PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JANUARY 19, 1995
$500,000,000
Corning Incorporated
Series A Medium-Term Notes
Due from 9 Months to 30 Years from Date of Issue
The Company may offer from time to time its Medium-Term Notes, due from 9
months to 30 years from the date of issue (the "Notes"), as selected by the
purchaser and agreed to by the Company, at an aggregate initial public
offering price not to exceed U.S. $500,000,000 or its equivalent in another
currency or composite currency.
The Notes may be denominated in U.S. dollars or in such foreign currencies or
composite currencies as may be designated by the Company at the time of
offering. The Notes may also be issued with the principal amount thereof
payable at Maturity, or the amount of interest payable on an interest payment
date, to be determined by reference to an index (e.g., currencies, composite
currencies, commodities or financial or non-financial indices) ("Indexed
Notes"), as specified in the applicable Pricing Supplement. The specific
currency, composite currency or any index, interest rate (if any), issue
price and maturity date of any Note will be set forth in a Pricing Supplement
to this Prospectus Supplement. Unless otherwise specified in the applicable
Pricing Supplement, Notes denominated in other than U.S. dollars or ECUs will
not be sold in, or to residents of, the country issuing the Specified
Currency. See "Description of Notes".
Unless otherwise specified in the applicable Pricing Supplement, the Notes,
except Zero Coupon Notes, will bear interest at a fixed rate or rates (a
"Fixed Rate Note") or at a floating rate (a "Floating Rate Note") determined
by reference to the Commercial Paper Rate, the Prime Rate, LIBOR, the
Treasury Rate, the CD Rate, the Federal Funds Rate or such other interest
rate formula as set forth in the Pricing Supplement, as adjusted by the
Spread or Spread Multiplier, if any, applicable to such Notes. Interest rates
and interest rate formulas are subject to change by the Company, but no such
change will affect any Notes already issued or as to which an offer to
purchase has been accepted by the Company. Unless otherwise specified in the
applicable Pricing Supplement, interest on the Fixed Rate Notes will be
payable on each June 1 and December 1 and at Maturity. Interest on the
Floating Rate Notes will be payable on the dates specified therein and in the
applicable Pricing Supplement. Zero Coupon Notes will not bear interest.
Unless a Redemption Commencement Date or a Repayment Date is specified in the
applicable Pricing Supplement, the Notes will not be redeemable or repayable
prior to their Stated Maturity. If a Redemption Commencement Date or a
Repayment Date is so specified, the Notes will be redeemable at the option of
the Company, or repayable at the option of the Holder, or both (as specified
therein), at any time after such date (or for a limited period) as described
in the applicable Pricing Supplement.
The Notes offered hereby will be issued in global or definitive form in a
minimum denomination of U.S. $100,000 or the approximate equivalent thereof
in the Specified Currency, as specified in the applicable Pricing Supplement.
A global Note representing Book-Entry Notes will be registered in the name of
the nominee of The Depository Trust Company, which will act as Depositary.
Interests in Book-Entry Notes will be shown on, and transfers thereof will be
effected only through, records maintained by the Depositary (with respect to
participants' interests) and its participants. Except as described herein
under "Description of Notes -- Book-Entry System", owners of beneficial
interests in a global Note will not be considered the Holders thereof and
will not be entitled to receive physical delivery of Notes in definitive
form, and no global Note will be exchangeable except for another global Note
of like denomination and terms to be registered in the name of the Depositary
or its nominee. See "Description of Notes".
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 HERETO OR THE PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Price to Agents' Proceeds to
Public (1) Commission (2) Company (2) (3)
Per Note 100% .125%-.750% 99.250%-99.875%
Total (4) $500,000,000 $625,000-$3,750,000 $496,250,000-$499,375,000
(1) Notes will be issued at 100% of their principal amount, unless otherwise
specified in the applicable Pricing Supplement.
(2) The Company will pay the Agents a commission of from .125% to .750%,
depending on maturity, of the principal amount of any Notes sold through them
as Agents. Unless otherwise specified 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 such Agent. The Company has agreed to
indemnify the Agents against certain liabilities, including liabilities under
the Securities Act of 1933.
(3) Before deducting estimated expenses of $450,000 payable by the Company,
including $110,000 of estimated expenses of the Agents to be reimbursed by
the Company.
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(4) Or the equivalent thereof in foreign currencies or currency units.
Offers to purchase Notes are being solicited, on a reasonable efforts basis,
from time to time by the Agents on behalf of the Company. Notes may be sold
to the Agents on their own behalf at negotiated discounts. The Company
reserves the right to sell Notes directly on its own behalf. The Company also
reserves the right to withdraw, cancel or modify the offering contemplated
hereby without notice. No termination date for the offering of the Notes has
been established. The Company or the Agents may reject any order as a whole
or in part. See "Supplemental Plan of Distribution".
Goldman, Sachs & Co.
Lazard Freres & Co.
Citicorp Securities, Inc.
The date of this Prospectus Supplement is March 23, 1995.
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IN CONNECTION WITH THE DISTRIBUTION OF THE NOTES, THE AGENTS MAY EFFECT
TRANSACTIONS IN THE NOTES WITH A VIEW TO STABILIZING OR MAINTAINING THE
MARKET PRICES OF THE NOTES AT LEVELS OTHER THAN THOSE WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN ANY
OVER-THE-COUNTER MARKET OR OTHERWISE AND, IF COMMENCED, MAY BE DISCONTINUED
AT ANY TIME.
DESCRIPTION OF NOTES
General
The following description of the particular terms of the Notes offered hereby
supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of Debt Securities set forth
in the accompanying Prospectus, to which description reference is hereby
made.
The Notes constitute a single series for purposes of the Indenture and are
limited in amount as set forth on the cover page hereof. The foregoing limit,
however, may be increased by the Company if in the future it determines that
it may wish to sell additional Notes. The aggregate offering price of Notes
that may be issued and sold may be reduced as a result of the sale by the
Company of any other series of Debt Securities. For a description of the
rights attaching to different series of Debt Securities under the Indenture,
see "Description of Debt Securities" in the Prospectus.
Unless previously redeemed, a Note will mature on the date ("Stated
Maturity") from 9 months to 30 years from its date of issue that is specified
on the face thereof and in the applicable Pricing Supplement or, if such Note
is a Floating Rate Note and such specified date is not a Market Day with
respect to such Note, the next succeeding Market Day (or, in the case of a
LIBOR Note, if such next succeeding Market Day falls in the next calendar
month, the next preceding Market Day). As used herein, the term "Market Day"
means (a) with respect to any Note (other than any LIBOR Note), any Business
Day, and (b) with respect to any LIBOR Note, any such Business Day on which
dealings in deposits in U.S. dollars are transacted in the London interbank
market. The term "Business Day" means each Monday, Tuesday, Wednesday,
Thursday and Friday which is (i) not a day on which banking institutions in
The City of New York generally are authorized or obligated by law or
executive order to close, and (ii) if the Note is denominated in a Specified
Currency (as defined below) other than U.S. dollars, not a day on which
banking institutions are authorized or obligated by law or executive order to
close in the financial center of the country issuing the Specified Currency
(which in the case of European Currency Units ("ECUs") shall be Luxembourg,
in which case "Business Day" shall not include any day that is a non-ECU
clearing day as determined by the ECU Banking Association in Paris).
Each Note will be denominated in a currency or composite currency ("Specified
Currency") as specified on the face thereof and in the applicable Pricing
Supplement, which may include U.S. dollars, Australian dollars, New Zealand
dollars, Canadian dollars, Danish kroner, Italian lire, ECUs or any other
currency set forth in the applicable Pricing Supplement. Purchasers of the
Notes are required to pay for them by delivery of the requisite amount of the
Specified Currency to an Agent, unless other arrangements have been made.
Unless otherwise specified in the applicable Pricing Supplement, payments on
the Notes will be made in the applicable Specified Currency; provided that,
at the election of the Holder thereof and in certain circumstances at the
option of the Company, payments on Notes denominated in other than U.S.
dollars may be made in U.S. dollars. See "Payment of Principal and Interest".
Each Note will be represented by either a global security (a "Global
Security") registered in the name of a nominee of the Depositary (each such
Note represented by a Global Security being herein referred to as a
"Book-Entry Note") or a certificate issued in definitive registered form,
without coupons (a "Certificated Note"), as set forth in the applicable
Pricing Supplement. Except as set forth under "Book- Entry System" below,
Book-Entry Notes will not be issuable in certificated form. So long as the
Depositary or its nominee, as the case may be, is the registered owner of any
Global Security, the Depositary or its nominee, as the case may be, will be
considered the sole owner or Holder of the Book-Entry Note or Notes
represented by such Global Security for all purposes under the Indenture and
the Book-Entry Notes. See "Book-Entry System" below.
The authorized denominations of any Note denominated in U.S. dollars will be
$100,000 and integral multiples of $1,000 in excess thereof. The authorized
denominations of any Note denominated in other than U.S. dollars will be the
amount of the Specified Currency for such Note equivalent, at the noon buying
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rate for cable transfers in The City of New York for such Specified Currency
(the "Exchange Rate") on the first Business Day next preceding the date on
which the Company accepts the offer to purchase such Note to U.S. $100,000
(rounded down to an integral multiple of 10,000 units of such Specified
Currency) and any greater amount that is an integral multiple of 10,000 units
of such Specified Currency.
Notes will be sold in individual issues of Notes having such interest rate or
interest rate formula, if any, Stated Maturity and date of original issuance
as shall be selected by the initial purchasers and agreed to by the Company.
Unless otherwise indicated in the applicable Pricing Supplement, each Note,
except any Zero Coupon Note (as defined below), will bear interest at either
(i) a fixed rate (a "Fixed Rate Note"), which may be zero in the case of
Notes issued at a discount from the principal amount payable at Maturity
thereof (a "Zero Coupon Note"), or (ii) a floating rate (a "Floating Rate
Note") determined by reference to the interest rate formula which may be
adjusted by adding or subtracting the Spread or multiplying by the Spread
Multiplier (each term as defined in "Floating Rate Notes" below).
The Notes may be issued as Original Issue Discount Notes. An Original Issue
Discount Note is a Note, including any Zero Coupon Note, which is issued at a
price lower than the principal amount thereof and which provides that upon
redemption or acceleration of the maturity thereof an amount less than the
principal thereof shall become due and payable. In the event of redemption or
acceleration of the maturity of an Original Issue Discount Note, the amount
payable to the Holder of such Note upon such redemption or acceleration will
be determined in accordance with the terms of the Note, but will be an amount
less than the amount payable at the Stated Maturity of such Note. In
addition, a Note issued at a discount may, for United States federal income
tax purposes, be considered an original issue discount note, regardless of
the amount payable upon redemption or acceleration of maturity of such Note.
See "United States Taxation -- United States Holders -- Original Issue
Discount" below.
Indexed Notes may be issued with the principal amount payable at Maturity, or
the amount of interest payable on an interest payment date, to be determined
by reference to a currency exchange rate, composite currency, commodity price
or other financial or non-financial index as set forth in the applicable
Pricing Supplement. Holders of Indexed Notes may receive a principal amount
at Maturity that is greater than or less than the face amount of such Notes
depending upon the value at Maturity of the applicable index. Information as
to the methods for determining the principal amount payable at Maturity or
the amount of interest payable on an interest payment date, as the case may
be, any currency or commodity market to which principal or interest is
indexed, foreign exchange risks and certain additional tax considerations
with respect to Indexed Notes will be set forth in the applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the Notes
will not be subject to any sinking fund and, unless a Redemption Commencement
Date or a Repayment Date is specified in the applicable Pricing Supplement,
will not be redeemable or repayable prior to their Stated Maturity. If a
Redemption Commencement Date is so specified with respect to any Note, the
applicable Pricing Supplement will also specify one or more redemption prices
(expressed as a percentage of the principal amount of such Note) ("Redemption
Prices") and the redemption period or periods ("Redemption Periods") during
which such Redemption Prices shall apply. Unless otherwise specified in the
Pricing Supplement, any such Note shall be redeemable at the option of the
Company or repayable at the option of the Holder thereof (as specified in
such Pricing Supplement) at any time on or after such specified Redemption
Commencement Date or Repayment Date, as the case may be, at the specified
Redemption Price applicable to the Redemption Period during which such Note
is to be redeemed, together with interest accrued to the redemption date.
With respect to the redemption of Global Securities, the Depositary advises
that if less than all of the Notes with like tenor and terms are to be
redeemed, the particular interests (in integral multiples of $1,000) in the
Book-Entry Notes representing the Notes to be redeemed shall be selected by
the Depositary's impartial lottery procedures.
The Pricing Supplement relating to each Note will describe the following
terms: (i) the Specified Currency with respect to such Note (and, if such
Specified Currency is other than U.S. dollars, certain other terms relating
to such Note, including the authorized denominations); (ii) the price
(expressed as a percentage of the aggregate principal amount thereof) at
which such Note will be issued; (iii) the date on which such Note will be
issued; (iv) the date on which such Note will mature; (v) whether such Note
is a Fixed Rate Note or a Floating Rate Note; (vi) if such Note is a Fixed
Rate Note, the rate per annum at which such Note will bear interest, if any,
and the interest payment date or dates, if different from those set forth
below under "Fixed Rate Notes"; (vii) if such Note is a Floating Rate Note,
the interest rate basis
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(the "Interest Rate Basis") for each such Floating Rate Note, which will be
(a) the Commercial Paper Rate, in which case such Note will be a Commercial
Paper Rate Note, (b) the Prime Rate, in which case such Note will be a Prime
Rate Note, (c) the London Inter-Bank Offered Rate ("LIBOR"), in which case
such Note will be a LIBOR Note, (d) the Treasury Rate, in which case such
Note will be a Treasury Rate Note, (e) the CD Rate, in which case such Note
will be a CD Rate Note, (f) the Federal Funds Rate, in which case such Note
will be a Federal Funds Rate Note, or (g) such other interest rate formula as
is set forth in such Pricing Supplement, and, if applicable, the Calculation
Agent, the Index Maturity, the Spread or Spread Multiplier, the Maximum Rate,
the Minimum Rate, the Initial Interest Rate, the Interest Payment Dates, the
Regular Record Dates, the Calculation Date, the Interest Determination Date
and the Interest Reset Date with respect to such Floating Rate Note; (viii)
whether such Note is an Original Issue Discount Note, and if so, the yield to
maturity; (ix) whether such Note is an Indexed Note, and if so, the principal
amount thereof payable at Maturity, or the amount of interest payable on an
interest payment date, as determined by reference to the applicable index, in
addition to certain other information relating to the Indexed Note; (x)
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 Date and, if so, the
provisions relating to such redemption or repayment; (xi) whether such Note
will be issued initially as a Book-Entry Note or a Certificated Note; and
(xii) any other terms of such Note not inconsistent with the provisions of
the Indenture.
Certificated Notes may be presented for registration of transfer or exchange
at the Corporate Trust Office of United States Trust Company of New York in
the Borough of Manhattan, The City of New York.
Unless otherwise indicated in a Pricing Supplement, neither the covenants of
the Company under the Indenture nor those contained in the Notes will
necessarily afford Holders of the Notes protection in the event of a highly
leveraged transaction involving the Company, such as a leveraged buyout.
Fixed Rate Notes
Each Fixed Rate Note (except any Zero Coupon Note) will bear interest from
its date of issue or from the most recent Interest Payment Date to which
interest on such Note has been paid or duly provided for at the fixed rate
per annum stated on the face thereof and in the applicable Pricing Supplement
until the principal thereof is paid or made available for payment. The
Pricing Supplement relating to each Fixed Rate Note will indicate whether
interest on such Fixed Rate Note will be payable semiannually each June 1 and
December 1 (each an "Interest Payment Date") and at maturity or upon earlier
redemption or repayment. Each payment of interest in respect of an Interest
Payment Date will include interest accrued to but excluding such Interest
Payment Date. Interest on Fixed Rate Notes will be computed on the basis of a
360-day year of twelve 30-day months. Interest will be payable on each
Interest Payment Date and at maturity as specified below under "Payment of
Principal and Interest".
Floating Rate Notes
Each Floating Rate Note will bear interest from its date of issue or from the
most recent Interest Payment Date (or if the applicable Interest Reset Dates
are weekly, from the day following the most recent Regular Record Date) to
which interest on such Note has been paid or duly provided for at the rate
per annum determined 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 on each Interest Payment
Date and at Maturity as specified below under "Payment of Principal and
Interest".
The interest rate for each Floating Rate Note will be determined by reference
to an interest rate formula which may be adjusted by adding or subtracting
the Spread or multiplying by the Spread Multiplier (both terms as defined
below). A Floating Rate Note may also have either or both of the following:
(a) a maximum numerical interest rate limitation, or ceiling, on the rate of
interest which may accrue during any interest period (a "Maximum Rate"); and
(b) a minimum numerical interest rate limitation, or floor, on the rate of
interest which may accrue during any interest period (a "Minimum Rate"). The
"Spread" is the number of basis points specified in the applicable Pricing
Supplement as being applicable to the interest rate for such Note, and the
"Spread Multiplier" is the percentage specified in the applicable Pricing
Supplement as being applicable to the interest rate for such Note. "Index
Maturity" means, with respect to a Floating Rate Note, the period to maturity
of the instrument or obligation on which the interest rate formula is based,
as specified in the applicable Pricing Supplement. Unless otherwise provided
in the applicable Pricing Supplement, United States Trust Company of New York
will be the calculation agent (the "Calculation Agent") with respect to the
Floating Rate Notes.
The rate of interest on each Floating Rate Note will be reset weekly,
monthly, quarterly, semi-annually or annually (each an "lnterest Reset
Date"), as specified in the applicable Pricing Supplement. The
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Interest Reset Date will be, in the case of Floating Rate Notes (other than
Treasury Rate Notes) which reset weekly, the Wednesday of each week; in the
case of Treasury Rate Notes which reset weekly, the Tuesday of each week; in
the case of Floating Rate Notes which reset monthly, the third Wednesday of
each month; in the case of Floating Rate Notes which reset quarterly, the
third Wednesday of March, June, September and December; in the case of
Floating Rate Notes which reset semi-annually, the third Wednesday of two
months of each year as specified in the applicable Pricing Supplement; and in
the case of Floating Rate Notes which reset annually, the third Wednesday of
one month of each year as specified in the applicable Pricing Supplement;
provided, however, that (a) the interest rate in effect from the date of
issue to the first Interest Reset Date with respect to a Floating Rate Note
will be the Initial Interest Rate (as set forth in the applicable Pricing
Supplement) and (b) the interest rate in effect for the ten days immediately
prior to Maturity of a Note will be that in effect on the tenth day preceding
such Maturity. If any Interest Reset Date for any Floating Rate Note would
otherwise be a day that is not a Market Day with respect to such Floating
Rate Note, the Interest Reset Date for such Floating Rate Note shall be
postponed to the next day that is a Market Day with respect to such Floating
Rate Note, except that in the case of a LIBOR Note, if such Market Day is in
the next succeeding calendar month, such Interest Reset Date shall be the
immediately preceding Market Day.
The Interest Determination Date pertaining to an Interest Reset Date for a
Commercial Paper Rate Note (the "Commercial Paper Interest Determination
Date"), for a Prime Rate Note (the "Prime Rate Interest Determination Date"),
for a LIBOR Note (the "LIBOR Interest Determination Date"), for a CD Rate
Note (the "CD Rate Interest Determination Date") and for a Federal Funds Rate
Note (the "Federal Funds Rate Interest Determination Date") will be the
second Market Day preceding such Interest Reset Date. The Interest
Determination Date pertaining to an Interest Reset Date for a Treasury Rate
Note (the "Treasury Interest Determination Date") will be the day of the week
in which such Interest Reset Date falls on which Treasury bills would
normally be auctioned. Treasury bills are usually sold at auction on the
Monday of each week, unless that day is a legal holiday, in which case the
auction is usually held on the following Tuesday, except that such auction
may be held on the preceding Friday. If, as the result of a legal holiday, an
auction is so held on the preceding Friday, such Friday will be the Treasury
Interest Determination Date pertaining to the Interest Reset Date occurring
in the next succeeding week. If an auction date shall fall on any Interest
Reset Date for a Treasury Rate Note, then such Interest Reset Date shall
instead be the first Market Day immediately following such auction date.
All percentages resulting from any calculations referred to in this
Prospectus Supplement will be rounded upwards, if necessary, to the next
higher one hundred-thousandth of a percentage point (e.g., 9.876541% (or
.09876541) being rounded to 9.87655% (or .0987655)), and all U.S. dollar
amounts used in or resulting from such calculations will be rounded to the
nearest cent (with one-half cent or more being rounded upwards).
In addition to any maximum interest rate which may be applicable to any
Floating Rate Note pursuant to the above provisions, the interest rate on the
Floating Rate Notes 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. Under present New York law the maximum rate of
interest is 25% per annum on a simple interest basis, with certain
exceptions. The limit may not apply to Floating Rate Notes in which U.S.
$2,500,000 or more has been invested.
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 which will become effective on the next Interest Reset Date
with respect to such Floating Rate Note. The Calculation Agent's
determination of any interest rate will be final and binding in the absence
of manifest error.
Commercial Paper Rate Notes
Commercial Paper Rate Notes will bear interest at the interest rates
(calculated with reference to the Commercial Paper Rate and the Spread or
Spread Multiplier, if any), and will be payable on the dates, specified on
the face of the Commercial Paper Rate Note and in the applicable Pricing
Supplement. Unless otherwise indicated in the applicable Pricing Supplement,
the "Calculation Date" pertaining to a Commercial Paper Interest
Determination Date will be the tenth day after such Commercial Paper Interest
Determination Date or, if any such day is not a Market Day, the next
succeeding Market Day.
Unless otherwise indicated in the applicable Pricing Supplement, "Commercial
Paper Rate" means, with respect to any Interest Reset Date, the Money Market
Yield (calculated as described below) of the
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per annum rate (quoted on a bank discount basis) for the relevant Commercial
Paper Interest Determination Date for commercial paper having the specified
Index Maturity as published by the Board of Governors of the Federal Reserve
System in "Statistical Release H.15(519), Selected Interest Rates" or any
successor publication of the Board of Governors of the Federal Reserve System
("H.15(519)") under the heading "Commercial Paper". In the event that such
rate is not published prior to 9:00 A.M., New York City time, on the relevant
Calculation Date, then the Commercial Paper Rate with respect to such
Interest Reset Date shall be the Money Market Yield of such rate on such
Commercial Paper Interest Determination Date for commercial paper having 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 published by the Federal
Reserve Bank of New York ("Composite Quotations") under the heading
"Commercial Paper". 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, the Commercial Paper Rate with respect to such Interest Reset
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 Interest Determination Date, of three leading dealers of
commercial paper in The City of New York 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 fewer than three dealers
selected as aforesaid by the Calculation Agent are quoting as mentioned in
this sentence, the Commercial Paper Rate with respect to such Interest Reset
Date will be the Commercial Paper Rate in effect on such Commercial Paper
Interest Determination Date.
"Money Market Yield" shall be a yield (expressed as a percentage) calculated
in accordance with the following formula:
Money Market Yield = 100 X 360 X D
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360 - (D X M)
where "D" refers to the 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 period from the Interest Reset Date to but excluding
the day that numerically corresponds to such Interest Reset Date (or if there
is not any such numerically corresponding day, the last day) in the calendar
month that is the number of months corresponding to the specified Index
Maturity after the month in which such Interest Reset Date falls.
Prime Rate Notes
Prime Rate Notes will bear interest at the interest rates (calculated with
reference to the Prime Rate and the Spread or Spread Multiplier, if any), and
will be payable on the dates specified on the face of the Prime Rate Note and
in the applicable Pricing Supplement. Unless otherwise indicated in the
applicable Pricing Supplement, the "Calculation Date" pertaining to a Prime
Rate Interest Determination Date will be the tenth day after such Prime Rate
Interest Determination Date or, if any such day is not a Market Day, the next
succeeding Market Day.
Unless otherwise indicated in the applicable Pricing Supplement, "Prime Rate"
means, with respect to any Interest Reset Date, the rate set forth for the
relevant Prime Rate Interest Determination Date in H.15(5l9) under the
heading "Bank Prime Loan". In the event that such rate is not published prior
to 9:00 A.M., New York City time, on the relevant Calculation Date, then the
Prime Rate with respect to such Interest Reset Date will be the arithmetic
mean of the rates of interest publicly announced by each bank that appears on
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) ("Reuters Screen NYMF Page") as such bank's prime rate or base
lending rate as in effect for such Prime Rate Interest Determination Date. If
fewer than four such rates appear on the Reuters Screen NYMF Page on such
Prime Rate Interest Determination Date, the Prime Rate with respect to such
Interest Reset Date will be the arithmetic mean of the prime rates or base
lending 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
Interest Determination Date by three major banks in The City of New York
selected by the Calculation Agent; provided, however, that if fewer than
three banks selected as aforesaid by the Calculation Agent are quoting as
mentioned in this sentence, the Prime Rate with respect to such Interest
Reset Date will be the Prime Rate in effect on such Prime Rate Interest
Determination Date.
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LIBOR Notes
LIBOR Notes will bear interest at the interest rates (calculated with
reference to LIBOR and the Spread or Spread Multiplier, if any), and will be
payable on the dates specified on the face of the LIBOR Note and in the
applicable Pricing Supplement. Unless otherwise specified in the applicable
Pricing Supplement, the "Calculation Date" with respect to a LIBOR Interest
Determination Date will be the tenth day after such LIBOR Interest
Determination Date or, if any such day is not a Market Day, the next
succeeding Market Day.
Unless otherwise indicated in the applicable Pricing Supplement, LIBOR, with
respect to any Interest Reset Date, will be determined by the Calculation
Agent in accordance with the following provisions:
(i) On the relevant LIBOR Interest Determination Date, LIBOR will be
determined on the basis of the offered rates for deposits of not less than
U.S. $1,000,000 having the specified Index Maturity, commencing on the second
Market Day immediately following such LIBOR Interest Determination Date,
which appear on the display designated as page "LIBO" on the Reuters Monitor
Money Rates Service (or such other page as may replace the LIBO page on that
service for the purpose of displaying London interbank offered rates of major
banks) ("Reuters Screen LIBO Page") as of 11:00 A.M., London time. If at
least two such offered rates appear on the Reuters Screen LIBO Page, LIBOR
with respect to such Interest Reset Date will be the arithmetic mean of such
offered rates as determined by the Calculation Agent. If fewer than two
offered rates appear, LIBOR with respect to such Interest Reset Date will be
determined as described in (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which fewer than
two offered rates for the applicable Index Maturity appear on the Reuters
Screen LIBO Page as described in (i) above, LIBOR will be determined on the
basis of the rates at approximately 11:00 A.M., London time, on such LIBOR
Interest Determination Date at which deposits in U.S. dollars having the
specified Index Maturity are offered to prime banks in the London interbank
market by four major banks in the London interbank market selected by the
Calculation Agent commencing on the second Market Day immediately following
such LIBOR Interest Determination Date and in a principal amount equal to an
amount of not less than U.S. $1,000,000 that in the Calculation Agent's
judgment is representative for a single transaction in such market at such
time (a "Representative Amount"). The Calculation Agent will request the
principal London office of each of such banks to provide a quotation of its
rate. If at least two such quotations are provided, LIBOR with respect to
such Interest Reset Date will be the arithmetic mean of such quotations. If
fewer than two quotations are provided, LIBOR with respect to such Interest
Reset Date will be the arithmetic mean of the rates quoted at approximately
11:00 A.M., New York City time, on such LIBOR Interest Determination Date by
three major banks in The City of New York, selected by the Calculation Agent,
for loans in U.S. dollars to leading European banks having the specified
Index Maturity commencing on the Interest Reset Date and in a Representative
Amount; provided, however, that if fewer than three banks selected as
aforesaid by the Calculation Agent are quoting as mentioned in this sentence,
LIBOR with respect to such Interest Reset Date will be the LIBOR in effect on
such LIBOR Interest Determination Date.
Treasury Rate Notes
Treasury Rate Notes will bear interest at the interest rates (calculated with
reference to the Treasury Rate and the Spread or Spread Multiplier, if any)
and will be payable on the dates specified on the face of the Treasury Rate
Note and in the applicable Pricing Supplement. Unless otherwise specified in
the applicable Pricing Supplement, the "Calculation Date" with respect to a
Treasury Interest Determination Date will be the tenth day after such
Treasury Interest Determination Date or, if any such day is not a Market Day,
the next succeeding Market Day.
Unless otherwise indicated in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Interest Reset Date, the rate for the
auction on the relevant Treasury Interest Determination Date of direct
obligations of the United States ("Treasury bills") having the specified
Index Maturity as published in H.15(519) under the heading "U.S. Government
Securities/Treasury Bills/Auction Average (Investment)" or, if not so
published by 9:00 A.M., New York City time, on the relevant Calculation 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) for
such auction as otherwise announced by the United States Department of the
Treasury. In the event that the results of such 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 during such week, then the Treasury
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Rate shall be the rate set forth in H.15(519) for the relevant Treasury Rate
Interest Determination Date for the specified Index Maturity under the
heading "U.S. Government Securities/Treasury Bills/Secondary Market". In the
event such rate is not so published by 3:00 P.M., New York City time, on the
relevant Calculation Date, the Treasury Rate with respect to such Interest
Reset Date shall be calculated by the Calculation Agent and shall be a 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 Interest Determination Date, of three primary
United States government securities dealers in The City of New York 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
fewer than three dealers selected as aforesaid by the Calculation Agent are
quoting as mentioned in this sentence, the Treasury Rate with respect to such
Interest Reset Date will be the Treasury Rate in effect on such Treasury
Interest Determination Date.
CD Rate Notes
CD Rate Notes will bear interest at the interest rates (calculated with
reference to the CD Rate and the Spread or Spread Multiplier, if any), and
will be payable on the dates specified on the face of the CD Rate Note and in
the applicable Pricing Supplement. Unless otherwise indicated in the
applicable Pricing Supplement, the "Calculation Date" pertaining to a CD Rate
Interest Determination Date will be the tenth day after such CD Rate Interest
Determination Date or, if such day is not a Market Day, the next succeeding
Market Day.
Unless otherwise indicated in the applicable Pricing Supplement, "CD Rate"
means, with respect to any Interest Reset Date, the rate for the relevant CD
Rate Interest Determination Date for negotiable certificates of deposit
having the specified Index Maturity as published in H.15(519) under the
heading "CDs (Secondary Market)". In the event that such rate is not
published prior to 9:00 A.M., New York City time, on the relevant Calculation
Date, then the CD Rate with respect to such Interest Reset Date shall be the
rate on such CD Rate Interest Determination Date for negotiable certificates
of deposit having 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 published in either
H.15(519) or Composite Quotations, the CD Rate with respect to such Interest
Reset Date shall be calculated by the Calculation Agent and shall be the
arithmetic mean of the secondary market offered rates, as of 10:00 A.M., New
York City time, on such CD Rate Interest Determination Date, of three leading
nonbank dealers of negotiable U.S. dollar certificates of deposit in The City
of New York selected by the Calculation Agent for negotiable certificates of
deposit of major United States money market banks with a remaining maturity
closest to the specified Index Maturity in a denomination of U.S. $5,000,000;
provided, however, that if fewer than three dealers selected as aforesaid by
the Calculation Agent are quoting as mentioned in this sentence, the CD Rate
with respect to such Interest Reset Date will be the CD Rate in effect on
such CD Rate Interest Determination Date.
Federal Funds Rate Notes
Federal Funds Rate Notes will bear interest at the interest rates (calculated
with reference to the Federal Funds Rate and the Spread or Spread Multiplier,
if any), and will be payable on the dates specified on the face of the
Federal Funds Rate Note and in the applicable Pricing Supplement. Unless
otherwise indicated in the applicable Pricing Supplement, the "Calculation
Date" pertaining to a Federal Funds Interest Determination Date will be the
tenth day after such Federal Funds Interest Determination Date or, if such
day is not a Market Day, the next succeeding Market Day.
Unless otherwise indicated in the applicable Pricing Supplement, "Federal
Funds Rate" means, with respect to any Interest Reset Date, the rate on the
relevant Federal Funds Interest Determination Date for Federal Funds as
published in H.15(519) under the heading "Federal Funds (Effective)". In the
event that such rate is not published prior to 9:00 A.M., New York City time,
on the relevant Calculation Date, then the Federal Funds Rate with respect to
such lnterest Reset Date will be the rate on such Federal Funds Interest
Determination Date 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 published in either H.15(519) or Composite
Quotations, the Federal Funds Rate with respect to such Interest Reset Date
shall be calculated by the Calculation Agent and shall be the arithmetic mean
of the rates, as of 9:00 A.M., New York City time, on such Federal Funds
Interest Determination Date, for the last transaction in overnight Federal
Funds arranged by three leading brokers of Federal Funds transactions in The
City of New York selected by the Calculation Agent; provided, however, that
if fewer
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than three brokers selected as aforesaid by the Calculation Agent are quoting
as mentioned in this sentence, the Federal Funds Rate with respect to such
Interest Reset Date will be the Federal Funds Rate in effect on such Federal
Funds Interest Determination Date.
Payment of Principal and Interest
Payments of principal of (and premium, if any) and interest on all Book-Entry
Notes will be payable in accordance with the procedures described below under
"Book-Entry System". Unless otherwise specified in the applicable Pricing
Supplement, payments of principal of (and premium, if any) and interest on
all Fixed Rate Notes and Floating Rate Notes which are Certificated Notes
will be made in the applicable Specified Currency. Notwithstanding the prior
two sentences, payments of principal (and premium, if any) and interest on
Notes denominated in other than U.S. dollars will nevertheless be made in
U.S. dollars (i) with respect to any Certificated Notes, at the option of the
Holders thereof under the procedures described in the two following
paragraphs and (ii) with respect to any Notes, at the option of the Company
in the case of imposition of exchange controls or other circumstances beyond
the control of the Company as described in the last paragraph under this
heading. If specified in the applicable Pricing Supplement, the amount of
principal payable on the Notes therein described will be determined by
reference to an index or formula described in such Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, and except
as provided in the next paragraph, payments of interest and principal (and
premium, if any) with respect to any Certificated Note denominated in other
than U.S. dollars will be made in U.S. dollars if the registered Holder of
such Note on the relevant Regular Record Date or at Maturity, as the case may
be, has transmitted a written request for such payment in U.S. dollars to the
Trustee at its Corporate Trust Office in The City of New York on or prior to
such Regular Record Date or the date 15 days prior to Maturity, as the case
may be. Such request may be in writing (mailed or hand delivered) or by cable
or telex or, if promptly confirmed in writing, by other form of facsimile
transmission. Any such request made with respect to any Certificated Note by
a registered Holder will remain in effect with respect to any further
payments of interest and principal (and premium, if any) with respect to such
Note payable to such Holder, unless such request is revoked on or prior to
the relevant Regular Record Date or the date 15 days prior to Maturity, as
the case may be. Holders of Certificated Notes denominated in other than U.S.
dollars whose Notes are registered in the name of a broker or nominee should
contact such broker or nominee to determine whether and how an election to
receive payments in U.S. dollars may be made.
Unless otherwise specified in the applicable Pricing Supplement, the U.S.
dollar amount to be received by a Holder of a Note (including a Book-Entry
Note) denominated in other than U.S. dollars who elects to receive payment in
U.S. dollars will be based on the highest bid quotation in The City of New
York received by the Exchange Rate Agent (as defined below) as of 11:00 A.M.,
New York City time, on the second Business Day next preceding the applicable
payment date from three recognized foreign exchange dealers (one of which may
be the Exchange Rate Agent) for the purchase by the quoting dealer of the
Specified Currency for U.S. dollars for settlement on such payment date in
the aggregate amount of the Specified Currency payable to all Holders of
Notes electing to receive U.S. dollar payments and at which the applicable
dealer commits to execute a contract. If three such bid quotations are not
available on the second Business Day preceding the date of payment of
principal (and premium, if any) or interest with respect to any Note, such
payment will be made in the Specified Currency. All currency exchange costs
associated with any payment in U.S. dollars on any such Note will be borne by
the Holder thereof by deductions from such payment. Unless otherwise provided
in the applicable Pricing Supplement, United States Trust Company of New York
will be the Exchange Rate Agent (the "Exchange Rate Agent") with respect to
the Notes.
Interest will be payable to the person in whose name a Note is registered
(which in the case of Global Securities representing Book-Entry Notes will be
the Depositary or a nominee of the Depositary) at the close of business on
the Regular Record Date next preceding each Interest Payment Date; provided,
however, that interest payable at Maturity will be payable to the person to
whom principal shall be payable (which in the case of Global Securities
representing Book-Entry Notes will be the Depositary or a nominee of the
Depositary). The first payment of interest on any Note originally issued
between a Regular Record Date and an Interest Payment Date will be made on
the Interest Payment Date following the next succeeding Regular Record Date
to the registered owner on such next succeeding Regular Record Date. Unless
otherwise indicated in the applicable Pricing Supplement, the "Regular Record
Date" with respect to any Floating Rate Note shall be the date 15 calendar
days prior to each Interest Payment Date, whether
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or not such date shall be a Business Day, and the "Regular Record Date" with
respect to any Fixed Rate Note shall be the May 15 and November 15 next
preceding the June 1 and December 1 Interest Payment Dates.
Unless otherwise indicated in the applicable Pricing Supplement, and except
as provided below, interest will be payable, in the case of Floating Rate
Notes which reset weekly, on the third Wednesday of March, June, September
and December of each year; in the case of Floating Rate Notes which reset
monthly, on the third Wednesday of each month or on the third Wednesday of
March, June, September and December of each year (as indicated in the
applicable Pricing Supplement); in the case of Floating Rate Notes which
reset quarterly, on the third Wednesday of March, June, September and
December of each year; in the case of Floating Rate Notes which reset
semi-annually, on the third Wednesday of the two months of each year
specified in the applicable Pricing Supplement; and in the case of Floating
Rate Notes which reset annually, on the third Wednesday of the month
specified in the applicable Pricing Supplement (each an "Interest Payment
Date"), and in each case, at Maturity. If an Interest Payment Date with
respect to any Floating Rate Note would otherwise fall on a day that is not a
Market Day with respect to such Note, such Interest Payment Date will be the
next succeeding Market Day (or, in the case of a LIBOR Note, if such day
falls in the next calendar month, the next preceding Market Day).
Payments of interest on any Fixed Rate Note or Floating Rate Note with
respect to any Interest Payment Date will include interest accrued to but
excluding such Interest Payment Date; provided, however, that if the Interest
Reset Dates with respect to any Floating Rate Note are weekly, interest
payable on such Note on any Interest Payment Date, other than interest
payable on the date on which principal on such Note is payable, will include
interest accrued through but excluding the day following the next preceding
Regular Record Date.
With respect to a Floating Rate Note, accrued interest from the date of issue
or from the last date to which interest has been paid is calculated by
multiplying the face amount of such Floating Rate Note by an accrued interest
factor. Such accrued interest factor is computed by adding the interest
factor calculated for each day from the date of issue, or from the last date
to which interest has been paid, to but excluding the date for which accrued
interest is being calculated. The interest factor (expressed as a decimal)
for each such day is computed by dividing the interest rate (expressed as a
decimal) applicable to such date by 360, in the case of Commercial Paper Rate
Notes, Prime Rate Notes, LIBOR Notes, CD Rate Notes or Federal Funds Rate
Notes, or by the actual number of days in the year, in the case of Treasury
Rate Notes. Interest on Fixed Rate Notes will be computed on the basis of a
360-day year of twelve 30-day months.
Any payment on any Note due on any day which is not a Market Day, need not be
made on such day, but may be made on the next succeeding Market Day (or, in
the case of a LIBOR Note, if such day falls in the next calendar month, the
next preceding Market Day) with the same force and effect as if made on the
due date, and no interest shall accrue for the period from and after such
date.
Payment of the principal of (and premium, if any) and any interest due with
respect to any Certificated Note at Maturity to be made in U.S. dollars will
be made in immediately available funds upon surrender of such Note at the
Corporate Trust Office of United States Trust Company of New York in the
Borough of Manhattan, The City of New York, provided that the Certificated
Note is presented to the Paying Agent in time for the Paying Agent to make
such payments in such funds in accordance with its normal procedures.
Payments of interest with respect to Certificated Notes to be made in U.S.
dollars other than at Maturity will be made by check mailed to the address of
the person entitled thereto as it appears in the Security Register or by wire
transfer to such account as may have been appropriately designated by such
Person.
Unless otherwise specified in the applicable Pricing Supplement, payments of
interest and principal (and premium, if any) with respect to any Certificated
Note to be made in a Specified Currency other than U.S. dollars will be made
by wire transfer of immediately available funds to such account with a bank
located in the country issuing the Specified Currency (or, with respect to
Certificated Notes denominated in ECUs, to an ECU account) or other
jurisdiction acceptable to the Company and the Trustee as shall have been
designated at least five Business Days prior to the Interest Payment Date or
Stated Maturity, as the case may be, by the registered Holder of such Note on
the relevant Regular Record Date or Maturity, provided that, in the case of
payment of principal (and premium, if any) and any interest due at Maturity,
the Certificated Note is presented to the Paying Agent in time for the Paying
Agent to make
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such payments in such funds in accordance with its normal procedures. Such
designation shall be made by filing the appropriate information with the
Trustee at its Corporate Trust Office in The City of New York and, unless
revoked, any such designation made with respect to any Certificated Note by a
registered Holder will remain in effect with respect to any further payments
with respect to such Note payable to such Holder. If a payment with respect
to any such Note cannot be made by wire transfer because the required
designation has not been received by the Trustee on or before the requisite
date or for any other reason, a notice will be mailed to the Holder at its
registered address requesting a designation pursuant to which such wire
transfer can be made and, upon the Trustee's receipt of such a designation,
such payment will be made within five Business Days of such receipt. The
Company will pay any administrative costs imposed by banks in connection with
making payments by wire transfer, but any tax, assessment or governmental
charge imposed upon payments will be borne by the Holders of the Certificated
Notes in respect of which payments are made.
If the principal of (and premium, if any) or interest on any Note (including
any Book-Entry Note) is payable in other than U.S. dollars and such Specified
Currency is not available due to the imposition of exchange controls or other
circumstances beyond the control of the Company, the Company will be entitled
to satisfy its obligations to Holders of the Notes by making such payment in
U.S. dollars on the basis of the most recently available Exchange Rate. Any
payment made under such circumstances in U.S. dollars where the required
payment is in other than U.S. dollars will not constitute an Event of Default
under the Indenture.
Book-Entry System
Upon issuance, all Book-Entry Notes bearing interest (if any) at the same
rate or pursuant to the same formula, having the same date of issuance,
redemption provisions, if any, Specified Currency, Stated Maturity and other
terms will be represented by a single Global Security. Each Global Security
representing Book-Entry Notes will be deposited with, or on behalf of, The
Depository Trust Company, New York, New York (the "Depositary"), and will be
registered in the name of the Depositary or a nominee of the Depositary.
Upon the issuance of a Global Security, the Depositary for such Global
Security or its nominee will credit the accounts of persons held with it with
the respective principal or face amounts of the Book-Entry Notes represented
by such Global Security. Such accounts shall be designated by the Agents with
respect to Book-Entry Notes or by the Company if such Notes are offered and
sold directly by the Company. Ownership of beneficial interests in a Global
Security will be limited to participants and to persons that have accounts
with the Depositary ("participants") or persons that may hold interests
through participants. Ownership interests in a Global Security will be shown
on, and the transfer of that ownership interest will be effected only
through, records maintained by the Depositary or its nominee (with respect to
a participant's interest) for such Global Security and records maintained by
participants (with respect to interests of persons other than participants).
The laws of some states require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such laws may impair
the ability to transfer interests in a Global Note.
The total amount of any principal, premium, if any, and interest due on any
Global Security representing one or more Book-Entry Notes on any Interest
Payment Date or at Maturity will be made available to the Trustee on such
date. As soon as possible thereafter, the Trustee will make such payments to
the Depositary. The Depositary will allocate such payments to each Book-Entry
Note represented by such Global Security and make payments to the owners or
holders thereof in accordance with its existing operating procedures. Neither
the Company or the Trustee, nor any agent of the Company or the Trustee, will
have any responsibility or liability for any aspect of the Depositary's
records relating to or payments made on account of beneficial ownership
interests in a Global Security representing any Book-Entry Notes or for
maintaining, supervising or reviewing any of the Depositary's records
relating to such beneficial ownership interests.
With respect to any Book-Entry Note denominated in a Specified Currency other
than U.S. dollars, the Depositary currently has elected to have payments of
principal (and premium, if any) and interest on such Note made in U.S.
dollars unless notified by any of its participants through which an interest
in such Note is held that it elects to receive such payment of principal (or
premium, if any) or interest in such Specified Currency. Unless otherwise
specified in the applicable Pricing Supplement, a beneficial owner of
Book-Entry Notes denominated in a Specified Currency other than U.S. dollars
electing to receive payments of principal or any premium or interest in a
currency other than U.S. dollars
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must notify the participant through which its interest is held on or prior to
the applicable Record Date, in the case of a payment of interest, and on or
prior to the sixteenth day prior to the maturity date, in the case of
principal or premium, of such beneficial owner's election to receive all or a
portion of such payment in such Specified Currency. Such participant must
notify the Depositary of such election on or prior to the third Business Day
after such Record Date or after such sixteenth day. The Depositary will
notify the Trustee of such election on or prior to the fifth Business Day
after such Record Date or after such sixteenth day. If complete instructions
are received by the participant and forwarded by the participant to the
Depositary, and by the Depositary to the Trustee, on or prior to such dates,
the beneficial owner will receive payments in the Specified Currency.
The Company has been advised by the Depositary that upon receipt of any
payment of principal of or any premium or interest on any Global Security,
the Depositary will immediately credit, on its book- entry registration and
transfer system, the accounts of participants with payments in amounts
proportionate to their respective beneficial interests in the principal
amount of such Global Security as shown on the records of the Depositary.
Payments by participants to owners of beneficial interests in a Global
Security held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for customer accounts registered in "street name", and will be the sole
responsibility of such participants.
A Global Security may not be transferred except as a whole by the Depositary
to a nominee of the Depositary. A Global Security representing Book-Entry
Notes is exchangeable only if (i) the Depositary notifies the Company that it
is unwilling or unable to continue as Depositary for such Global Security or
if at any time the Depositary ceases to be a clearing agency registered under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), (ii)
the Company in its sole discretion determines that all such Global Securities
shall be exchangeable for definitive Notes in registered form, or (iii) an
Event of Default, or an event with notice or the passage of time would be an
Event of Default, with respect to the Notes represented by such Global
Security has occurred and is continuing. Any Global Security that is
exchangeable pursuant to the preceding sentence shall be exchangeable for
Certificated Notes issuable in denominations of $100,000 and integral
multiples of $1,000 in excess thereof and registered in such names as the
Depositary holding such Global Security shall direct. Subject to the
foregoing, the Global Security is not exchangeable, except for a Global
Security of like denomination to be registered in the name of the Depositary
or its nominee.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or Holder of Book-Entry
Notes represented by such Global Security for the purposes of receiving
payment on the Notes, receiving notices and for all other purposes under the
Indenture and the Notes. Except as provided above, owners of beneficial
interests in a Global Security will not be entitled to receive physical
delivery of Notes in definitive form and will not be considered the Holders
thereof for any purpose under the Indenture. Accordingly, each person owning
a beneficial interest in such a Global Security must rely on the procedures
of the Depositary and, if such person is not a participant, on the procedures
of the participant through which such person owns its interest, to exercise
any rights of a Holder under the Indenture. The Indenture provides that the
Depositary may grant proxies and otherwise authorize participants to give or
take any request, demand, authorization, direction, notice, consent, waiver
or other action which a Holder is entitled to give or take under the
Indenture. The Company understands that under existing industry practices, in
the event that the Company requests any action of Holders or that an owner of
a beneficial interest in such a Global Security desires to give or take any
action which a Holder is entitled to give or take under the Indenture, the
Depositary would authorize the participants holding the relevant beneficial
interests to give or take such action, and such participants would authorize
beneficial owners owning through such participants to give or take such
action or would otherwise act upon the instructions of beneficial owners
owning through them.
The Depositary has advised the Company that the Depositary 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 under the Exchange Act. The Depositary was created to hold the
securities of its participants and to facilitate the clearance and settlement
of securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
Depositary's participants include securities brokers and dealers (including
the Agents), banks, trust companies, clearing corporations, and certain other
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organizations some of whom (and/or their representatives) own the Depositary.
Access to the Depositary'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.
FOREIGN CURRENCY RISKS
General
Exchange Rates and Exchange Controls. An investment in Notes that are
denominated in other than U.S. dollars entails significant risks that are not
associated with a similar investment in a security denominated in U.S.
dollars. Such risks include, without limitation, the possibility of
significant changes in rates of exchange between the U.S. dollar and the
various foreign currencies or composite currencies and the possibility of the
imposition or modification of foreign exchange controls by either the U.S. or
foreign governments. Such risks generally depend on factors over which the
Company has no control, such as economic and political events and the supply
of and demand for the relevant currencies. In recent years, rates of exchange
between the U.S. dollar and certain foreign currencies have been highly
volatile and such volatility may be expected in the future. Fluctuations in
any particular exchange rate that have occurred in the past are not
necessarily indicative, however, of fluctuations in the rate that may occur
during the term of any Note. Depreciation of a Specified Currency other than
U.S. dollars against the U.S. dollar would result in a decrease in the
effective yield of such Note below its coupon rate, and in certain
circumstances could result in a loss to the investor on a U.S. dollar basis.
Governments have imposed from time to time and may in the future impose
exchange controls which could affect exchange rates as well as the
availability of the Specified Currency at a Note's maturity. Even if there
are no actual exchange controls, it is possible that the Specified Currency
for any particular Note would not be available at such Note's maturity. In
that event, the Company will repay in U.S. dollars on the basis of the most
recently available Exchange Rate. See "Description of Notes -- Payment of
Principal and Interest".
Currently, there are limited facilities in the United States for conversion
of U.S. dollars into foreign currencies, and vice versa. Accordingly,
payments on Notes made in a Specified Currency other than U.S. dollars will
be made from an account with a bank located in the country issuing the
Specified Currency (or, with respect to Notes denominated in ECUs, from an
ECU account). See "Description of Notes -- Payment of Principal and
Interest".
Unless otherwise specified in the applicable Pricing Supplement, Notes
denominated in other than U.S. dollars or ECUs will not be sold in, or to
residents of, the country issuing the Specified Currency in which particular
Notes are denominated.
This Prospectus Supplement and the attached Prospectus and Pricing Supplement
do not describe all the risks of an investment in the Notes denominated in
other than U.S. dollars. Prospective investors should consult their own
financial and legal advisors as to the risks entailed by an investment in the
Notes denominated in a currency (including any composite currency) in other
than U.S. dollars. Such Notes are not an appropriate investment for investors
who are unsophisticated with respect to foreign currency transactions.
The information set forth in the Prospectus Supplement is directed to
prospective purchasers who are United States residents, and the Company
disclaims any responsibility to advise prospective purchasers who are
residents of countries other than the United States with respect to any
matters that may affect the purchase, holding or receipt of payments of
principal of and interest on the Notes. Such persons should consult their own
financial and legal advisors with regard to such matters.
Governing Law and Foreign Currency Judgments. The Notes will be governed by
and construed in accordance with the laws of the State of New York. If an
action based on the Notes were commenced in a court in the United States, it
is likely that such court would grant judgment relating to the Notes only in
U.S. dollars. It is not clear, however, whether, in granting such judgment,
the rate of conversion into U.S. dollars would be determined with reference
to the date of default, the date judgment is rendered or some other date. New
York statutory law provides, however, that a court shall render a judgment in
the foreign currency of the underlying obligation and that the judgment shall
be converted into U.S. dollars at the rate of exchange prevailing on the date
of the entry of the judgment.
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Exchange Rates and Exchange Controls for Specified Currencies
With respect to any Note denominated in other than U.S. dollars, a Pricing
Supplement including a currency supplement with respect to the applicable
Specified Currency (which supplement shall include information with respect
to applicable current foreign exchange controls, if any), and the relevant
historical exchange rates for the Specified Currency shall constitute a part
of this Prospectus Supplement. The information therein concerning exchange
rates is furnished as a matter of information only and should not be regarded
as indicative of the range of or trends in fluctuations in currency exchange
rates that may occur in the future.
If payment on a Note is required to be made in ECUs and on a payment date
with respect to such Note, ECUs are unavailable due to the imposition of
exchange controls or other circumstances beyond the Company's control or are
no longer used in the European Monetary System, then all payments due on such
payment date shall be made in U.S. dollars. The amount so payable on any
payment date in ECUs shall be converted into U.S. dollars at a rate
determined by the Exchange Rate Agent as of the second Business Day prior to
the date on which such payment is due on the following basis: the component
currencies of the ECUs for this purpose (the "Components") shall be the
currency amounts that were components of the ECUs as of the last date on
which ECUs were used in the European Monetary System. The equivalent of ECUs
in U.S. dollars shall be calculated by aggregating the U.S. dollar
equivalents of the Components. The U.S. dollar equivalent of each of the
Components shall be determined by the Exchange Rate Agent on the basis of the
most recently available Exchange Rate for the Components, or as otherwise
indicated in the applicable Pricing Supplement.
If the official unit of any component currency is altered by way of
combination or subdivision, the number of units of that currency as a
Component shall be divided or multiplied in the same proportion. If two or
more component currencies are consolidated into a single currency, the
amounts of those currencies as Components shall be replaced by an amount in
such single currency equal to the sum of the amounts of the consolidated
component currencies expressed in such single currency. If any component
currency is divided into two or more currencies, the amount of that currency
as a Component shall be replaced by amounts of such two or more currencies,
each of which shall have a value on the date of division equal to the amount
of the former component currency divided by the number of currencies into
which that currency was divided.
All determinations referred to above made by the Exchange Rate Agent shall be
at its sole discretion (except to the extent expressly provided herein or in
the applicable Pricing Supplement that any determination is subject to
approval by the Company) and, in the absence of manifest error, shall be
conclusive for all purposes and binding on Holders of the Notes and the
Company, and the Exchange Rate Agent shall have no liability therefor.
UNITED STATES TAXATION
The following summary of the principal United States federal income tax
consequences of ownership of Notes is based upon the opinion of Donald W.
Stevenson, Manager of Tax Research and Audits of the Company. 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. Except as described below with respect to Notes
providing for alternative payment schedules or Variable Rate Notes, this
summary does not apply with respect to Notes payments on which are determined
by reference to any index or subject to any contingency. The applicable
Pricing Supplement will contain a discussion of any special United States
federal income tax rules with respect to such Notes. 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 effect.
This summary is intended to be a general statement of present United
States federal tax law and is not intended to interpret such law with respect
to any particular Holder. 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.
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United States Holders
Payments of Interest
Interest on a Note, whether payable in U.S. dollars or a currency, composite
currency or basket of currencies other than U.S. dollars (a "foreign
currency"), other than interest on a "Discount Note" that is not "qualified
stated interest" (each as defined below under "Original Issue Discount --
General"), will be taxable to 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. A United States Holder is a beneficial owner who
or that is (i) a citizen or resident of the United States, (ii) a domestic
corporation or (iii) otherwise subject to United States federal income
taxation on a net income basis in respect of the Note.
If an interest payment is denominated in, or determined by reference to, a
foreign currency, the amount of income recognized by a cash basis United
States Holder will be the U.S. dollar value of the interest payment, based on
the exchange rate in effect on the date of receipt, regardless of whether the
payment is in fact converted into U.S. dollars.
An accrual basis United States Holder may determine the amount of income
recognized with respect to an interest payment denominated in, or determined
by reference to, a foreign currency in accordance with either of two methods.
Under the first method, the amount of income accrued will be based on the
average exchange rate in effect during the interest accrual period (or, with
respect to an accrual period that spans two taxable years, the part of the
period within the taxable year). Upon receipt of the interest payment
(including a payment attributable to accrued but unpaid interest upon the
sale or retirement of a Note) denominated in, or determined by reference to,
a foreign currency, the United States Holder will recognize ordinary income
or loss measured by the difference between the average exchange rate used to
accrue interest income and the exchange rate in effect on the date of
receipt, regardless of whether the payment is in fact converted into U.S.
dollars.
Under the second method, the United States Holder may elect to determine the
amount of income accrued on the basis of the exchange rate in effect on the
last day of the accrual period or, in the case of an accrual period that
spans two taxable years, the exchange rate in effect on the last day of the
part of the period within the taxable year. Additionally, if a payment of
interest is actually received within five business days of the last day of
the accrual period or taxable year, an electing accrual basis United States
Holder may instead translate such accrued interest into U.S. dollars at the
exchange rate in effect on the day of actual receipt. Any such election will
apply to all debt instruments held by the United States Holder at the
beginning of the first taxable year to which the election applies or
thereafter acquired by the United States Holder, and will be irrevocable
without the consent of the Internal Revenue Service (the "Service").
Original Issue Discount
General. 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 the Note's "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 to other than 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 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 for "Variable Rate Notes" (as defined below
under "Original Issue Discount -- Variable Rate Notes") are described below
under "Original Issue Discount -- Variable Rate Notes".
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 original issue discount" and the Note is not a Discount Note.
Unless the election described below under "Election to Treat All Interest as
Original Issue Discount" is made, a United States Holder of a Note with de
minimis original issue discount must include such de minimis original issue
discount in income as stated principal payments on the Note are made. The
includible amount with respect to each such payment will equal
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the product of the total amount of the Note's de minimis original issue
discount 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.
United States Holders of Discount Notes having a maturity of more than one
year from their date of issue must include original issue discount ("OID") in
income calculated on a constant-yield method before the receipt of cash
attributable to such income, and generally will have to include in income
increasingly greater amounts of OID over the life of the Note. The amount of
OID includible in income by a United States Holder of a Discount Note is the
sum of the daily portions of OID with respect to the Discount Note for each
day during the taxable year or portion of the taxable year on which the
United States Holder holds such Discount 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 that accrual period. Accrual periods
with respect to a Note may be of any length selected by the United States
Holder and may vary in length over the term of the Note 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 final or first day of
an accrual period. The amount of OID allocable to an accrual period equals
the excess of (a) the product of the Discount Note's adjusted issue price at
the beginning of the accrual period and such Note's yield to maturity
(determined on the basis of compounding at the close of each accrual period
and properly adjusted for the length of the accrual period) over (b) the sum
of the payments of qualified stated interest on the Note 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
(x) the amount of accrued OID for each prior accrual period and decreased by
(y) 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 lengths to each accrual period in the interval, and
the adjusted issue price at the beginning of each accrual period in the
interval 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 (x) the amount payable at the maturity of the Note (other
than any payment of qualified stated interest) and (y) the Note's adjusted
issue 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.
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
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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 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 method. 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 include 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 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 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 the Company 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 the Company, the
Company 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 the
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 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, except to the extent that a portion of the
Note is repaid as a result of a change in circumstances and solely for
purposes of the accrual of OID, the yield and maturity of the Note are
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.
Election to Treat All Interest as Original Issue Discount. 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 purposes of this election, interest includes stated interest, OID, de
minimis original issue discount, 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
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apply amortizable bond premium against interest with respect to all debt
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 3 months prior to the first day on which that value is in effect
and no later than 1 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,
governors, 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, that is
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 a related party,
or (iv) a combination of objective rates. A variable rate 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. Under these rules, Commercial Paper Rate Notes, Prime Rate Notes,
LIBOR Notes, Treasury Rate Notes, CD Rate Notes, and Federal Funds Rate Notes
will generally be treated as Variable Rate Notes.
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 inverse floating
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 single 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
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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 with the
modification 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 rate (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 provides 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 specially
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 include
any stated 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-thru 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.
Foreign Currency Discount Note. OID for any accrual period on a Discount Note
that is denominated in, or determined by reference to, a foreign currency
will be determined in the foreign currency and then translated into U.S.
dollars in the same manner as stated interest accrued by an accrual basis
United States Holder, as described under "Payments of Interest". Upon receipt
of an amount attributable to OID (whether in connection with a payment of
interest or the sale or retirement of a Note), a United States Holder may
recognize ordinary income or loss.
Notes Purchased at a Premium
A United States Holder that purchases a Note for an amount in excess of its
principal amount may elect to treat such excess as "amortizable bond
premium", in which case the amount required to be included in the United
States Holder's income each year with respect to interest on the Note will be
reduced by the amount of amortizable bond premium allocable (based on the
Note's yield to maturity) to such year. In the case of a Note that is
denominated in, or determined by reference to, a foreign currency, bond
premium will be computed in units of foreign currency, and amortizable bond
premium will reduce interest income in units of the foreign currency. At the
time amortized bond premium offsets interest income, exchange gain or loss
(taxable as ordinary income or loss) is realized measured by the difference
between exchange rates at that time and at the time of the acquisition of the
Notes. Any election to amortize bond premium shall apply to all bonds (other
than bonds the interest on which is excludible from gross income) held by the
United States Holder at the beginning of the first taxable year to which the
election applies or thereafter acquired by the United States Holder, and is
irrevocable without the consent of the Service. See also "Original Issue
Discount -- Election to Treat All Interest as Original Issue Discount".
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
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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) the amount of any amortizable bond premium applied to
reduce interest on the Note. The U.S. dollar cost of a Note purchased with a
foreign currency will generally be the U.S. dollar value of the purchase
price on the date of purchase or, in the case of Notes traded on an
established securities market, as defined in the applicable Treasury
Regulations, that are purchased by a cash basis United States Holder (or an
accrual basis United States Holder that so elects), on the settlement date
for the purchase.
A United States Holder will generally recognize gain or loss on the sale or
retirement of a Note equal to the difference between the amount realized on
the sale or retirement and the tax basis of the Note. The amount realized on
a sale or retirement for an amount in foreign currency will be the U.S.
dollar value of such amount on the date of sale or retirement or, in the case
of Notes traded on an established securities market, as defined in the
applicable Treasury Regulations, sold by a cash basis United States Holder
(or an accrual basis United States Holder that so elects), on the settlement
date for the sale. 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.
Gain or loss recognized by a United States Holder on the sale or retirement
of a Note that is attributable to changes in exchange rates will be treated
as ordinary income or loss. However, exchange gain or loss is taken into
account only to the extent of total gain or loss realized on the transaction.
Exchange of Amounts in Other Than U.S. Dollars
Foreign currency received as interest on a Note or on the sale or retirement
of a Note will have a tax basis equal to its U.S. dollar value at the time
such interest is received or at the time of such sale or retirement. Foreign
currency that is purchased will generally have a tax basis equal to the U.S.
dollar value of the foreign currency on the date of purchase. Any gain or
loss recognized on a sale or other disposition of a foreign currency
(including its use to purchase Notes or upon exchange for U.S. dollars) will
be ordinary income or loss.
United States Alien Holders
For purposes of this discussion, a "United States Alien Holder" is any holder
of a Note who is (i) a nonresident alien individual or (ii) a foreign
corporation, partnership or estate or trust which is not subject to United
States federal income tax on a net income basis in respect of income or gain
from a Note. This discussion assumes that the Note is not subject to the
rules of Section 871(h)(4)(A) of the Code (relating to interest payments that
are determined by reference to the income, profits, changes in the value of
property or other attributes of the debtor or a related party).
Under present United States federal income and estate tax law, and subject to
the discussion of backup withholding below:
(i) payments of principal, premium (if any) and interest, including OID, by
the Company or any of its paying agents to any holder of a Note that is a
United States Alien Holder will not be subject to United States federal
withholding tax if, in the case of interest or OID, (a) the beneficial owner
of the Note does not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of the Company entitled to
vote, (b) the beneficial owner of the Note is not a controlled foreign
corporation that is related to the Company through stock ownership, and (c)
either (A) the beneficial owner of the Note certifies to the Company or its
agent, under penalties of perjury, that it is not a United States Holder and
provides its name and address or (B) a securities clearing organization, bank
or other financial institution that holds customers' securities in the
ordinary course of its trade or business (a "financial institution") and
holds the Note certifies to the Company or its agent under penalties of
perjury that such statement has been received from the beneficial owner by it
or by a financial institution between it and the beneficial owner and
furnishes the payor with a copy thereof;
(ii) a United States Alien Holder of a Note will not be subject to United
States federal withholding tax on any gain realized on the sale or exchange
of a Note; and
(iii) a Note held by an individual who at death is not a citizen or resident
of the United States will not be includible in the individual's gross estate
for purposes of the United States federal estate tax as
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a result of the individual's death if (a) the individual did not actually or
constructively own 10% or more of the total combined voting power of all
classes of stock of the Company entitled to vote and (b) the income on the
Note would not have been effectively connected with a United States trade or
business of the individual at the individual's death.
Backup Withholding and Information Reporting
United States Holders
In general, information reporting requirements will apply to payments of
principal, any premium and interest on a Note and the proceeds of the sale of
a Note before maturity within the United States to, and to the accrual of OID
on a Discount Note with respect to, non-corporate United States Holders, and
"backup withholding" at a rate of 31% will apply to such payments and to
payments of OID if the United States Holder fails to provide an accurate
taxpayer identification number or to report all interest and dividends
required to be shown on its federal income tax returns.
United States Alien Holders
Information reporting and backup withholding will not apply to payments of
principal, premium (if any) and interest (including OID) made by the Company
or a paying agent to a United States Alien Holder on a Note if the
certification described in clause (i)(c) under "United States Alien Holders"
above is received, and provided that the payor does not have actual knowledge
that the holder is a United States person.
Payments of the proceeds from the sale by a United States Alien Holder of a
Note made to or through a foreign office of a broker will not be subject to
information reporting or backup withholding, except that if the broker is a
United States person, a controlled foreign corporation for United States tax
purposes or a foreign person 50% or more of whose gross income is effectively
connected with a United States trade or business for a specified three-year
period, information reporting may apply to such payments. Payments of the
proceeds from the sale of a Note to or through the United States office of a
broker is subject to information reporting and backup withholding unless the
holder or beneficial owner certifies as to its non-United States status or
otherwise establishes an exemption from information reporting and backup
withholding.
SUPPLEMENTAL PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in the Amended and Restated
Distribution Agreement, dated March 23, 1995 (the "Distribution Agreement"),
the Notes are being offered on a continuing basis by the Company through
Goldman, Sachs & Co., Lazard Freres & Co. and Citicorp Securities, Inc. (the
"Agents"), who have agreed to use reasonable efforts to solicit purchases of
the Notes. The Company will have the sole right to accept offers to purchase
Notes and may reject any proposed purchase of Notes as a whole or in part.
The Agents shall have the right, in their discretion reasonably exercised, to
reject any offer to purchase Notes, as a whole or in part. The Company will
pay the Agents a commission of from .125% to .750% of the principal amount of
Notes, depending upon maturity, for sales made through them as Agents.
The Company may also sell Notes to the Agents as principals for their own
accounts at a discount to be agreed upon at the time of sale, or the
purchasing Agents may receive from the Company a commission or discount
equivalent to that set forth on the cover page hereof in the case of any such
principal transaction in which no other discount is agreed. Such Notes may be
resold at prevailing market prices, or at prices related thereto, at the time
of such resale, as determined by the Agents. The Company reserves the right
to sell Notes directly on its own behalf. No commission will be payable on
any Notes sold directly by the Company.
The Agents, as agents or principals, may be deemed to be "underwriters"
within the meaning of the Securities Act of 1933 (the "Act"). The Company has
agreed to indemnify the Agents against certain liabilities, including
liabilities under the Act. The Company has agreed to reimburse the Agents for
certain expenses.
In the ordinary course of their respective businesses, certain of the Agents
and their affiliates have performed, and may in the future perform,
investment banking and commercial banking services for the Company.
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Notes may also be sold at the price to the public set forth herein to dealers
who may resell to investors. Such dealers may be deemed to be "underwriters"
within the meaning of the Act.
The Notes are a new issue of securities with no established trading market
and will not be listed on any securities exchange. No assurance can be given
as to the existence or liquidity of the secondary market for the Notes.
VALIDITY OF NOTES
The validity of the Notes will be passed upon for the Company by William C.
Ugetta, General Counsel of the Company, and for the Agents by Sullivan &
Cromwell, 125 Broad Street, New York, New York. The opinions of Mr. Ugetta
and Sullivan & Cromwell will be conditioned upon, and subject to certain
assumptions regarding future actions required to be taken by the Company and
the Trustee in connection with the issuance and sale of any particular Note,
the specific terms of Notes and other matters which may affect the validity
of Notes but which cannot be ascertained on the date of such opinions.
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PROSPECTUS
Corning Incorporated
Debt Securities
Corning Incorporated (the "Company" or "Corning") may offer and sell from
time to time its debt securities, consisting of debentures, notes and/or
other unsecured evidences of indebtedness (the "Debt Securities"), in an
aggregate principal amount as shall result in an aggregate initial public
offering price not exceeding $500,000,000 (or net proceeds in the case of
Debt Securities issued at an original issue discount) or the equivalent
thereof in a foreign currency (including a composite currency). The Debt
Securities may be offered as separate series on terms to be determined at the
time of sale. The specific designation, aggregate principal amount,
denomination, maturity, premium, if any, rate or rates and time of payment of
interest, if any, terms for any redemption at the option of the Company or
the holder, terms for any sinking fund payments, the initial public offering
price and the other terms in connection with the offering and sale of the
Debt Securities in respect of which the Prospectus is being delivered are set
forth in the accompanying Prospectus Supplement (the "Prospectus
Supplement"). As used herein, Debt Securities shall include securities
denominated in United States dollars or, at the option of the Company if so
specified in the applicable Prospectus Supplement, in any other currency,
including composite currencies such as the European Currency Unit.
The Company may sell Debt Securities to or through underwriters, and also may
sell Debt Securities directly to other purchasers or through agents. See
"Plan of Distribution". The names of such underwriters or agents and the
principal amounts, if any, to be purchased by them and their compensation are
set forth in the accompanying 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
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is January 19, 1995.
<PAGE>
No dealer, salesman or other person has been authorized to give any
information or to make any representation not contained in this Prospectus or
the Prospectus Supplement and, if given or made, such information or
representation must not be relied upon as having been authorized by the
Company or any underwriter, dealer or agent. Neither this Prospectus nor any
Prospectus Supplement constitutes an offer to sell or a solicitation of an
offer to buy any of the securities offered hereby in any jurisdiction to any
person to whom it is unlawful to make such offer in such jurisdiction. The
delivery of this Prospectus or any Prospectus Supplement at any time does not
imply that the information herein or therein is correct as of any time
subsequent to the date of such imformation.
TABLE OF CONTENTS
Page
Available Information 2
Incorporation of Certain Documents by Reference 2
The Company 3
Use of Proceeds 3
Ratios of Earnings to Fixed Charges 3
Description of Debt Securities 4
Plan of Distribution 8
Validity of Debt Securities 9
Experts 9
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and
other information and the Registration Statements referred to below may be
inspected at the Commission's public reference facilities, Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, as well as the following regional
offices: Seven World Trade Center, New York, New York 10048 and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661; and copies of such
materials may be obtained from the Public Reference Section of the Commission
at 450 Fifth Street, Washington, D.C. 20549, at prescribed rates. In
addition, such reports, proxy statements and other information concerning the
Company may also be inspected at the offices of the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York, 10005, upon which Exchange certain
securities of the Company are listed.
This Prospectus constitutes a part of the Registration Statement with respect
to the Debt Securities filed by the Company with the Commission under the
Securities Act of 1933. This Prospectus omits certain of the information
contained in the Registration Statement, and reference is hereby made to the
Registration Statement and to the exhibits relating thereto for further
information with respect to the Company and the Debt Securities. Any
statement contained herein concerning the provisions of any document is not
necessarily complete, and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission. Each such statement is qualified in its entirety
by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission (File No. 1-3247) are
incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
January 2, 1994, filed pursuant to Section 13(a) of the Exchange Act.
2. The Company's Current Reports on Form 8-K dated August 4, 1993 and
August 13, 1993.
3. All other reports filed by the Company pursuant to Sections 13(a) or
15(d) of the Exchange Act since January 2, 1994, consisting of the Company's
Quarterly Reports on Form 10-Q for the twelve, twenty-four and forty weeks
ended March 27, 1994, June 19, 1994, and October 9, 1994, respectively; the
Company's Current Reports on Form 8-K dated January 24, 1994, April 6, 1994,
June 28, 1994, July 26, 1994, August 3, 1994, August 31, 1994, September 29,
1994, October 18, 1994, October 24, 1994, and December 12, 1994,
respectively; and the Company's Current Report on Form 8-KA dated December
12, 1994.
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All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Debt Securities shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
dates of filing of such documents.
Any statement contained herein or in a document all or part of which is
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 or in any document subsequently filed with
the Commission which also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, 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 the written or oral request of any such person,
a copy of any or all of the documents incorporated by reference herein, other
than exhibits to such documents, unless such exhibits are specifically
incorporated by reference in such documents. Such requests should be directed
to the Secretary, Corning Incorporated, One Riverfront Plaza, Corning, New
York 14831; telephone (607) 974-9000.
THE COMPANY
Corning traces its origin to a glass business established by the Houghton
family in 1851. The present corporation was incorporated in the State of New
York on December 24, 1936, and its name was changed from Corning Glass Works
to Corning Incorporated in April 1989.
Corning is an international corporation competing in four broadly based
business segments: Specialty Materials, Communications, Laboratory Services
and Consumer Products. Corning is engaged directly or through subsidiaries
and affiliates principally in the manufacture and sale of products made from
specialty glasses and related inorganic materials having special properties
of chemical stability, electrical resistance, heat resistance, light
transmission and mechanical strength. Corning and its subsidiaries annually
produce some 60,000 different products at 41 plants in eight countries. In
addition, Corning, through subsidiaries and affiliates, engages in laboratory
services businesses, including life and environmental sciences and clinical
laboratory testing at more than 50 facilities in 10 countries.
Corning's strategy includes growth from new products developed from Corning's
long-standing commitment to research and development and from mergers and
acquisitions. Accordingly, Corning continuously reviews potential acquisition
opportunites, primarily in the laboratory services and communications areas.
However, there can be no assurance that Corning will pursue any such
acquisition opportunity.
Corning's executive offices are located at One Riverfront Plaza, Corning, New
York 14831; telephone (607) 974-9000.
USE OF PROCEEDS
Except as may be set forth in the Prospectus Supplement, the net proceeds
from the sale of the Debt Securities will be used by the Company for general
corporate purposes. Such purposes may include, among others, repayment or
reduction of indebtedness, working capital requirements, the funding of a
portion of the Company's normal, ongoing capital spending program and
acquisitions. The precise amounts and timing of the application of proceeds
will depend on the funding requirements of the Company.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the historical ratios of earnings to fixed
charges of the Company for the periods indicated:
Forty Weeks Fiscal Year Ended
Ended Jan. 2, Jan. 3, Dec. 29, Dec. 30, Dec. 31,
October 9, 1994 1994 1993 1991 1990 1989
Ratio of Earnings
to Fixed Charges 3.8x 1.1x 3.8x 4.5x 4.7x 5.0x
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For the purposes of computing the ratio of earnings to fixed charges,
earnings consist of ( 1 ) income before taxes on income, before equity in
earnings and minority interest and before fixed charges (excluding interest
capitalized during the period), (2) Corning's share of pre-tax earnings of
fifty-percent owned companies, (3) Corning's share of pre-tax earnings of
greater than fifty-percent owned unconsolidated subsidiaries, (4) dividends
received from less than fifty-percent owned companies and Corning's share of
losses of such companies, if any, if any debt of such companies is guaranteed
by Corning and (5) previously capitalized interest amortized during the
period; and fixed charges consist of (1) interest on indebtedness, (2)
amortization of debt issuance costs, (3) a portion of rental expenses which
represent an appropriate interest factor, (4) Corning's share of the fixed
charges of fifty-percent owned companies, (5) fixed charges of greater than
fifty-percent owned unconsolidated subsidiaries and (6) pre-tax dividends on
convertible preferred securities of subsidiary.
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities sets 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 (the "Offered Debt Securities") will be
described in the Prospectus Supplement relating to such Offered Debt
Securities.
The Debt Securities are to be issued under an Indenture (the "Indenture"),
dated as of April 1, 1991, between the Company and United States Trust
Company of New York, as Trustee (the "Trustee"), a copy of which is filed as
an exhibit to the Registration Statement of which this Prospectus is a part.
The following summary of certain provisions of the Debt Securities and the
Indenture does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, all the provisions of the Indenture.
Capitalized terms used herein have the respective meanings set forth in the
Indenture, and references to sections or articles are to sections or articles
of the Indenture.
General
The Debt Securities will be unsecured obligations of the Company.
The Indenture does not limit the aggregate principal amount of the debt
securities that may be issued thereunder and provides that Debt Securities
may be issued thereunder from time to time in one or more series. (Section
301)
Reference is made to the Prospectus Supplement for certain terms or
additional provisions of the Offered Debt Securities, including: (i) the
title of the Offered Debt Securities; (ii) any limit on the aggregate
principal amount of the Offered Debt Securities; (iii) the price (expressed
as a percentage of the aggregate principal amount thereof) at which the
Offered Debt Securities will be issued; (iv) the date or dates on which the
principal of the Offered Debt Securities will be payable; (v) the rate or
rates (which may be fixed or variable) per annum at which the Offered Debt
Securities will bear interest, if any; (vi) the date or dates from which such
interest, if any, on the Offered Debt Securities will accrue, the dates on
which such interest, if any, will be payable, the date on which payment of
such interest, if any, will commence and the regular record dates for any
such interest payment dates; (vii) the period or periods within which, the
price or prices at which and the terms and conditions upon which the Offered
Debt Securities may be redeemed, in whole or in part, at the option of the
Company; (viii) the obligation, if any, of the Company to redeem or purchase
Offered Debt Securities pursuant to any sinking fund or analogous provisions
or at the option of a Holder, and the periods within, the prices at and the
terms and conditions upon which such Offered Debt Securities may be redeemed
or purchased; (ix) if other than U.S. dollars, the currency (including
composite currencies) in which payment of principal of and any premium and
interest on the Offered Debt Securities shall be payable; (x) any currency
(including composite currencies) other than the stated currency of the
Offered Debt Securities in which the principal of and any premium and
interest on the Offered Debt Securities may, at the election of the Company
or the Holders, be payable, and the periods within which, and terms and
conditions upon which, such election may be made; (xi) if the amount of
payments of principal of and any premium and interest on the Offered Debt
Securities may be determined with reference to an index, the manner in which
such amounts shall be determined; (xii) the right of the Company to defease
the Offered Debt Securities or certain restrictive covenants and certain
Events of Default under the Indenture; (xiii) whether the Offered Debt
Securities will be issued as Global Securities and, if so, the Depositary for
the Global Securities and the terms and conditions upon which a Global
Security may be exchanged for definitive Debt Securities; and (xiv) any
restrictive covenants, Events of Default, or other terms relating to the
Offered Debt Securities in addition to those described herein.
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Principal and any premium or interest will be payable, and the Debt
Securities will be transferable, at the Place of Payment designated for such
Debt Securities (Sections 305, 1002); provided that the payment of any
interest may, at the option of the Company, be made by check mailed to the
address of the Person entitled thereto as it appears in the Security
Register.
Unless otherwise indicated in the Prospectus Supplement relating thereto, the
Debt Securities will be issued only in fully registered form, without
coupons, in denominations of $1,000 or any integral multiple thereof.
(Section 302) No service charge will be made for any registration of transfer
or exchange of Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or governmental charge payable in connection
therewith. (Section 305)
Debt Securities may be issued under the Indenture as Original Issue Discount
Securities to be offered and sold at a substantial 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 Security" means any security which provides for an amount less than
the principal amount to be due and payable upon a declaration of acceleration
of the maturity thereof. (Section 101)
Subsidiaries
The term "Subsidiary" will be defined as a manufacturing corporation 80% or
more of the outstanding voting stock of which is owned, directly or
indirectly, by the Company and/or one or more Subsidiaries of the Company.
The term "Domestic Subsidiary" will be defined as a Subsidiary of the Company
except (i) a Subsidiary which neither transacts any substantial portion of
its business nor regularly maintains any substantial portion of its fixed
assets within the United States, or (ii) a Subsidiary which is engaged
primarily in financing the operations of the Company and/or its Subsidiaries
outside the United States. (Section 101)
Restrictions on Secured Debt
If the Company or any Domestic Subsidiary shall incur, issue, assume or
guarantee any notes, bonds, debentures or other similar instruments ("Debt")
secured by a pledge, mortgage or lien (a "Mortgage") on any Principal
Domestic Manufacturing Property or on any shares of stock or Debt of any
Domestic Subsidiary, the Company will secure, or cause such Domestic
Subsidiary to secure, the Debt Securities equally and ratably with (or prior
to) such Debt, unless after giving effect thereto the aggregate amount of all
such Debt so secured together with all Attributable Debt of the Company and
its Domestic Subsidiaries in respect of sale and leaseback transactions
involving Principal Domestic Manufacturing Properties would not exceed 10% of
the Consolidated Net Tangible Assets of the Company and its consolidated
subsidiaries. This restriction will not apply to, and there shall be excluded
in computing secured Debt for the purpose of such restriction, Debt secured
by (a) Mortgages on property of, or on any shares of stock or Debt of, any
corporation existing at the time such corporation becomes a Domestic
Subsidiary, (b) Mortgages in favor of the Company or a Domestic Subsidiary,
(c) Mortgages in favor of U.S. governmental bodies to secure progress,
advance or other payments, (d) Mortgages on property, shares of stock or Debt
existing at the time of acquisition thereof (including acquisition through
merger or consolidation), purchase money Mortgages and construction Mortgages
and (e) any extension, renewal or refunding of any Mortgage referred to in
the foregoing clauses (a) through (d), inclusive. (Section 1008) The
Indenture will not restrict the Mortgage of any of the Company's shares of
stock of less than 80% owned subsidiaries or the incurring of unsecured Debt
by the Company or its subsidiaries.
"Principal Domestic Manufacturing Property" will be defined to include any
facility (together with the land on which it is erected and fixtures
comprising a part thereof) used primarily for manufacturing or warehousing,
located in the United States, owned or leased by the Company or a Subsidiary
of the Company and having a gross book value in excess of 3% of Consolidated
Net Tangible Assets, other than any such facility or portion thereof (i)
which is financed by means of industrial revenue bonds or (ii) which, in the
opinion of the Board of Directors of the Company, is not of material
importance to the total business conducted by the Company and its
Subsidiaries as an entirety. (Section 101) "Consolidated Net Tangible Assets"
will be defined to mean the consolidated assets of the Company less
applicable reserves and other deductible items, current liabilities (other
than extendible or renewable Funded Debt) and good will, tradenames,
trademarks, patents, unamortized debt discount and expense and like
intangibles, all as set forth on the most recent balance sheet of the Company
prepared in accordance with generally accepted accounting principles.
(Section 101) "Funded Debt" will be defined to mean any indebtedness for
borrowed money with a maturity of more than 12 months or having a maturity of
less than 12 months but renewable or extendible beyond 12 months. (Section
101)
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Restrictions on Sales and Leasebacks
Neither the Company nor any Domestic Subsidiary may enter into any sale and
leaseback transaction involving any Principal Domestic Manufacturing
Property, completion of construction and commencement of full operation of
which has occurred more than 120 days prior thereto, unless (a) the Company
or such Domestic Subsidiary could create Debt secured by a Mortgage on such
property pursuant to the restrictions set forth under "Restrictions on
Secured Debt" in an amount equal to the Attributable Debt with respect to the
sale and leaseback transaction without equally and ratably securing the Debt
Securities or (b) the Company, within 120 days, applies to the retirement of
its Funded Debt an amount equal to the greater of (i) the net proceeds of the
sale of the Principal Domestic Manufacturing Property leased pursuant to such
arrangement or (ii) the fair market value of the Principal Domestic
Manufacturing Property so leased (subject to credits for certain voluntary
retirements of Funded Debt). This restriction will not apply to any sale and
leaseback transaction (a) between the Company and a Domestic Subsidiary or
between Domestic Subsidiaries or (b) involving the taking back of a lease for
a period of three years or less (including renewals). (Section 1009)
"Attributable Debt" will be defined to mean the total net amount of rent
(discounted at the rate per annum equal to the weighted average interest rate
borne as of the date of determination by the Outstanding Debt Securities
compounded semiannually) required to be paid during the remaining term of any
lease. (Section 101)
Merger and Consolidation
The Indenture will provide that the Company may, without the consent of any
Holder, consolidate with, or sell or convey all or substantially all of its
assets to, or merge with or into any other corporation, provided that in any
such case, (i) either the Company shall be the continuing corporation, or the
successor corporation shall be a corporation organized and existing under the
laws of the United States of America or a State thereof and such successor
corporation shall expressly assume the due and punctual payment of the
principal of and interest on all the Debt Securities, according to their
tenor, and the due and punctual performance and observance of all of the
covenants and conditions of the Indenture to be performed by the Company, and
(ii) the Company or such successor corporation, as the case may be, shall
not, immediately after such merger or consolidation, or such sale or
conveyance, be in default in the performance of any such covenant or
condition. (Sectin 801) The Indenture will provide that no consolidation or
merger of the Company with or into any other corporation and no sale or
conveyance of its property as an entirety, or substantially as an entirety,
may be made to another corporation if, as a result thereof, any Principal
Domestic Manufacturing Property or any shares of stock or Debt of any
Domestic Subsidiary would become subject to a Mortgage, unless either (i) the
Debt Securities shall be equally and ratably secured with (or prior to) the
Debt secured by such Mortgage or (ii) such Mortgage could be created pursuant
to the restrictions set forth under "Restrictions on Secured Debt" without
equally and ratably securing the Debt Securities. (Section 803)
Modification, Amendment or Waiver
With certain limited exceptions, modifications and amendments of the
Indenture may only be made by the Company and the Trustee with the consent of
the Holders of not less than a majority in principal amount of the
Outstanding Debt Securities of each series affected thereby, and compliance
with certain covenants (including those referred to above relating to
restrictions on secured debt and on sales and leasebacks) may be waived on
behalf of the Holders of all Debt Securities of any series, either generally
or in a specific instance and either before or after the time for compliance
with such covenants, with the consent of Holders of not less than a majority
in principal amount of the Outstanding Debt Securities of that series,
provided that without the consent of each Holder of Debt Securities affected
thereby no such modifications or amendments may, among other things, reduce
the principal amount of or interest on any of the Outstanding Debt
Securities, change the maturity date of the principal, the Redemption Price,
the Interest Payment Dates or terms of payment or reduce the percentage of
Holders necessary to waive certain covenants or modify or amend the
Indenture. (Section 901, 902, 1010)
Events of Default
The following will be Events of Default with respect to the Debt Securities
of any series: (a) default in the payment of interest, if any, on a Debt
Security of that series when due, continued for 30 days; (b) default in the
payment of principal of (or premium, if any, on) a Debt Security of that
series when due; (c) failure to deposit any sinking fund payment, when due,
in respect of any Debt Security of that series; (d) default in the
performance of any other covenant of the Company (other than a covenant
included in
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the Indenture solely for the benefit of series of Debt Securities other than
that series), continued for 60 days after written notice; (e) acceleration of
any indebtedness for money borrowed in excess of $10,000,000 by the Company
under the terms of the instrument under which such indebtedness is or may be
outstanding, if such acceleration is not annulled, or such indebtedness is
not paid, within 10 days after written notice; (f) certain events in
bankruptcy, insolvency or reorganization; and (g) any other Event of Default
provided with respect to Debt Securities of that series. (Section 501)
If an Event of Default with respect to Debt Securities of any series shall
occur and be continuing, then in every such case the Trustee or the Holders
of not less than 25% in principal amount (or if the Debt Securities of that
series are Original Issue Discount Securities, such portion of the principal
amount as may be specified in the terms of that series) of the Outstanding
Debt Securities of that series may declare the principal amount of all of the
Debt Securities of that series to be due and payable immediately by a notice
in writing to the Company (and to the Trustee if given by Holders). Upon any
such declaration, such principal amount (or specified amount), plus any
interest accrued on such Debt Securities to the date of declaration, shall
become immediately due and payable. Upon payment (i) of (A) such principal
amount and (B) such interest and (ii) of interest on any overdue principal
and overdue interest, all of the Company's obligations in respect of the
payment of the principal of and interest on such Debt Securities shall
terminate. Overdue principal and overdue interest will each bear interest at
the rate specified in the Debt Securities of such series. At any time after
such declaration of acceleration with respect to the Debt Securities of any
series, but before a judgment or decree based on such declaration, the
Holders of a majority in aggregate principal amount of the Outstanding Debt
Securities of that series may, under certain circumstances, rescind and annul
such declaration if all Events of Default, other than the nonpayment of
accelerated principal, have been cured or waived as provided in the
Indenture. (Section 502)
The Holders of a majority in principal amount of the Outstanding Debt
Securities of any series may direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any
trust or power conferred on the Trustee with respect to the Debt Securities
of such series, provided that such direction shall not be in conflict with
any rule or law or the Indenture. (Section 512) Before proceeding to exercise
any right or power under the Indenture at the direction of any Holders, the
Trustee shall be entitled to receive from such Holders reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
by it in compliance with any such direction. (Section 603(e))
No holder of a Debt Security of any series will have any right to institute
any proceeding with respect to the Indenture, or for the appointment of a
receiver or a trustee, or for any other remedy thereunder, unless (i) such
Holder has previously given to the Trustee written notice of a continuing
Event of Default with respect to the Debt Securities of that series, (ii) the
Holders of at least 25% in aggregate principal amount of the Outstanding Debt
Securities of that series have made written request, and such Holder or
Holders have offered reasonable indemnity, to the Trustee to institute such
proceeding as trustee and (iii) the Trustee has failed to institute such
proceeding, and has not received from the Holders of a majority in aggregate
principal amount of the Outstanding Debt Securities of that series a
direction inconsistent with such request, within 60 days after such notice,
request and offer. (Section 507) However, such limitations do not apply to a
suit instituted by a Holder of a Debt Security for the enforcement of payment
of the principal of or any premium or interest on such Debt Security on or
after the applicable due date specified in such Debt Security. (Section 508)
The Company will be required to furnish to the Trustee annually a statement
that the Company is not in default in the performance and observation of any
of the terms, provisions and conditions of the Indenture (without regard to
any period of grace or requirement of notice) and if the Company is in
default, specifying all such defaults. (Section 1004)
Defeasance
The Prospectus Supplement will state if defeasance and/or covenant defeasance
provisions will apply to the Offered Debt Securities.
The Indenture provides, if such provisions are made applicable to the Debt
Securities of any series, that the Company may elect either (A) to defease
and be discharged from any and all obligations with respect to such Debt
Securities (except from the obligations to register the transfer or exchange
of such Debt Securities, to replace temporary or mutilated, destroyed, lost
or stolen Debt Securities, to maintain an office or agency in respect of the
Debt Securities and to hold moneys for payment in trust) ("defeasance") or
(B) to be released from its obligations with respect to such Debt Securities
under Sections
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501(5), 1008 and 1009 of the Indenture (being the cross-acceleration
provision described in clause (e) under "Events of Default", the restrictions
described under "Restrictions on Secured Debt" and the restrictions described
under "Restrictions on Sales and Leasebacks," respectively) and any other
restrictive covenants and Events of Default applicable to such series of Debt
Securities if indicated in the Prospectus Supplement relating thereto
("covenant defeasance"), upon the deposit with the Trustee (or other
qualifying trustee), in trust for such purpose, of money and/or U.S.
Government Obligations which through the payment of principal and interest in
accordance with their terms will provide money in an amount sufficient to pay
the principal of and any premium and interest on such Debt Securities, and
any mandatory sinking fund or analogous payments thereon, on the scheduled
due dates therefor. In the case of defeasance, the Holders of such Debt
Securities are entitled to receive payments in respect of such Debt
Securities solely from such trust. Such a trust may only be established if,
among other things, the Company has delivered to the Trustee an opinion of
counsel (as specified in the Indenture) to the effect that the Holders of
such Debt Securities will not recognize income, gain or loss for Federal
income tax purposes as a result of such defeasance or covenant defeasance and
will be subject to Federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such defeasance or
covenant defeasance had not occurred. Such opinion, in the case of defeasance
under clause (A) above, must refer to and be based upon a ruling of the
Internal Revenue Service or a change in applicable Federal income tax law
occurring after the date of the Indenture. The Prospectus Supplement may
further describe the provisions, if any, permitting such defeasance or
covenant defeasance with respect to the Debt Securities of a particular
series. (Article Thirteen)
In the event the Company exercised its covenant defeasance option with
respect to the Securities of any series and the Securities of such series
were declared due and payable because of the occurrence of any Event of
Default, the amount of money and U.S. Government Obligations deposited in
trust may not be sufficient to pay amounts due on the Securities of such
series upon any acceleration resulting from such Event of Default. In such a
case, the Company would remain liable for such payments. (Sections 1303 and
1304)
Regarding the Trustee
United States Trust Company of New York serves as the Trustee under several
Indentures pursuant to which there is outstanding long-term indebtedness of
the Company as follows: $75,000,000 principal amount of 8-1/4% Debentures due
2002, $75,000,000 principal amount of 8-3/8% Notes due 1996, $75,000,000
principal amount of 8-7/8% Debentures due 2016, $75,000,000 principal amount
of 8-7/8% Debentures due 2021, $100,000,000 principal amount of 6.75%
Debentures due 2013, $100,000,000 principal amount of 7.625% Debentures due
2024 and $100,000,000 principal amount of 6% Notes due 2003. United States
Trust Company also serves as the Trustee of Medium Term Notes in the
aggregate principal amount of $145,000,000 bearing various interest rates
ranging from 7.08% to 7.93% and maturing at various dates from August, 2000,
to March, 2023. United States Trust Company also serves as a Trustee of the
Company's Pension Plan and Investment Plan, both of which are maintained by
the Company for the benefit of the employees of the Company and certain
participating subsidiaries.
PLAN OF DISTRIBUTION
The Company may sell Debt Securities to or through underwriters, and also may
sell Debt Securities directly to other purchasers or through agents. Unless
otherwise set forth in the Prospectus Supplement, the obligations of any
underwriters to purchase the Offered Debt Securities will be subject to
certain conditions precedent and such underwriters will be obligated to
purchase all the Offered Debt Securities if any are Purchased.
The distribution of the Debt Securities may be effected from time to time in
one or more transactions at a fixed price or prices which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The applicable Prospectus
Supplement will describe the method of distribution of the Offered Debt
Securities.
In connection with the sale of Debt Securities, underwriters may receive
compensation from the Company or from purchasers of Debt Securities for whom
they may act as agents, in the form of discounts, concessions or commissions.
Underwriters, dealers and agents that participate in the distribution of Debt
Securities may be deemed to be underwriters, and any discounts or commissions
received by them and any profit on the resale of Debt Securities by them may
be deemed to be underwriting discounts and commissions, under the Securities
Act of 1933 (the "Act"). Any such underwriter, dealer or agent will be
identified, and any such compensation will be described, in the Prospectus
Supplement.
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<PAGE>
Under agreements which may be entered into by the Company, underwriters,
dealers and agents who participate in the distribution of Debt Securities may
be entitled to indemnification by the Company against certain liabilities,
including liabilities under the Act, or to contribution with respect to
payments which the underwriters, dealers or agents may be required to make in
respect thereof.
If so indicated in the Prospectus Supplement, the Company will authorize
dealers or other persons acting as the Company's agent to solicit offers by
certain institutions to purchase Debt Securities 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.
VALIDITY OF DEBT SECURITIES
The validity of the Debt Securities is being passed on for the Company by
William C. Ughetta, Esq., Senior Vice President and General Counsel of
Corning, and for any underwriters, dealers or agents by Sullivan & Cromwell,
125 Broad Street, New York, New York. Mr. Ughetta owns substantially less
than 1% of the outstanding shares of Corning Common Stock.
EXPERTS
The consolidated financial statements of the Company and of Dow Corning
Corporation incorporated in this Prospectus by reference to the Company's
1993 Annual Report on Form 10-K for the year ended January 2, 1994, have been
so incorporated in reliance on the reports of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The consolidated financial statements of Damon Corporation, as of December
31, 1992 and 1991 and for each of the three years ended December 31, 1992,
incorporated in this Prospectus by reference to the Company's Current Report
on Form 8-K filed on August 4, 1993 have been so incorporated in reliance on
the report of Arthur Andersen LLP, independent public accountants, given on
the authority of said firm as experts in auditing and accounting.
The financial statements of Moran Research Labs as of and for the year ended
December 31, 1993 incorporated in this Prospectus by reference to Corning's
Current Report on Form 8-KA dated December 12, 1994 have been so incorporated
in reliance on the report of Leverone & Company, certified public
accountants, given on the authority of said firm as experts in auditing and
accounting.
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No dealer, salesman or other person has been authorized by the Company to
give any information or to make any representations other than those
contained or incorporated by reference in this Prospectus Supplement, any
Pricing Supplement or the Prospectus in connection with the offer made by
this Prospectus Supplement, any Pricing Supplement and the Prospectus and, if
given or made, such information or representations must not be relied upon as
having been authorized. Neither the delivery of this Prospectus Supplement,
any Pricing Supplement and the Prospectus nor any sale made hereunder and
thereunder shall under any circumstances create an implication that there has
been no change in the affairs of the Company since the date hereof or
thereof. This Prospectus Supplement, any Pricing Supplement and the
Prospectus do not constitute an offer or solicitation by anyone in any state
in which such offer or solicitation is not authorized or in which the person
making such offer or solicitation is not qualified to do so or to anyone to
whom it is unlawful to make such offer or solicitation.
TABLE OF CONTENTS
Prospectus Supplement
Page
Description of Notes S-2
Foreign Currency Risks S-13
United States Taxation S-14
Supplemental Plan of Distribution S-21
Validity of Notes S-22
Prospectus
Available Information 2
Incorporation of Certain Documents by
Reference 2
The Company 3
Use of Proceeds 3
Ratios of Earnings to Fixed Charges 3
Description of Debt Securities 4
Plan of Distribution 8
Validity of Debt Securities 9
Experts 9
$500,000,000
Corning
Incorporated
Series A Medium-Term Notes
CORNING
Goldman, Sachs & Co.
Lazard Freres & Co.
Citicorp Securities, Inc.
