Filed pursuant to
Rule 424(b)(5)
Registration No. 33-64574
U.S. $1,000,000,000
CITICORP
Global Medium-Term Subordinated Notes, Series C
Due From 9 Months to 60 Years From Date of Issue
Pricing Supplement, dated March 29, 1994
(To Prospectus Supplement, dated September 20, 1993,
to Prospectus, dated September 20, 1993).
DESCRIPTION OF NOTE
-------------------
The terms of the CMT Note (defined below) set forth in this
Pricing Supplement supplement and modify, to the extent applicable,
the description of general terms and provisions of Citicorp's
Global Medium-Term Subordinated Notes, Series C set forth in the
accompanying Prospectus and Prospectus Supplement. Capitalized
terms not defined herein shall have the meanings assigned to such
terms in the accompanying Prospectus and Prospectus Supplement.
SUMMARY OF TERMS:
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Title of Note: Constant Maturity Treasury Subordinated Note
due April 15, 1999 (the "CMT Note").
Aggregate
Principal Amount: $100,000,000.
Issue Date: March 31, 1994.
Stated Maturity Date: April 15, 1999.
Interest Rate Index: Two-year Constant Maturity Treasury
("CMT"). (See "Constant Maturity
Treasury Subordinated Note")
Spread: Minus 12.5 basis points.
Initial Interest Rate: 5.09%.
Interest
Commencement Date: March 31, 1994.
Interest Payment Dates: Quarterly, each March 30, June 30,
September 30 and December 30, commencing
June 30, 1994; provided, however, that
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if an Interest Payment Date would
otherwise be a day that is not a Market
Day, such Interest Payment Date will be
the next succeeding Market Day, except
<PAGE>
that if the next succeeding Market Day is
in the next succeeding calendar month,
such Interest Payment Date will be the
immediately preceding Market Day;
provided, further, however, that the
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final Interest Payment Date shall be the
Stated Maturity Date.
Interest Reset Dates: Each Interest Payment Date
CMT Interest
Determination Dates: The tenth Market Day preceding the
related Interest Reset Date.
Index Maturity: Two Years.
CMT Screen Reference: 2 year Treasury Constant Maturity Telerate
Screen Page 7055.
Calculation Dates: The related CMT Interest
Determination Date.
Redemption: The CMT Note are not subject to
redemption.
Sinking Fund: The CMT Note are not subject to any
sinking fund.
Regular Record Dates: The date that is 15 calendar days prior
to the related Interest Payment Date.
Calculation Agent: Citibank, N.A.
Underwriter: Bear, Stearns & Co. Inc.
Discount: 0.550%
Price to Public: 100%
CONSTANT MATURITY TREASURY SUBORDINATED NOTE
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The CMT Note will bear interest from March 31, 1994, and such
interest will be payable quarterly in arrears on the 30th day of
each March, June, September and December (each an "Interest Payment
Date"), commencing with the Interest Payment Date in June 1994, and
at the date of maturity. The period beginning on and including the
issue date of the Note and ending on but excluding the first
Interest Payment Date and each successive period beginning on and
including an Interest Payment Date and ending on but excluding the
next succeeding Interest Payment Date is herein called an "Interest
Period." If any Interest Payment Date falls on a day which is not
a Market Day, such Interest Payment date shall be postponed to the
next day which is a Market Day.
<PAGE>
Interest payable on any Note prior to maturity will be payable
to the person in whose name such Note is registered at the close
of business on the fifteenth calendar day prior to each Interest
Payment Date. The interest payment at maturity will include
interest accrued to but excluding the date of maturity and will be
payable to the person to whom principal is payable.
The rate of interest on the Note for the Interest Period
beginning on the date of issuance of the Note will be 5.09% per
annum. For each interest period thereafter, the Note will bear
interest at a rate per annum equal to the two-year CMT, which will
be determined by Citibank, N.A., as calculation agent (the
"Calculation Agent"), for each applicable Interest Period in
accordance with the following provisions:
(i) For each applicable Interest Period, the two-year
CMT will be determined on the applicable Interest
Determination Date (as defined above) on the basis of the
latest rate displayed at the close of business on that
Interest Determination Date on Telerate page 7055 for
"Yields on Treasury Constant Maturities ... Federal Reserve
Board Statistical Release H.15(519) ... Mondays
approximately 3:45 p.m. EST" (or "EDT" as the case may be)
under the heading "2 YR", or such page as may replace page
7055, as provided by the Telerate News Service, for the
purpose of displaying rates or prices that are comparable,
as determined by the Calculation Agent (after consultation
with Citicorp), to the two-year Constant Maturity Treasury
rates formerly displayed on Telerate page 7055; or
(ii) if the information specified in subparagraph
(i) above is not available on any Interest Determination
Date, then the two-year CMT for the applicable Interest
Period shall be determined on the basis of the two-year
Treasury Constant Maturity rate (or other two-year United
States Treasury rate) published as of such Interest
Determination Date by either the Board of Governors of the
Federal Reserve System or the United States Department of
the Treasury that the Calculation Agent (after consultation
with Citicorp) determines to be comparable to the rate
formerly displayed on Telerate page 7055 and published in
the Federal Reserve Board Statistical Release H.15 (519);
or
(iii) if the information specified in subparagraphs
(i) and (ii) is not available at any Interest Determination
Date, then the two-year CMT for the applicable Interest
Period shall be the yield to maturity of the then most
recently issued direct non-callable fixed rate United States
Treasury Note with an original maturity of approximately two
years and a remaining term to maturity of at least one year
(the "Reference Treasury Note"), as calculated by the
Calculation agent on the basis of the arithmetic mean of the
secondary market bid side prices for such Reference Treasury
Note quoted as of 3:00 p.m., New York City time (or the
closing of the market, if earlier), on such Interest
Determination Date, by (and appearing in written records of)
three leading primary United States government securities
dealers in New York City selected by the Calculation Agent;
or
<PAGE>
(iv) if the information specified in subparagraphs
(i) and (ii) above is not available at any Interest
Determination Date and at least three price quotations for
the Reference Treasury Note are not available at that
Interest Determination Date from leading primary dealers in
New York City as provided in subparagraph (iii) above, then
the two-year CMT for the applicable Interest Period shall be the
yield to maturity of the Reference Treasury Note, as calculated
by the Calculation
Agent on the basis of the arithmetic mean of the secondary
market bid side prices for such Reference Treasury Note
quoted as of 3:00 p.m., New York City time (or the closing
of the market, if earlier), on such Interest Determination
Date, by (and appearing in the written records of) any three
primary United States government securities dealers selected
by the Calculation Agent (irrespective of where such dealers
may be located); or
(v) if the information specified in subparagraphs (i)
and (ii) above is not available at any Interest
Determination Date and the Calculation Agent is unable to
obtain the requisite quotations specified in either
subparagraph (iii) above or subparagraph (iv) above, then
the interest rate on the Note for the applicable Interest
Period shall be the same as the interest rate on the Note
in effect at that Interest Determination Date.
UNITED STATES TAXATION
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The following summary of the principal United States federal income
tax consequences of the ownership of Notes is based upon the
opinion of E. Noel Harwerth, Esq., Chief Tax Officer of Citibank.
It deals only with Notes held as capital assets by initial
purchasers, and not with special classes of holders, such as
dealers in securities or currencies, banks, tax-exempt
organizations, life insurance companies, persons that hold Notes
that are a hedge or that are hedged against currency risks or that
are part of a straddle or conversion transaction, or persons whose
functional currency is not the U.S. dollar. It also does not deal
with holders other than original purchasers and thus does not deal
with the "market discount rules". The summary is based on the
Internal Revenue Code of 1986, as amended (the "Code"), its
legislative history, existing and proposed regulations thereunder,
published rulings and court decisions, all as currently in effect
and all subject to change at any time, perhaps with retroactive
affect.
The discussion of original issue discount ("OID") is based in part
on regulations under the OID and related provisions of the Code
(the "Regulations"). The Regulations adopt, with certain changes,
the proposed regulations on the same subject that were published in
the Federal Register on December 21, 1992 (the "Proposed
Regulations"). Generally, the Regulations will apply to debt
instruments issued on or after April 4, 1994. Taxpayers may also
rely on the Regulations for debt instruments issued after December
21, 1992, except in the case of the election to treat all interest
as OID (see below under "Election to Treat All Interest as Original
Issue Discount"). In addition, taxpayers may rely on the Proposed
Regulations as substantial authority for purposes of the penalty
provisions of section 6662 of the Code with respect to
<PAGE>
debt instruments issued after December 21, 1992 but before the
effective date of the Regulations. The discussion of OID that
follows is based on the Regulations. Prospective purchasers of
Notes should consult their own tax advisors concerning the
consequences, in their particular circumstances, under the Code and
the laws of any other taxing jurisdiction, of ownership of Notes.
UNITED STATES HOLDERS
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Payments of Interest. Interest on a Note that is not "qualified
stated interest" (as defined below under "Original Issue Discount
- -- General") will be taxable to a beneficial owner that is a United
States Holder as ordinary income at the time it is received or
accrued, depending on the holder's method of accounting for tax
purposes.
ORIGINAL ISSUE DISCOUNT
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General. For United States federal income tax purposes, a Note,
other than a Note with a term of one year or less (a "short term
note"), will be treated as issued at an original issue discount (a
"discount Note") if the excess of its "stated redemption price at
maturity" over its issue price is more than a "de minimis amount"
(as defined below). Generally, the issue price of a Note will be
the first price at which a substantial amount of Notes included in
the issue of which the Note is a part is sold. The stated
redemption price at maturity of a Note is the total of all payments
provided by the Note that are not payments of "qualified stated
interest". A qualified stated interest payment is generally any
one of a series of stated interest payments on a Note that are
unconditionally payable at least annually at a single fixed rate
(with certain exceptions for lower rates paid during some periods)
applied to the outstanding principal amount of the Note. Special
rules are provided for "variable rate notes" (as defined below).
In general, if the excess of a Note's stated redemption price at
maturity over its issue price is less than 1/4 of 1 percent of the
Note's stated redemption price at maturity multiplied by the number
of complete years to its maturity (the "de minimis amount"), then
such excess, if any, constitutes "de minimis OID" and the Note is
not a discount Note. Unless the election described below under
"Election to Treat All Interest as OID" is made, a United States
Holder of a Note with de minimis OID must include such de minimis
OID in income as stated principal payments on the Note are made.
The includible amount with respect to each such payment will equal
the product of the total amount of the Note's de mimimis OID and a
fraction, the numerator of which is the amount of the principal
payment made and the denominator of which is the stated principal
amount of the Note.
Inclusion of Original Issue Discount in Income. United States
Holders (including cash basis Holders) of discount Notes having a
maturity of more than one year from their date of issue must
include OID in income as it accrues, generally before the receipt
of cash attributable to such income and generally in increasingly
<PAGE>
greater amounts over the life of the Note. The amount of discount
includible in income by the holder of a discount Note is the sum of
the daily portions of discount with respect to the discount Note
for each day during the taxable year or portion of the taxable year
in which it holds such Note ("accrued OID"). The daily portion is
determined by allocating to each day in any "accrual period" a pro
rata portion of the OID allocable to such accrual period.
Accrual periods with respect to a Note may be of any length
selected by the United States Holder, as long as (i) no accrual
period is longer than one year and (ii) each scheduled payment of
interest or principal on the Note occurs on either the first or
last day of an accrual period. The amount of OID allocable to any
accrual period is an amount equal to the excess of (a) the product
of the discount Note's "adjusted issue price" (as defined below) 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 adjusted for the length of such period) over (b)
the sum of the payments of qualified stated interest, if any,
allocable to the accrual period. The "adjusted issue price" of a
discount Note at the beginning of any accrual period is the issue
price of the Note increased by (i) the amount of accrued OID for
each prior accrual period and decreased by (ii) the amount of any
payments previously made on the Note that were not qualified stated
interest payments. For purposes of determining the amount of OID
allocable to an accrual period if an interval between payments of
qualified stated interest on the Note contains more than one
accrual period, the amount of qualified stated interest payable at
the end of the interval (including any qualified stated interest
that is payable on the first day of the accrual period immediately
following the interval) is allocated pro rata on the basis of
relative length to each accrual period in the interval, and the
adjusted issue price at the beginning of each accrual period must
be increased by the amount of any qualified stated interest that
has accrued prior to the first day of the accrual period but that
is not payable until the end of the interval. The amount of OID
allocable to an initial short accrual period may be computed using
any reasonable method if all other accrual periods other than a
final short accrual period are of equal length. The amount of OID
allocable to the final accrual period is the difference between the
amount payable at the maturity of the Note (other than any payment
of qualified stated interest) and the Note's adjusted issued price
as of the beginning of the final accrual period.
Acquisition Premium. A United States Holder that purchases a Note
for an amount less than or equal to the sum of all amounts payable
on the Note after the purchase date other than payments of
qualified stated interest but in excess of its adjusted issue price
(any such excess being "acquisition premium") and that does not
make the election described below under "Election to Treat All
Interest as Original Issue Discount" is permitted to reduce the
daily portions of OID by a fraction, the numerator of which is the
excess of the United States Holder's adjusted basis in the Note
immediately after its purchase over the adjusted issue price of the
Note, and the denominator of which is the excess of the sum of all
amounts payable on the Note after the purchase date, other than
payments of qualified stated interest, over the Note's adjusted
issue price.
<PAGE>
Market Discount. A Note, other than a short-term Note, will be
treated as purchased at a market discount (a "market discount
Note") if (i) the amount for which a United States Holder purchased
the Note is less than the Note's issue price (as determined above
under "Original Issue Discount -- General") and (ii) the Note's
stated redemption price at maturity or, in the case of a discount
Note, the Note's "revised issue price", exceeds the amount for
which the United States Holder purchased the Note by at least 1/4
of 1 percent of such Note's stated redemption price at maturity or
revised issue price, respectively, multiplied by the number of
complete years to the Note's maturity. If such excess is not
sufficient to cause the Note to be a market discount Note, then
such excess constitutes "de minimis market discount". The Code
provides that, for these purposes, the "revised issue price" of a
Note generally equals its issue price, increased by the amount of
any OID that has accrued on the Note.
Any gain recognized on the maturity or disposition of a market
discount Note will be treated as ordinary income to the extent that
such gain does not exceed the accrued market discount on such Note.
Alternatively, a United States Holder of a market discount Note may
elect to include market discount in income currently over the life
of the Note. Such an election shall apply to all debt instruments
with market discount acquired by the electing United States Holder
on or after the first day of the first taxable year to which the
election applies. This election may not be revoked without the
consent of the Internal Revenue Service (the "Service").
Market discount on a market discount Note will accrue on a
straight-line basis unless the United States Holder elects to
accrue such market discount on a constant-yield to maturity basis.
Such an election shall apply only to the Note with respect to which
it is made and may not be revoked without the consent of the
Service. A United States Holder of a market discount Note that
does not elect to included market discount in income currently
generally will be required to defer deductions for interest on
borrowings allocable to such Note in an amount not exceeding the
accrued market discount on such Note until the maturity or
disposition of such Note.
Pre-Issuance Accrued Interest. If (i) a portion of the initial
purchase price of a Note is attributable to pre-issuance accrued
interest, (ii) the first stated interest payment on the Note is to
be made within one year of the Note's issue date and (iii) the
payment will equal or exceed the amount of pre-issuance accrued
interest, then the United States Holder may elect to decrease the
issue price of the Note by the amount of pre-issuance accrued
interest. In that event, a portion of the first stated interest
payment will be treated as a return of the excluded pre-issuance
accrued interest and not as an amount payable on the Note.
Notes Subject to Contingencies Including Optional Redemption. In
general, if a Note provides for an alternative payment schedule or
schedules applicable upon the occurrence of a contingency or
contingencies and the timing and amounts of the payments that
comprise each payment schedule are known as of the issue date, the
yield and maturity of the Note are determined by assuming that the
<PAGE>
payments will be made according to the Note's stated payment
schedule. If, however, based on all the facts and circumstances as
of the issue date, it is more likely than not that the Note's
stated payment schedule will not occur, then, in general, the yield
and maturity of the Note are to be computed based on the payment
schedule most likely to occur.
Notwithstanding the general rules for determining yield and
maturity in the case of Notes subject to contingencies, if Citicorp
has an unconditional option or options to redeem a Note, or the
Holder has an unconditional option or options to cause a Note to be
repurchased, prior to the Note's stated maturity, then (i) in the
case of an option or options of Citicorp, Citicorp will be deemed
to exercise or not exercise an option or combination of options in
the manner that minimizes the yield on the Note and (ii) in case of
an option or options of the Holder, the Holder will be deemed to
exercise or not exercise an option or combination of options in the
manner that maximizes the yield on the Note. For purposes of those
calculations, the yield on the Note is to be determined by using
any date on which the Note may be redeemed or repurchased as the
maturity date and the amount payable on such date in accordance
with the terms of the Note as the principal amount payable at
maturity.
If a contingency (including the exercise of an option) actually
occurs or does not occur contrary to an assumption made according
to the above rules (a "change in circumstances") then, solely for
purposes of the accrual of OID, the yield and maturity of the Note
are to be redetermined by treating the Note as reissued on the date
of the change in circumstances for an amount equal to the Note's
adjusted issue price on that date, except to the extent that a
portion of the Note is repaid as a result of a change in
circumstances.
Election to Treat All Interest as OID. In the case of Notes
acquired on or after April 4, 1994, a United States Holder may
elect to include in gross income all interest that accrues on a
Note using the constant-yield method described above under the
heading "Original Issue Discount -- General," with the
modifications described below. For the purposes of this election,
interest includes stated interest, OID, de minimis OID, market
discount, de minimis market discount and unstated interest, as
adjusted by any amortizable bond premium (described below under
"Notes Purchased at a Premium") or acquisition premium.
In applying the constant-yield method to a Note with respect to
which this election has been made, the issue price of the Note will
equal the electing United States Holder's adjusted basis in the
Note immediately after its acquisition, the issue date of the Note
will be the date of its acquisition by the electing United States
Holder, and no payments on the Note will be treated as payments of
qualified stated interest. This election will generally apply only
to the Note with respect to which it is made and may not be revoked
without the consent of the Service. If this election is made with
respect to a Note with amortizable bond premium, then the electing
United States Holder will be deemed to have elected to apply
amortizable bond premium against interest with respect to all debt
<PAGE>
instruments with amortizable bond premium (other than debt
instruments the interest on which is excludible from gross income)
held by the electing United States Holder as of the beginning of
the taxable year in which the Note with respect to which the
election is made is acquired or thereafter acquired. The deemed
election with respect to amortizable bond premium may not be
revoked without the consent of the Service.
If the election to apply the constant-yield method to all interest
on a Note is made with respect to a market discount Note, the
electing United States Holder will be treated as having made the
election discussed above under "Original Issue Discount -- Market
Discount" to include market discount in income currently over the
life of all debt instruments held or thereafter acquired by such
United States Holder.
Variable Rate Notes. A "variable rate Note" is a Note that: (i)
has an issue price that does not exceed the total noncontingent
principal payments by more than the lesser of (1) the product of
(x) the total noncontingent principal payments, (y) the number of
complete years to maturity from the issue date and (z) .015, or (2)
15 percent of the total noncontingent principal payments, and (ii)
provides for stated interest compounded or paid at least annually
at (1) one or more "qualified floating rates", (2) a single fixed
rate and one or more qualified floating rates, (3) a single
"objective rate" or (4) a single fixed rate and a single objective
rate that is a "qualified inverse floating rate".
A qualified floating rate or objective rate in effect at any time
during the term of the instrument must be set at a "current value"
of that rate. A "current value" of a rate is the value of the rate
on any day that is no earlier than three months prior to the first
day on which that value is in effect and no later than one year
following that first day.
A variable rate is a "qualified floating rate" if (i) variations in
the value of the rate can reasonably be expected to measure
contemporaneous variations in the cost of newly borrowed funds in
the currency in which the Note is denominated or (ii) it is equal
to the product of such a rate and either (a) a fixed multiple that
is greater than zero but not more than 1.35, or (b) a fixed
multiple greater than zero but not more than 1.35, increased or
decreased by a fixed rate. A rate is not a qualified floating
rate, however, if the rate is subject to certain restrictions
(including caps, floors, or other similar restrictions) unless such
restrictions are fixed throughout the term of the Note or are not
reasonably expected to significantly affect the yield on the Note.
An "objective rate" is a rate, other than a qualified floating
rate, determined using a single, fixed formula and that is based on
(i) one or more qualified floating rates, (ii) one or more rates
each of which would be a qualified floating rate for a debt
instrument denominated in a currency other than the currency in
which the debt instrument is denominated, (iii) the yield or
changes in the price of one or more actively traded items of
personal property other than stock or debt of the issuer or related
party or (iv) a combination of objective rates. A variable rate
<PAGE>
is not an objective rate, however, if it is reasonably expected
that the average value of the rate during the first half of the
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 Note's term. An objective rate is a "qualified inverse
floating rate" if (i) the rate is equal to a fixed rate minus a
qualified floating rate and (ii) the variations in the rate can
reasonably be expected to inversely reflect contemporaneous
variations in the cost of newly borrowed funds.
In general, if a variable rate Note provides for stated interest at
a single qualified floating rate or objective rate, all stated
interest on the Note is qualified stated interest and the amount of
OID, if any, is determined by using, in the case of a qualified
floating rate or qualified floating inverse rate, the value as of
the issue date of the qualified floating rate or qualified inverse
floating rate, or in the case of any other objective rate, a fixed
rate that reflects the yield reasonably expected for the Note.
If a variable rate Note does not provide for stated interest at a
single qualified floating rate or objective rate, or at a fixed
rate (other than at a single fixed rate for an initial period), the
amount of interest and OID accruals on the Note are generally
determined by (i) determining a fixed rate substitute for each
variable rate provided under the Variable Rate Note (generally, the
value of each variable rate as of the issue date or, in the case of
an objective rate that is not a qualified inverse floating rate, a
rate that reflects the reasonably expected yield on the Note), (ii)
constructing the equivalent fixed rate debt instrument (using the
fixed rate substitute described above), (iii) determining the
amount of qualified stated interest and OID with respect to the
equivalent fixed rate debt instrument and (iv) making the
appropriate adjustments for actual variable rates during the
applicable accrual period.
If a variable rate Note provides for stated interest either at one
or more qualified floating rates or at a qualified inverse floating
rate, and in addition provides for stated interest at a single
fixed rate (other than at a single fixed rate for an initial
period), the amount of interest and OID accruals are determined as
in the immediately preceding paragraph, except that the variable
rate Note is treated, for purposes of the first three steps of the
determination, as if it provided for a qualified floating rate (or
a qualified inverse floating rate, as the case may be) rather than
the fixed rate. The qualified floating (or qualified inverse
floating rate) replacing the fixed rate must be such that the fair
market value of the variable rate Note as of the issue date would
be approximately the same as the fair market value of an otherwise
identical debt instrument that provide for the qualified floating
rate (or qualified inverse floating rate) rather than the fixed
rate.
Short-Term Notes. In general, an individual or other cash basis
United States Holder of a short-term Note is not required to accrue
OID (as specifically defined below for the purposes of this
paragraph) for United States federal income tax purposes unless it
elects to do so (but may be required to included any stated
<PAGE>
interest in income as the interest is received). Accrual basis
United States Holders and certain other United States Holders,
including banks, regulated investment companies, dealers in
securities, common trust funds, United States Holders who hold
Notes as part of certain identified hedging transactions, certain
pass-through entities and cash basis United States Holders who so
elect, are required to accrue OID on short-term Notes on either a
straight-line basis or under the constant-yield method (based on
daily compounding), at the election of the United States Holder.
In the case of a United States Holder not required and not electing
to include OID in income currently, any gain realized on the sale
or retirement of the short-term Note will be ordinary income to the
extent of the OID accrued on a straight-line basis (unless an
election is made to accrue the OID under the constant-yield method)
through the date of sale or retirement. United States Holders who
are not required and do not elect to accrue OID on short-term Notes
will be required to defer deductions for interest on borrowings
allocable to short-term Notes in an amount not exceeding the
deferred income until the deferred income is realized. For
purposes of determining the amount of OID subject to these rules,
all interest payments on a short-term Note, including stated
interest, are included in the short-term Note's stated redemption
price at maturity.
Purchase, Sale and Retirement of the Notes. A United States
Holder's tax basis in a Note will generally be its U.S. dollar cost
(as defined below), increased by the amount of any OID or market
discount included in the United States Holder's income with respect
to the Note and the amount, if any, of income attributable to de
minimis original issue discount and de minimis market discount
included in the United States Holder's income with respect to the
Note, and reduced by (i) the amount of any payments that are not
qualified stated interest payments, and (ii) amount of any
amortizable bond premium applied to reduce interest on the Note.
A United States Holder will generally recognize gain or loss on the
sale of retirement of a Note equal to the difference between the
amount realized on the sale or retirement and the tax basis of the
Note. Except to the extent described above under "Original Issue
Discount -- Short-Term Notes" or "Original Issue Discount -- Market
Discount" or described in the next succeeding paragraph or
attributable to accrued but unpaid interest, gain or loss
recognized on the sale or retirement of a Note will be capital gain
or loss and will be long-term capital gain or loss if the Note was
held for more than one year.
<PAGE>
