Filed Under Rule 424(b)(3)
File No. 33-48128
PRICING SUPPLEMENT NO. 38 DATED MARCH 7, 1994
To Prospectus dated June 2, 1992 and
Prospectus Supplement dated July 24, 1992)
E. I. DUPONT DE NEMOURS AND COMPANY
MEDIUM-TERM NOTES, SERIES F
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
(FLOATING RATE)
DSE-CUSIP: 26353V BH1
Face Amount: $20,000,000.00 Net Proceeds to Company: $19,970,000
Issue Price: 100% Specified Currency: U.S. Dollars
Original Issue Date: March 8, 1994 Determination Agent: Swiss Bank
Corporation, London Branch
Stated Maturity: March 8, 1995 Form: [X] Book-Entry
[ ] Certificated
Interest Rate: See "Description of Notes--Payment of Interest"
Interest Reset Dates: March 8, 1994 and September 8, 1994
Designated Maturity: Six months
Interest Payment Dates: September 8, 1994 and March 8, 1995
Minimum Denominations: N/A
(only applicable if Specified Currency
is other than U.S. Dollars)
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Redemption: [X] The Notes cannot be redeemed prior to the Stated Maturity.
[ ] The Notes may be redeemed prior to the Stated Maturity.
Initial Redemption Date:
Initial Redemption Price:
Annual Redemption Price Reduction:
Repayment: [X] The Notes cannot be repaid prior to the Stated Maturity.
[ ] The Notes may be repaid prior to the Stated Maturity.
Initial Repayment Date:
Initial Repayment Price:
Annual Repayment Price Reduction:
Discount Note: [ ] Yes [X] No
Total Amount of OID:
Yield to Maturity:
Initial Accrual Period OID:
Principal Discount or Commission: 0.15% Agent: SBCI Swiss Bank Corporation
Investment banking Inc.
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DESCRIPTION OF NOTES
The following description of the particular terms of the Notes
described herein (which are Indexed Notes) supplements, and to the extent
inconsistent therewith replaces, the descriptions of the general terms and
provisions of the Notes set forth in the accompanying Prospectus Supplement
and of the Debt Securities set forth in the accompanying Prospectus, to
which descriptions reference is hereby made. All terms used but not defined
herein which are defined in the accompanying Prospectus or Prospectus
Supplement shall have the meanings therein assigned to them.
Payment of Interest
The Notes will bear interest at a floating rate per annum in
accordance with the formula specified below. Interest will be computed on
the basis of the actual number of days in an interest period divided by 360
days. Interest will be payable on September 8, 1994 and at Stated Maturity.
The amount of interest payable on an Interest Payment Date will be
determined by the Determination Agent on the Reference Date based on the
following formula:
Face Amount x {6 month USD LIBOR - 0.24% +
[9 x (6.545% - 6 month SEK STIBOR) x (Begin divided by End C)]}
See "Description of Notes--Certain Definitions" for the definition
of certain terms used in the foregoing formula.
If the foregoing formula would otherwise result in a negative
amount of interest payable on an Interest Payment Date, then the absolute
value of such amount together with the Compounding Amount (as defined below)
will be subtracted from the amount of interest payable on the next Interest
Payment Date. If, after giving effect to any such subtraction, the amount
of interest payable at Stated Maturity is negative, the absolute value of
such amount will be subtracted from the principal amount of the Note payable
at Stated Maturity.
Payment of Principal
The principal amount of a Note payable at Stated Maturity shall be
the greater of (i) zero and (ii) an amount determined by the Determination
Agent on the Reference Date based on the following formula:
100% x Face Amount + [Redemption A divided by END R]
less the absolute value of any negative amount of interest payable at Stated
Maturity, after giving effect to the subtraction of any negative amount of
interest computed in respect of a previous Interest Payment Date together
with the Compounding Amount.
See "Description of Notes--Certain Definitions" for the definition
of certain terms used in the foregoing formula.
The principal amount of a Note payable at Stated Maturity thus
will be determined with reference to the Swedish Kronor Exchange Rate and
the SEK STIBOR swap rate but will never be less than zero. Depending on the
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Swedish Kronor Exchange Rate and the levels of and difference between six
month USD LIBOR and the value of the two year 6.545% semi-annual actual/360
SEK swap versus six month SEK STIBOR, the principal amount payable at Stated
Maturity will range from zero to an amount in excess of the Face Amount. So
long as the Determination Agent shall have acted in good faith, the
determination by the Determination Agent of the principal amount payable at
Stated Maturity shall be final and binding.
Certain Definitions
"SEK STIBOR" means that the rate for an Interest Reset Date will
be the rate for deposits in Swedish Kronor for a period of the Designated
Maturity which appears on the Reuters Screen SIOR page under the caption
"STIBOR FIXING" as of 11:00 a.m., Stockholm time, on the day that is two
Business Days preceding that Interest Reset Date. If such rate does not
appear on the Reuters Screen SIOR page, the rate for that Interest Reset
Date will be determined on the basis of the rates at which deposits in
Swedish Kronor are offered by the SEK STIBOR Reference Banks at
approximately 11:00 a.m., Stockholm time, on the day that is two Business
Days preceding that Interest Reset Date to prime banks in the Stockholm
interbank market for a period of the Designated Maturity commencing on that
Interest Reset Date and in a Representative Amount. The Determination Agent
will request the principal Stockholm office of each of the SEK STIBOR
Reference Banks to provide a quotation of its rate. If at least two
quotations are provided, the rate for that Interest Reset Date will be the
arithmetic mean of the quotations. If fewer than two quotations are
provided as requested, the rate for that Interest Reset Date will be
arithmetic mean of the rates quoted by major banks in Stockholm, selected by
the Determination Agent, at approximately 11:00 a.m., Stockholm time, on
that Interest Reset Date for loans in Swedish Kronor to leading European
banks for a period of the Designated Maturity commencing on that Interest
Reset Date and in a Representative Amount.
"6 month USD LIBOR" means that the rate for an Interest Reset Date
will be the rate for deposits in U.S. Dollars for a period of the Designated
Maturity which appears on the Telerate Page 3750 as of 11:00 a.m., London
time, on the day that is two Business Days preceding that Interest Reset
Date. If such rate does not appear on the Telerate Page 3750, the rate for
that Interest Reset Date will be determined on the basis of the rates at
which deposits in U.S. Dollars are offered by the USD LIBOR Reference Banks
at approximately 11:00 a.m., London time, on the day that is two Business
Days preceding that Interest Reset Date to prime banks in the London
interbank market for a period of the Designated Maturity commencing on that
Interest Reset Date and in a Representative Amount. The Determination Agent
will request the principal London office of each of the USD LIBOR Reference
Banks to provide a quotation of its rate. If at least two such quotations
are provided, the rate for that Interest Reset Date will be the arithmetic
mean of the quotations. If fewer than two quotations are provided as
requested, the rate for that Interest Reset Date will be the arithmetic mean
of the rates quoted by major banks in New York City, selected by the
Determination Agent, at approximately 11:00 a.m., New York City time, on
that Interest Reset Date for loans in U.S. Dollars to leading European banks
for a period of the Designated Maturity commencing on that Interest Reset
Date and in a Representative Amount.
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"Begin" means 8.042 Swedish Kronor per one U.S. Dollar.
"Business Day" means any day, other than a Saturday or Sunday,
that is not a day on which banking institutions are authorized or required
by law or regulation to close in either New York, London or Stockholm.
"Compounding Amount" means the amount, as determined by the
Determination Agent, equal to the negative amount of interest, if any,
determined in accordance with the formula stated in "Description of
Notes--Payment of Interest" multiplied by a factor equal to the following
formula: 6 month USD LIBOR determined on September 6, 1994 x Compounding
Days divided by 360.
"Compounding Days" means the actual number of days from (and
including) September 8, 1994 to (but excluding) Stated Maturity.
"Determination Agent" means Swiss Bank Corporation, London Branch.
"End C" means the Swedish Kronor Exchange Rate determined on
September 6, 1994 for settlement on September 8, 1994, or March 1, 1995 for
settlement on March 8, 1995, as the case may be.
"END R" means the Swedish Kronor Exchange Rate determined on
March 1, 1995 for settlement on March 8, 1995.
"Swedish Kronor Exchange Rate" means the arithmetic mean (rounded
to the second decimal place, rounding up if the third decimal place, without
regard to rounding, is five or higher and otherwise truncating after the
second decimal place) of the spot bid quotations (expressed as a number of
Swedish Kronor per one U.S. Dollar) received by the Determination Agent from
the Swedish Kronor Exchange Rate Reference Banks (as defined below), without
regard to the highest and lowest quotations, at or about 11:00 a.m., London
time, on September 6, 1994 or March 1, 1995, as the case may be, for the
purchase by the Swedish Kronor Exchange Rate Reference Banks of U.S.
$20,000,000 on the Interest Payment Date or at Stated Maturity, as the case
may be , or, if such day is not a Business Day, on the next succeeding
Business Day; provided, however, that if such spot bid quotations are only
available from less than three such banks, then such spot bid quotation or
spot bid quotations as are available shall be used as aforesaid to the
extent practicable. If no such spot bid quotation is provided or no such
leading bank is selected and approved, the Swedish Kronor Exchange Rate will
be such rate as the Determination Agent, in its absolute discretion,
determines to be fair and reasonable under the circumstances, at or about
11:45 a.m., London time, on September 6, 1994 or March 1, 1995, as the case
may be.
"Redemption A" means the value of a two year 6.545% semi-annual
actual/360 SEK swap versus 6 month SEK STIBOR for SIZE, as determined by the
Determination Agent at 11:00 a.m. London time on March 1, 1995 for a two
year SEK swap for the period from March 8, 1995 through March 10, 1997, by
taking the arithmetic mean (rounded to the second decimal place, rounding up
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if the third decimal place, without regard to rounding, is five or higher
and otherwise truncating after the second decimal place) of five major
banks' offered quotations of the swap rate for SIZE without regard to the
highest and lowest rates; provided, however, that if such offered quotations
are only available from less than three such banks, then such offered
quotation or offered quotations as are available shall be used as aforesaid
to the extent practicable. If no such offered quotation is provided or no
such leading bank is selected and approved, the one year SEK swap rate will
be such rate as the Determination Agent, in its absolute discretion,
determines to be fair and reasonable under the circumstances, at or about
11:45 a.m., London time, on March 1, 1995 for the period from March 8, 1995
through March 10, 1997.
"SEK STIBOR Reference Banks" means five, to the extent available,
major banks that actively participate in the SEK STIBOR markets, as selected
and approved by the Determination Agent.
"USD LIBOR Reference Banks" means five, to the extent available,
major banks that actively participate in the USD LIBOR markets, as selected
and approved by the Determination Agent.
"Swedish Kronor Exchange Rate Reference Banks" means five, to the
extent available, major banks that actively participate in the Swedish
Kronor/U.S. Dollar currency exchange markets, as selected and approved by
the Determination Agent.
"Reference Date" means the second Business Day prior to the
applicable Interest Payment Date or Stated Maturity, as the case may be.
"Representative Amount" means, for purposes of any rate for which
a Representative Amount is relevant, an amount that is equivalent to U.S.
$20,000,000.
"Reuters Screen" means, when used in connection with any
designated page and any rate, the display page so designated on the Reuter
Monitor Money Rates Service (or such other page as may replace that page on
that service for the purpose of displaying rates of prices comparable to
that rate).
"SIZE" means the amount equal to the formula: U.S. $20,000,000 x
9 x Begin.
"Telerate" means, when used in connection with any designated page
and any rate, the display page so designated on the Dow Jones Telerate
Service (or such other page as may replace that page on that service, or
such other service as may be nominated as the information vendor, for the
purpose of displaying rates or prices comparable to that rate).
IMPORTANT INFORMATION
An investment in the Notes entails significant risks that are not
associated with a similar investment in other Debt Securities. Such risks
include, without limitation, the possibility of significant changes in rates
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of exchange between the U.S. Dollar and the Swedish Kronor and the
possibility of the imposition or modification of foreign exchange controls
by either the United States or foreign governments. Such risks generally
depend on factors over which the Company has no control. For example, the
exchange rates between the U.S. Dollar and the Swedish Kronor are at any
moment a result of the supply of, and demand for, each currency. Changes in
exchange rates result over time from the interaction of many factors
directly or indirectly affecting economic conditions in the United States
and Sweden, as well as economic, military and political developments in
other countries. Of particular importance are rates of inflation, interest
rate levels, the balance of payments and the extent of government surpluses
and deficits in the respective countries, all of which are in turn sensitive
to the monetary, fiscal and trade policies pursued by the governments in
such countries and in other countries important to international trade and
finance.
Also, sovereign governments use a variety of techniques, such as
intervention by a country's central bank or imposition of regulatory
controls or taxes, to affect the level of interest rates and exchange rates
of their currencies. Governments may also issue a new currency to replace
an existing currency or alter the exchange rate or relative exchange
characteristics by devaluation or revaluation of a currency. Thus, a
special risk in purchasing the Notes is that governmental actions could
interfere with or change theretofore freely determined currency valuations
and fluctuations in market forces. There will be no adjustment or change in
the terms of the Notes in the event that exchange rates should become fixed,
or in the event of any devaluation or revaluation or imposition of exchange
or other regulatory controls or taxes, or in the event of other developments
affecting the U.S. Dollar or the Swedish Kronor.
THIS PRICING SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS AND
PROSPECTUS SUPPLEMENT DO NOT DESCRIBE ALL THE RISKS OF AN INVESTMENT IN THE
NOTES. THE COMPANY BELIEVES THAT THESE RISKS ARE POTENTIALLY TOO VARIABLE
TO ASCERTAIN AND DESCRIBE WITH ANY REASONABLE DEGREE OF CERTAINTY AND
INCORPORATING EVERY ECONOMIC, FINANCIAL, POLITICAL AND MILITARY
CIRCUMSTANCE, AMONG OTHER THINGS, WOULD BE IMPRACTICAL. PROSPECTIVE
INVESTORS SHOULD THEREFORE CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS AS
TO THE RISKS ENTAILED BY AN INVESTMENT IN THE NOTES. SUCH NOTES ARE NOT AN
APPROPRIATE INVESTMENT FOR INVESTORS WHO ARE UNSOPHISTICATED WITH RESPECT TO
FOREIGN CURRENCY TRANSACTIONS.
EXCHANGE RATES
The following table sets forth certain historical Swedish
Kronor/U.S. Dollar exchange rates based on the noon buying rate in New York
City for cable transfers as certified for customs purposes by the Federal
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Reserve Bank of New York on the last New York Business Day of the month
indicated:
Swedish Kronor/
U.S. $1.00
Month-End Exchange Rate
1989:
March 6.4430
June 6.6570
September 6.4310
December 6.2065
1990:
March 6.1140
June 6.0375
September 5.7630
December 5.6335
1991:
March 6.1300
June 6.4915
September 6.0685
December 5.5550
1992:
March 5.9760
June 5.5045
September 5.3040
December 7.0790
1993:
March 7.7275
June 7.7680
September 8.0800
December 8.3400
On March 1, 1994, the noon buying rate in New York City for cable
transfers of Swedish Kronor per one U.S. Dollar was SEK 8.045 = U.S. 1.00,
as certified for customs purposes by the Federal Reserve Bank of New York.
Recent exchange rates are also published in The Wall Street Journal.
The information presented in the above table is furnished as a
matter of information only. In recent years, the rates of exchange for the
Swedish Kronor/U.S. Dollar exchange rates that have occurred in the past,
however, are not necessarily indicative of fluctuations in the rates that
may occur over the term of the Notes.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
In addition to the consequences summarized in the Prospectus
Supplement under the heading "United States Taxation", set forth below is a
summary of certain United States Federal income tax consequences to original
Holders of the Notes that have purchased the Notes at their Issue Price.
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For Federal income tax purposes the treatment of the Notes is not
clear. Since the Notes are short-term Notes, the Notes will be treated as
issued with original issue discount ("OID"), subject to special rules in the
Code. Those special rules generally require accrual basis holders and
certain other holders, including banks, regulated investment companies,
dealers in securities and cash basis holders who so elect to accrue OID on
either a straight-line method or a constant yield method, at the election of
the holder. An individual or other cash basis U.S. Holder of a Note (other
than a cash basis U.S. Holder described in the preceding sentence) includes
interest actually received in income to the extent of accrued OID, but is
not required to accrue OID unless such holder elects to do so. The
application of these rules to the Notes is not clear because the Notes
provide for contingent payments of interest and principal.
Although by their terms not applicable to the Notes, proposed
regulations (the "Proposed Regulations") relating to the accrual of OID
on debt instruments with contingent payments provide a method for accruing
OID. Assuming the Proposed Regulations were applied by analogy to the
Notes, any payment of interest on the first Interest Payment Date would be
deemed to be interest to the extent it does not exceed the product of the
Issue Price of the Note and the applicable Federal rate for short-term notes
determined as of the Issue Date, and a payment of principal to the extent of
the excess of such payment over the interest deemed accrued. If, at Stated
Maturity of the Note, the outstanding principal balance of the Note (i.e. .,
its Issue Price less deemed principal payments) exceeds the amount of the
sum of the principal and interest on the Note actually payable at Stated
Maturity, the U.S. Holder would recognize capital loss equal to such excess
(or ordinary loss to the extent the loss is attributable to changes in the
Swedish Kronor/U.S. Dollar exchange rate between the Note's Issue Date and
its Stated Maturity). If the amount of the actual payment at Stated
Maturity exceeds the outstanding principal balance, the U.S. Holder will
recognize ordinary income (treated as interest or, to the extent of changes
in the Swedish Kronor/U.S. Dollar exchange rate, possibly exchange gain).
It is not clear whether any gain recognized on the sale or
exchange of a Note would be ordinary income or capital gain (in whole or in
part), although any loss would generally be a capital loss (except in each
case, possibly, to the extent the gain or loss is attributable to changes in
the Swedish Kronor/U.S. Dollar exchange rate).
Other approaches to the Federal income tax treatment of the Notes
are also possible, and accordingly, the IRS might require U.S. Holders to
account for interest income on a Note, or gain or loss on sale or exchange
of a Note, in a manner different than that described above. Because of the
uncertainty as described above, purchasers of Notes should consult their own
tax advisors as to the treatment of the Notes.
In the case of non-U.S. Holders, any interest described above will
be treated as described in the Prospectus Supplement under "Non-United
States Persons".
Backup Withholding. The rate of backup withholding has been
increased from 20% to 31%.
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