registered
Warrants and may be issuable as Bearer Warrants. At the option of the
holder upon request confirmed in writing, and subject to the terms of the
relevant Warrant Agreement, Bearer Warrants of any series will be
exchangeable into Registered Warrants or Bearer Warrants of the same
series representing in the aggregate the number of Warrants surrendered
for exchange, and Registered Warrants of any series will be exchangeable
into Registered Warrants of the same series representing in the aggregate
the number of Warrants surrendered for exchange. Warrant Certificates may
be presented for exchange, and Registered Warrants may be presented for
transfer (with the form of transfer endorsed thereon duly executed), at
the corporate trust office of the Warrant Agent for such series of
Warrants (or any other office indicated in the Prospectus Supplement
relating to such series of Warrants) without service charge and upon
payment of any taxes and other governmental charges as described in the
relevant Warrant Agreement. Such transfer or exchange will be effected
when the Warrant Agent for such series of Warrants is satisfied with the
documents of title and identity of the person making the request. Bearer
Warrants will be transferable by delivery. (Section 4.01) Prior to the
exercise of their Warrants, holders of Warrants will not have any of the
rights of holders of the series of Debt Securities purchasable upon such
exercise, including the right to receive payments of principal of,
premium, if any, or interest, if any, on the series of Debt Securities
purchasable upon such exercise, or to enforce any of the covenants in the
Indenture. (Section 3.01)
EXERCISE OF WARRANTS
Each Warrant will entitle the holder thereof to purchase such
principal amount of the related series of Debt Securities at such exercise
price as shall in each case be set forth in, or calculable as set forth
in, the Prospectus Supplement relating to such Warrant. Warrants of a
series may be exercised at the corporate trust office of the Warrant Agent
for such series of Warrants (or any other office indicated in the
Prospectus Supplement relating to such series of Warrants) at any time
prior to 5:00 P.M., New York City time, on the Expiration Date set forth
in the Prospectus Supplement relating to such series of Warrants. After
the close of business on the Expiration Date relating to such series of
Warrants (or such later date to which such Expiration Date may be extended
by the Company), unexercised Warrants of such series will become void.
(Sections 2.02 and 2.03)
Warrants of a series may be exercised by delivery to the appropriate
Warrant Agent of payment, as provided in the Prospectus Supplement
relating to such series of Warrants, of the amount required to purchase
the principal amount of the series of Debt Securities purchasable upon
such exercise, together with certain information as set forth on the
reverse side of the Warrant Certificate evidencing such Warrants and, in
the case of Bearer Warrants, compliance with the procedures specified in
the applicable Prospectus Supplement. Such Warrants will be deemed to have
been exercised upon receipt of the exercise price, subject to the receipt
within five business days of such Warrant Certificate. Upon receipt of
such payment and such Warrant Certificate, properly completed and duly
executed, at the corporate trust office of the appropriate Warrant Agent
(or any other office indicated in the Prospectus Supplement relating to
such series of Warrants), the Company will, as soon as practicable, issue
and deliver the principal amount of the series of Debt Securities
purchasable upon such exercise. Registered Securities will be issued and
delivered upon exercise of Registered Warrants. At the option of the
holder of any Bearer Warrants, Registered Securities or Bearer Securities
will be issued and delivered upon exercise of such Bearer Warrants. If
fewer than all of the Warrants represented by a Registered Warrant are
exercised, a new Registered Warrant will be issued and delivered for the
remaining amount of Warrants. If fewer than all the Warrants represented
by a Bearer Warrant are exercised, at the option of the holder thereof, a
new Registered Warrant or Bearer Warrant will be issued and delivered for
the remaining amount of Warrants. (Section 2.03)
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES AND BEARER WARRANTS
In compliance with United Stated federal tax laws and regulations
regarding the distribution of debt securities in bearer form, Bearer
Securities and Bearer Warrants may not, in connection with their original
issuance, be offered, sold, resold or delivered in the United States or to
United States persons (as defined below) other than to offices located
outside the United States of certain United States financial institutions
that agree in writing to comply with the requirements of Section
165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986 (the "Code")
and the regulations thereunder, and any underwriters, agents and dealers
participating in the offering of Bearer Securities or Bearer Warrants will
agree that they will not offer any Bearer Securities or Bearer Warrants
for sale or resale in the United States or to United States persons (other
than the financial institutions described above) or deliver Bearer
Securities or Bearer Warrants within the United States. In addition, any
such underwriters, agents and dealers will agree to send confirmations to
each purchaser of a Bearer Security or Bearer Warrant confirming that such
purchaser represents that it is not a United States person or is a
financial institution described above and, if such person is a dealer,
that it will send similar confirmations to purchasers from it. Bearer
Securities will bear a legend substantially to the following effect: "Any
United States person who holds this obligation will be subject to
limitations under the United States income tax laws, including the
limitations provided in Sections 165(j) and 1287(a) of the Internal
Revenue Code."
Generally, for United States federal income tax purposes, any United
States person who holds a Bearer Security will not be allowed to deduct
any loss sustained on the sale, exchange, redemption or other disposition
of such Bearer Security and will be taxed at ordinary income rates on any
gain (which might otherwise be characterized as capital gain) recognized
on such sale, exchange, redemption or disposition.
As used herein, "United States" mean the United States of America
(including the States and the District of Columbia), its territories, its
possessions and other areas subject to its jurisdiction, and "United
States person" means an individual who is a citizen or resident of the
United States, a corporation, partnership or other entity created or
organized in or under the laws of the United States or any political
subdivision thereof, or any estate or trust the income of which is subject
to United States federal income taxation regardless of its source.
Pending the availability of a permanent Global Security or
definitive Bearer Securities, as the case may be, Debt Securities that are
issuable as Bearer Securities may initially be represented by a single
temporary Global Security, with or without interest coupons, each to be
deposited with a depositary in London for Morgan Guaranty Trust Company of
New York, Brussels Office, as operator of the Euroclear System
("Euroclear") and Centrale de Livraisons de Valeurs Mobilieres, S.A.
("Cedel S.A.") for credit to the designated accounts against
certifications to the effect described below. Following the availability
of a permanent Global Security or definitive forms of Bearer Securities
and subject to any further limitations described in the applicable
Prospectus Supplement, the temporary Global Security will be exchangeable
for a permanent Global Security or for definitive Bearer Securities,
respectively, only upon certification that an interest in such permanent
Global Security or such definitive Bearer Securities is not being acquired
by or on behalf of a United States person or, if a beneficial interest in
such a Bearer Security is being acquired by or on behalf of a United
States person, that such United States person is a financial institution
described above; provided, however, that no definitive Bearer Security
will be issued if the Company has reason to know that such certificate is
false. No definitive Bearer Security will be delivered in or to the United
States. If so specified in the applicable Prospectus Supplement, interest
in respect of any portion of the temporary Global Security payable in
respect of an Interest Payment Date prior to the issuance of a permanent
Global Security or definitive Bearer Securities of any series will be paid
to each of Euroclear and Cedel S.A. with respect to the portion of the
temporary Global Security held for its account. Each of Euroclear and
Cedel S.A. will undertake in such circumstances to credit such interest
received by it in respect of the temporary Global Security to the
respective accounts for which it holds the temporary Global Security only
upon receipt in each case of (i) certification that as of the relevant
interest payment date the portion of the temporary Global Security on
which such interest is to be so credited is not beneficially owned by a
United States person or any person who has purchased its interest in the
temporary Global Security for resale to any United States person or (ii)
if a beneficial interest in the portion of the temporary Global Security
on which such interest is to be so credited is beneficially owned by a
United States person or any person who has purchased its interest in the
temporary Global Security for resale to any United States person,
certification that such United States person is a financial institution
described above.
Bearer Warrants will be issued only on receipt of a certification
that the Bearer Warrant in question is not being acquired by or on behalf
of a United States person or, if a beneficial interest in such Bearer
Warrant is being acquired by or on behalf of a United States person, that
such United States person is a financial institution described above.
PLAN OF DISTRIBUTION
The Company may offer and sell Debt Securities and Warrants,
separately or together, to or through underwriters, acting as principals
for their own accounts and/or as agents, and also may offer and sell Debt
Securities and Warrants, separately or together, directly to dealers or
other purchasers. Any such Debt Securities and Warrants may be offered and
sold upon their original issuance or, if so indicated in the Prospectus
Supplement, in connection with a remarketing upon their purchase by or on
behalf of the Company, whether in accordance with a redemption or
repayment pursuant to their terms, in the open market or otherwise. Any
underwriter and/or agent will be identified and the terms of its agreement
with the Company and its compensation will be described in the Prospectus
Supplement. Only underwriters named in the Prospectus Supplement are
deemed to be underwriters in connection with the Debt Securities or
Warrants offered thereby.
Debt Securities and Warrants, separately or together, also may be
offered and sold, if so indicated in the Prospectus Supplement, in
connection with a remarketing upon their purchase, in accordance with a
redemption or repayment pursuant to their terms, by one or more firms
("remarketing firms") acting as principals for their own accounts or as
agents for the Company. Any remarketing firm will be identified and the
terms of its agreement, if any, with the Company and its compensation will
be described in the Prospectus Supplement. Remarketing firms may be deemed
to be underwriters in connection with the Debt Securities and Warrants
remarketed thereby.
The distribution of the Debt Securities and Warrants may be effected
from time to time in one or more transactions at a fixed price or prices,
which may be changed, or at market prices prevailing at the time of sale,
at prices related to such prevailing market prices or at negotiated
prices.
In connection with the sale of Debt Securities and Warrants, dealers
may receive compensation from the Company or from purchasers of Debt
Securities or Warrants for whom they may act as agents, in the form of
discounts, concessions or commissions. The dealers that participate in the
distribution of Debt Securities or Warrants may be deemed to be
underwriters and any discounts or commissions received by them and any
profit on the resale of Debt Securities or Warrants by them may be deemed
to be underwriting discounts and commissions under the Act. Any such
compensation will be described in the Prospectus Supplement.
Under agreements that may be entered into with the Company,
underwriters, dealers, agents and remarketing firms may be entitled to
indemnification by the Company against certain liabilities, including
liabilities under the Act. Underwriters, dealers, agents and remarketing
firms may be customers of, engage in transactions with, or perform
services for the Company in the ordinary course of business.
If so indicated in the Prospectus Supplement, the Company will
authorize dealers or other persons acting as the Company's agents to
solicit offers by certain institutions to purchase Debt Securities or
Warrants from the Company pursuant to contracts providing for payment and
delivery on a future date. Institutions with which such contracts may be
made include commercial and savings banks, insurance companies, pension
funds, investment companies, educational and charitable institutions and
others, but in all cases such institutions must be approved by the
Company. The obligations of any purchaser under any such contract will not
be subject to any conditions except that (i) the purchase of the Debt
Securities or Warrants shall not at the time of delivery be prohibited
under the laws of the jurisdiction to which such purchaser is subject, and
(ii) if the series of Debt Securities or Warrants being sold to such
institutions are also being sold to underwriters, the Company shall have
sold to such underwriters the Debt Securities or Warrants not sold for
delayed delivery. The dealers and such other persons will not have any
responsibility in respect of the validity of performance of such
contracts.
Each underwriter, dealer, agent and remarketing firm participating
in the distribution of any Debt Securities that are issuable as Bearer
Securities will agree that it will not offer, sell or deliver, directly or
indirectly, Bearer Securities in the United States or to United States
persons (other than qualifying financial institutions) in connection with
the original issuance of such Debt Securities.
For as long as Part III of The Companies Act 1985 remains in force
in relation to the Debt Securities or the Warrants, as the case may be,
neither the Debt Securities nor the Warrants may be offered or sold in the
United Kingdom, by means of this Prospectus, any Prospectus Supplement or
any other document, other than to persons whose ordinary business it is to
buy or sell shares or debentures (whether as principal or agent) or in
circumstances which do not constitute an offer to the public within the
meaning of The Companies Act 1985. All applicable provisions of The
Financial Services Act 1986 must be complied with in respect of anything
done or to be done in relation to the Debt Securities or the Warrants in,
from or otherwise involving the United Kingdom. Furthermore, each
underwriter, dealer, agent and remarketing firm participating in the
distribution of Debt Securities or Warrants will agree that it will only
issue or pass on to any person in the United Kingdom any document received
by it in connection with the issue of such Debt Securities or Warrants if
that person is of a kind described in Article 9(3) of The Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1988.
Once the provisions of Part V of The Financial Services Act 1986 come into
force in relation to the Debt Securities or the Warrants, no advertisement
may be issued in the United Kingdom offering the Debt Securities or the
Warrants, as the case may be, in circumstances which would require (for
the avoidance of any contravention of those provisions) a prospectus to
have been delivered to the Registrar of Companies.
LEGAL MATTERS
The validity of the Debt Securities and Warrants offered hereby will
be passed upon for the Company by Allan L. Ronquillo, Esq., Vice President
and General Counsel of the Company, and for any underwriters and agents by
Brown & Wood, New York, New York. Mr. Ronquillo will rely as to all
matters of New York law on the opinion of Brown & Wood, and Brown & Wood
will rely as to all matters of Michigan law on the opinion of
Mr. Ronquillo. Mr. Ronquillo holds 768 shares of Chrysler's common stock
and options to purchase 13,920 shares of Chrysler's common stock. Brown &
Wood may from time to time render legal services to the Company and its
affiliates.
EXPERTS
The consolidated financial statements and the related financial
statement schedules of the Company as of December 31, 1994 and 1993 and
for each of the three years in the period ended December 31, 1994
incorporated in this prospectus by reference from the Company's Annual
Report on Form 10-K for the year ended December 31, 1994, have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports, which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
<PAGE>
NO PERSON IS AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS OTHER THAN THOSE CONTAINED
IN THIS PROSPECTUS SUPPLEMENT (IN-
CLUDING THE ACCOMPANYING PRICING SUP-
PLEMENT) OR THE PROSPECTUS, AND IF
GIVEN OR MADE SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON $1,500,000,000
AS HAVING BEEN AUTHORIZED. THIS PRO-
SPECTUS SUPPLEMENT (INCLUDING THE AC-
COMPANYING PRICING SUPPLEMENT) AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER [ CHRYSLER FINANCIAL logotype
TO BUY ANY SECURITIES OTHER THAN THE with "Pentastar" logo ]
SECURITIES OFFERED BY THIS PROSPECTUS
SUPPLEMENT (INCLUDING THE ACCOMPANYING
PRICING SUPPLEMENT) AND THE PROSPECTUS
OR AN OFFER TO SELL OR A SOLICITATION Chrysler Financial Corporation
OF AN OFFER TO BUY SUCH SECURITIES IN
ANY JURISDICTION TO ANY PERSON TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION.
NEITHER THE DELIVERY OF THIS PROSPEC-
TUS SUPPLEMENT (INCLUDING THE ACCOMPA- Medium-Term Notes, Series N
NYING PRICING SUPPLEMENT) AND THE PRO-
SPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY
OR CHRYSLER CORPORATION SINCE THE DATE
HEREOF, OR THAT THE INFORMATION HEREIN ______________________
IS CORRECT AS OF ANY TIME SINCE ITS
DATE. PROSPECTUS SUPPLEMENT
______________________
TABLE OF CONTENTS
Page
Prospectus Supplement
Prior Sales.................... S-2
Description of Notes........... S-2
Book-Entry System.............. S-13
Certain United States Federal
Income Tax Considerations..... S-14
Plan of Distribution........... S-21
Prospectus
Available Information.......... 2
Incorporation of Certain
Documents by Reference........ 2
Chrysler Financial Corporation. 3 MERRILL LYNCH & CO.
Selected Consolidated Financial
Data.......................... 5 SALOMON BROTHERS INC
Information Concerning Chrysler
Corporation................... 8
Ratio of Earnings to Fixed
Charges........................ 11
Use of Proceeds................ 12
Description of Debt Securities. 12
Description of Warrants........ 18
Limitations on Issuance of
Bearer Securities and Bearer
Warrants...................... 20
Plan of Distribution........... 21
Legal Matters.................. 22
Experts........................ 23 FEBRUARY 14, 1995
