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Rule 424(b)(3)
File No. 33-58716
Pricing Supplement No. 13 Dated: July 8, 1994
(To Prospectus dated March 17, 1993 and
Prospectus Supplement dated March 31, 1993)
U.S.$2,500,000,000
HELLER FINANCIAL, INC.
MEDIUM-TERM NOTES, SERIES F
Principal Amount: $33,000,000 Issue Price: 100%
Indexed Notes - Nikkei Stock Index 300
Original Issue Date: July 15, 1994
Stated Maturity Date: December 20, 1999
Form: [X] Book-Entry [ ] Certificated
Depositary: The Depository Trust Company
Specified Currency: U.S. Dollars
Authorized Denominations: U.S. $1,000 or multiples thereof -
Minimum Purchase $50,000
Payment Provisions:
No periodic payment of interest will be made with respect to
the Nikkei 300 Indexed Notes.
At the Stated Maturity Date, a beneficial owner of a Note
will be entitled to receive a Principal Redemption Amount in U.S.
dollars equal to the product of the face amount of the Note
multiplied by a percentage calculated as follows:
( Final Index Value - Initial Index Value )
100% + ( --------------------------------------- x 115% )
( Initial Index Value )
provided, however, that in no case will such amount be less than
100.0% or greater than 199.0% of the face amount of such Note.
The "Initial Index Value" is 301.48, which is the market closing
value of the Nikkei Stock Index 300 on July 8, 1994; and "Final
Index Value" is the official market opening Special Quotation
value of the Nikkei Stock Index 300 on December 10, 1999, subject
to extension in the event of a Market Disruption Event as
described in this Pricing Supplement.
Notwithstanding the above, if the Closing Index Value ever
exceeds 561.05, which is the product of (i) 186.1% and (ii) the
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Initial Index Value, on any Index Business Day prior to December
10, 1999, a beneficial owner of a Note will be entitled to
receive at the Stated Maturity Date a Principal Redemption Amount
in U.S. dollars equal to the product of the face amount of such
Note and 199.0% regardless of the subsequent performance of the
Nikkei Stock Index 300. The "Closing Index Value" is the value
of the Nikkei Stock Index 300 at the close of business on the
Tokyo Stock Exchange on any Index Business Day. See "Description
of Notes - Principal Redemption" in this Pricing Supplement.
Redemption at the Option of the Company: The Company may not
redeem the Nikkei
300 Indexed Notes
prior to the Stated
Maturity Date.
Repayment at the Option of the
Beneficial Owner: A beneficial owner
may not demand
repayment of the
Nikkei 300 Indexed
Notes prior to the
Stated Maturity
Date.
Discount Note: [X] Yes [ ] No
Total Amount of OID: 31.35% of the Principal Amount of the
Note
Yield to Maturity: 7.04787% (calculated on the basis of a
360 day year consisting of twelve 30-day months)
Initial Accrual Period OID: U.S. $20.7815 per U.S. $1000 of
Notes (calculated from July 15, 1994 to December 20, 1994)
Calculation Agent: Goldman, Sachs & Co.
Discount or Commission: 0.50%
Other Provisions: a) Amount Issued to Date, Prior to Pricing
Supplement
No.13 , Under MTN Series F Program:
$319,000,000
b) CUSIP #: 42333HDU3
Agent: Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
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THE NIKKEI 300 INDEXED NOTES OFFERED HEREBY ARE NOT AN
APPROPRIATE INVESTMENT FOR INVESTORS WHO ARE NOT SOPHISTICATED
WITH RESPECT TO EQUITY INDICES, OPTIONS AND OPTION TRANSACTIONS
AND FOREIGN MARKETS.
DESCRIPTION OF NOTES
General
Heller Financial, Inc.'s (the "Company") Nikkei 300 Indexed
Notes (the "Notes") are being offered at an original issue price
of 100% of the principal amount thereof, will provide for no
periodic payments of interest and will mature on December 20,
1999 (the "Stated Maturity Date"). The Principal Redemption
Amount (as defined) on the Stated Maturity Date will be
determined by reference to the Nikkei Stock Index 300 or a
Successor Index (together or as applicable the "Index" or the
"Nikkei 300 Index"), subject to a minimum Principal Redemption
Amount of 100.0% and a maximum Principal Redemption Amount of
199.0% of the face amount of the Notes. The minimum purchase
will be $50,000.
Upon issuance, all Notes will be represented by one or more
Global Notes registered in the name of a nominee of DTC.
References herein to the beneficial owner of a Note shall, so
long as the Notes are held in global form by a Depository, be
deemed to be to the owner of a beneficial interest in such Global
Note, and, unless the context otherwise requires, references
herein to Notes shall be deemed to be to beneficial interests in
such Global Note. If Notes in certificated form are physically
delivered to the owners of such beneficial interests, references
herein to the beneficial owner of any such Note shall be deemed
to be to the Holder of such Certificated Note and references to
the Note shall be deemed to be to such Certificated Note.
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.
The Notes are not redeemable at the option of the Company or
repayable at the option of the beneficial owner prior to maturity
and do not provide for any sinking fund.
Goldman, Sachs & Co. will act as Calculation Agent with
respect to the Notes.
Principal Redemption:
Except as provided below, a beneficial owner of a Note will
be entitled to receive, at the Stated Maturity Date, a principal
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redemption amount (the "Principal Redemption Amount") in U.S.
dollars equal to the product of the face amount of such Note
multiplied by a percentage calculated as follows:
( Final Index Value - Initial Index Value )
100% + ( --------------------------------------- x 115% )
( Initial Index Value )
provided, however, that in no case will such Principal Redemption
Amount be less than 100.0% or greater than 199.0% of the face
amount of such Note.
Notwithstanding the above, if the Closing Index Value ever
exceeds 561.05, which is the product of (i) 186.1% and (ii) the
Initial Index Value, on any Index Business Day prior to December
10, 1999, a beneficial owner of a Note will be entitled to
receive at the Stated Maturity Date, a Principal Redemption
Amount in U.S. dollars equal to the product of the face amount of
such Note and 199.0%, regardless of the subsequent performance of
the Index.
"Index Business Day" is a day that is (or, but for the
existence of a Market Disruption Event, would have been) a
trading day on which the Tokyo Stock Exchange and the Osaka
Securities Exchange are open for business, other than a day
on which trading is scheduled to close prior to the regular
weekday closing time.
"Index Sponsor" is Nihon Keizai Shimbun, Inc. ("NKS")
"Calculation Date" is December 10, 1999, or if December 10,
1999 is not an Index Business Day the next following Index
Business Day, subject to extension in the event of a Market
Disruption Event (as defined herein).
"Initial Index Value" is equal to 301.48, which is the
Closing Index Value on July 8, 1994.
"Closing Index Value" is the value of the Index at the close
of business on the Tokyo Stock Exchange on any Index
Business Day as determined by the Calculation Agent.
"Final Index Value" is the official market opening Special
Quotation value of the Index on the Calculation Date as
determined by the Calculation Agent, unless the Calculation
Date is not December 10, 1999 or the Special Quotation is
not officially announced, in which case the Final Index
Value shall be the Closing Index Value on the Calculation
Date.
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Notwithstanding the foregoing, if the Calculation Agent
determines that a Market Disruption Event has occurred on the
Calculation Date, then the Final Index Value shall be the Closing
Index Value on the first succeeding Index Business Day on which
there is no Market Disruption Event (which day shall be deemed to
be the Calculation Date), unless there is a Market Disruption
Event on each of the five Index Business Days immediately
following the original date that, but for the Market Disruption
Event, would have been the Calculation Date. In that case, (i)
that fifth Index Business Day shall be deemed to be the
Calculation Date, notwithstanding the Market Disruption Event,
and (ii) the Calculation Agent shall determine the Final Index
Value as the market closing value of the Index on that fifth
Index Business Day (subject to "Index Adjustment" described
herein) in accordance with the method for calculating the Index
last in effect prior to the commencement of the Market Disruption
Event using the Tokyo Stock Exchange traded price (or, if trading
in the relevant security has been materially suspended or
materially limited, its good faith estimate of the Tokyo Stock
Exchange traded price that would have prevailed but for that
suspension or limitation) on that fifth Index Business Day of
each security comprising the Index.
Market Disruption Event
Market Disruption Event means the occurrence or existence on any
Index Business Day of:
(i) Any suspension of or limitation imposed on trading (by
reason of movement in price exceeding limits permitted
by the relevant exchange or otherwise) on the Tokyo
Stock Exchange in securities that comprise the Index or
securities generally on the Osaka Securities Exchange
in options and futures contracts in the Index if, in
the determination of the Calculation Agent, such
suspension or limitation is material, or
(ii) There shall have occurred any change in national or
international financial, political or economic
conditions or currency exchange rates or exchange
controls, the effect of which is, in the judgment of
the Calculation Agent, so material and adverse as to
make it impracticable or inadvisable to proceed with
calculation of the Principal Redemption Amount of the
Note on the terms and in the manner contemplated
herein.
For the purpose of determining whether a Market Disruption Event
exists at any time, if trading in a security included in the
Index is materially suspended or materially limited at that time,
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then the relevant percentage contribution of the security to the
level of the Index shall be based on a comparison of (i) the
portion of the level of the Index attributable to that security
relative to (ii) the overall level of the Index, in each case
immediately before that suspension or limitation.
The Calculation Agent shall as soon as reasonably practicable
under the circumstances notify the Paying Agent and the Company
of the existence or occurrence of a Market Disruption Event on
the day that but for the occurrence or existence of a Market
Disruption Event would have been the Calculation Date.
Index Adjustment
If the Nikkei 300 Index is (i) not calculated and announced by
the Index Sponsor but is calculated and announced by a successor
sponsor acceptable to the Calculation Agent or (ii) replaced by a
successor or substitute index (the "Successor Index") using, in
the determination of the Calculation Agent, the same or a
substantially similar formula for a method of calculation as used
in the calculation of the Index, then the index so calculated and
announced by that successor sponsor or that Successor Index, as
the case may be, will be deemed to be the Index for purposes of
computing the Principal Redemption Amount.
If (i) on or prior to the Calculation Date the Index Sponsor
makes a material change in the formula for or the method of
calculating the Index or in any other way materially modifies the
Index (other than a modification prescribed in that formula or
method to maintain the Index in the event of changes in
constituent stock and capitalization and other routine events) or
(ii) on the Calculation Date the Index Sponsor fails to calculate
and announce the Index, then the Calculation Agent shall
calculate the Closing Index Value or Final Index Value, as the
case may be, using, in lieu of a published level for the Index,
the level for that Index as of the Calculation Date as determined
by the Calculation Agent in accordance with the formula for and
method of calculating the Index last in effect prior to that
change or failure, but using only those securities that comprised
the Index immediately prior to that change or failure (other than
those securities that have since ceased to be listed on the Tokyo
Stock Exchange).
The following table illustrates for a range of hypothetical Final
Index Values, the percentage change in the Nikkei 300 Index from
July 8, 1994 to the Calculation Date, the corresponding Principal
Redemption Amount of the Notes, and the pre-tax annualized rate
of return to Investors.
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Hypothetical Principal Pre-Tax
Final Index Value Percentage Redemption Annualized Rate
on Calculation Change in Amount of Note at of Return to
Date Index (1) Maturity Maturity (2)
241.18 -20.00% 100.00% 0.00%
271.33 -10.00% 100.00% 0.00%
301.48 0.00% 100.00% 0.00%
331.63 10.00% 111.50% 2.02%
361.78 20.00% 123.00% 3.87%
391.92 30.00% 134.50% 5.59%
422.07 40.00% 146.00% 7.19%
452.22 50.00% 157.50% 8.69%
482.37 60.00% 169.00% 10.11%
512.52 70.00% 180.50% 11.44%
542.66 80.00% 192.00% 12.72%
561.05 86.10% 199.00% 13.46%
572.81 90.00% 199.00% 13.46%
602.96 100.00% 199.00% 13.46%
633.11 110.00% 199.00% 13.46%
663.26 120.00% 199.00% 13.46%
_____________________
(1) Percentage change in Index from July 8, 1994 to the
Calculation Date.
(2) Pre-tax annualized rate of return from July 8, 1994 to the
Stated Maturity Date is calculated on the basis of a 360 day
year consisting of twelve 30 day months.
NOTE: THE PRINCIPAL REDEMPTION AMOUNT OF THE NOTES MAY BE
FIXED AND DETERMINED PRIOR TO STATED MATURITY DATE AT
199.0% OF THE FACE AMOUNT OF THE NOTES AS DESCRIBED IN
"PRINCIPAL REDEMPTION."
The above figures are for purposes of illustration only. The
actual Principal Redemption Amount of the Notes and the pre-tax
annualized rate of return represented thereby will depend
entirely upon the actual Final Index Value determined by the
Calculation Agent as provided herein.
Events of Default and Acceleration
In case an Event of Default with respect to the Notes shall
have occurred and be continuing, the amount payable to a
beneficial owner of a Note upon any acceleration permitted by the
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Notes, will be equal to the amount that would be payable as
though the Stated Maturity Date of the Notes was the date on
which early repayment is due, and the Final Index Value was
calculated based on the Closing Index Value of the Index on the
date of early repayment, or the first succeeding Index Business
Day in the event that the date of early repayment is not an Index
Business Day, provided, however, that if prior to the date of
such early repayment, the Closing Index Value exceeds 561.05, the
product of (i) 186.1% and (ii) the Initial Index Value, the
amount payable to a beneficial owner of a Note upon acceleration
will be equal to the sum of (x) 100% of the face amount of the
Note, plus (y) 99% of the face amount of such Note discounted
from the Stated Maturity Date to the date of early repayment in
accordance with generally accepted financial practices on a
semiannual basis at a discount rate equal to the LIBOR rate,
determined by the Calculation Agreement in accordance with the
procedures set forth in the accompanying Prospectus Supplement
for LIBOR Notes using the rate for an Index Maturity similar to
the period from the date of early repayment to the Stated
Maturity Date. If a bankruptcy proceeding is commenced in
respect of the Company, the claim of the beneficial owner of a
Note may be limited, under Section 502(b)(2) of Title 11 of the
United States Code, to the amount of the Note that would be due
if the Stated Maturity Date of the Notes were the date of the
commencement of the proceeding.
SPECIAL CONSIDERATIONS
PAYMENT AT MATURITY
Principal Redemption Amount of Notes. In all cases, except as
provided below, if the Final Index Value is equal to or less than
the Initial Index Value, the beneficial owners of the Notes will
be entitled to receive only the face amount of the Notes at the
Stated Maturity Date. This will be true even though the value of
the Index as of some interim date or date prior to the
Calculation Date may have exceeded the Initial Index Value
because the Principal Redemption Amount payable on the Notes is
calculated based on the Final Index Value only. However, if the
Closing Index Value on any Index Business Day exceeds 561.05,
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which is the product of (i) 186.1% and (ii) the Initial Index
Value, the Principal Redemption Amount of the Note is fixed at
199.0% of the original face amount of the Note regardless of the
subsequent performance of the Index.
Capped Principal Redemption. Because the maximum Principal
Redemption Amount of the Notes is capped at 199.0% of the
original face amount of the Notes, the yield to maturity on the
Notes may be lower than the yield provided by investing directly
in the stocks underlying the Index over an identical period of
time, particularly in the case that the Final Index Value exceeds
186.1% of the Initial Index Value.
Time Value of Money. No interest payments will be made on the
Notes. The minimum Principal Redemption Amount to be received by
beneficial owners of the Notes at the Stated Maturity Date does
not reflect any opportunity cost implied by inflation and other
factors relating to the time value of money.
Principal Redemption Amount of the Notes Does Not Reflect
Dividends Paid on the Index. The Principal Redemption Amount is
calculated based only on the price appreciation, if any, of the
Index. Because the Principal Redemption Amount calculation does
not account for the payment of dividends on the individual stocks
comprising the Index, the yield to maturity of the Notes may
produce a lower yield than if such stocks underlying the Index
were purchased and held for a similar period.
EFFECTIVE FIXED EXCHANGE RATE
Because the Principal Redemption Amount of the Notes is
calculated in U.S. dollars based on the percentage price
appreciation of the Index, the Principal Redemption Amount of the
Notes will not be directly affected by the actual Yen/US$
exchange rate prevailing at the Stated Maturity Date. Therefore,
while the investor is protected against any decrease in value
that would be realized by owning the stocks underlying the Index
outright if the Yen depreciates against the U.S. dollar, the
investor does not realize any benefit if the Yen appreciates
against the U.S. dollar.
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TRADING
The Notes have not been approved for listing on any stock
exchange and the Company has no intention of seeking a listing
for the Notes in the future. Investors should be aware that
securities similar to the Notes have not previously been publicly
offered in the United States and that there is no U.S. precedent
to indicate how the Notes will trade in the secondary market or
whether such market will be liquid. Goldman, Sachs & Co. has
advised the Company that it intends to make a market in the
Notes. However, Goldman, Sachs & Co. is under no obligation to
do so and may discontinue market making activities at any time.
It is expected that the secondary market for the Notes will be
affected by a number of factors independent of the
creditworthiness of the Company.
The trading values of the Notes may be affected by a number of
interrelated factors, including, but not limited to, those listed
below. The relationship among these factors is complex.
Accordingly, investors should be aware that factors other than
the level of the Index are likely to affect their trading value.
The likely effect on the trading value of the Notes of each of
the factors listed below, assuming in each case that all other
factors are held constant, is as follows:
Price Appreciation of Index. The trading value of the Notes will
likely depend primarily on the extent of the appreciation, if
any, of the Index over the Initial Index Value. If, however, the
Notes are sold prior to the Stated Maturity Date at a time when
the Index exceeds the Initial Index Value, the sale price may be
at a discount from the amount which would be payable to the
holder if such excess of the Index over the Initial Index Value
were to prevail until the Calculation Date because of the
possible fluctuations of the Index between the time of such sale
and the Calculation Date. The Japanese equity market has been
highly volatile during the recent past. Furthermore, the price
at which a holder will be able to sell the Notes prior to the
Stated Maturity Date may be at a discount, which could be
substantial, from the principal amount thereof, if, at such time,
the Index is below, equal to or not sufficiently above the
Initial Index Value.
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Principal Redemption Amount Cap. The trading performance of the
Notes will be influenced by the maximum Principal Redemption
Amount of the Notes which is capped at 199% of the initial
investment amount in the event the Closing Index Value on any
Index Business Day or the Final Index Value equals or exceeds
186.1% of the Initial Index Value. The value of the Notes will
never exceed this cap. In the event the Closing Index Value on
any Index Business Day equals or exceeds 561.05, the Principal
Redemption Amount will be fixed at 199.0% of the face amount, but
the price at which a holder will be able to sell the Notes prior
to the Stated Maturity Date would likely be at a discount, which
could be substantial, from that fixed Principal Redemption Amount
to reflect the time value of money.
Volatility of the Index. If the volatility of the Index
increases, the trading value of the Notes would likely increase.
If the volatility of the Index decreases, the trading value of
the Notes would likely decrease.
U.S. Dollar Interest Rates. If U.S. interest rates increase, the
value of the Notes would likely decrease. If U.S. interest rates
decrease, the value of the Notes would likely increase.
Japanese Yen Interest Rates. If Japanese Yen interest rates
increase, the value of the Notes would likely increase. If
Japanese Yen interest rates decrease, the value of the Notes
would likely decrease.
Dividend Rates in Japan. If dividend rates on the stocks
comprising the Index increase, the value of the Notes would
likely decrease. If dividend rates on the stocks comprising the
Index decrease, the value of the Notes would likely increase.
Correlation Between Yen/US$ Foreign Exchange Rate and the Index.
If the correlation between the Yen/US$ exchange rate and the
Index becomes more positive (or less negative), the value of the
Notes would likely increase. If the correlation becomes more
negative (or less positive), the value of the Notes would likely
decrease. Correlation refers to the statistical correlation of
the Yes/US$ exchange rate (expressed in Yen per one U.S. dollar)
and the price of the Index.
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Time Remaining to Maturity. The Notes may trade at a value above
that which may be inferred from the level of interest rates and
the Index. This difference would reflect a "time premium" due to
expectations concerning the value of the Index during the period
prior to the Calculation Date of the Notes. As the time
remaining to the Calculation Date of the Notes decreases,
however, this time premium will likely decrease, thus decreasing
the trading value of the Notes.
GENERAL FACTORS AFFECTING THE U.S. AND JAPANESE ECONOMIES
Investors should also consider factors affecting the U.S. and
Japanese economies. Although the Principal Redemption Amount of
the Notes will be calculated using a fixed Yen/US$ exchange rate,
the Yen/US$ exchange rate may affect economic and political
developments in Japan and other countries which, in turn, may
affect the value of the Index. Exchange rates of most
economically developed noncommunist nations, including Japan, are
permitted to fluctuate in value relative to the U.S. dollar.
National governments, however, may not allow their currencies to
float freely in response to economic forces. Sovereign
governments in fact use a variety of techniques, such as
intervention by a country's central bank or imposition of
regulatory controls or taxes, to affect the exchange rates of
their currencies. Of particular importance are rates of
inflation, interest rate levels, the balance of payments and the
extent of governmental surpluses or deficits in Japan and the
United States, all of which are in turn sensitive to the
monetary, fiscal and trade policies pursued by the governments of
Japan, the United States and other countries important to
international trade and finance. 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.
The likely effect of the foregoing factors on the trading value
of the Notes is complex. The factors affect not only the value
of the fixed-income component of the Note, but also the value of
the embedded option which would generally be calculated using
option pricing models. Each of the factors are interrelated. No
single factor should be viewed in isolation and, in fact, changes
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in one or more of the factors listed may have indirect effects on
other factors. In addition, no assessment has been made as to
the likely magnitude of any change in the trading value of the
Notes resulting from a change in one or more of the factors.
DISCRETION OF CALCULATION AGENT
Goldman Sachs & Co., in its capacity as Calculation Agent, has
been granted certain discretionary powers to determine the value
of the Index, particularly in determining the market opening
Special Quotation value of the Index on the Calculation Date, in
the event of a Market Disruption Event or in the event that the
Index Sponsor ceases to publish the Index. As such, the
decisions of the Calculation Agent may influence the Principal
Redemption Amount of the Notes, but in no event will the
Principal Redemption Amount be less than 100% of the face amount
of any Note. Goldman Sachs International, an affiliate of
Goldman, Sachs & Co., has also provided a hedge to the Company
against its exposure to price movements in the Index in
connection with the Notes.
Certain Federal Income Tax Considerations
Prospective investors should also consider the tax consequences
of investing in the Notes. Under proposed Treasury Regulations,
the Company will take the position that a Note will be treated
for United States federal income tax purposes as having been
issued with original issue discount which a beneficial owner who
is a United States person will be required to include in income
over the term of the Note before the receipt of cash attributable
to such income. See "Certain Federal Income Tax Considerations"
in this Pricing Supplement.
NIKKEI STOCK INDEX 300
Summary of the Index
The Nikkei Stock Index 300 is an index calculated, published and
disseminated by Nihon Keizai Shimbun, Inc., ("NKS") that measures
the composite price performance of stocks of 300 Japanese
companies. All 300 stocks are listed in the First Section of the
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Tokyo Stock Exchange ("TSE"). Stocks listed in the First Section
are among the most actively traded stocks on the TSE.
Publication of the Nikkei 300 Index began on October 8, 1993.
The Nikkei 300 Index is a market capitalization-weighted index
which is calculated by (i) multiplying the per share price of
each stock included in the Nikkei 300 Index by the number of
outstanding shares (excluding shares held by the Japanese
Government), (ii) calculating the sum of all these products (such
sum being hereinafter referred to as the "Aggregate Market
Price"), (iii) dividing the Aggregate Market Price by the Base
Aggregate Market Price (i.e. the Aggregate Market Price as of
October 1, 1982) and (iv) multiplying the result by 100. Larger
companies' shares have a larger effect on moving the entire index
than smaller companies' shares.
Although the Nikkei 300 Index was first published in October
1993, NKS has calculated values for the Nikkei 300 Index for the
period from October 1, 1982 through October 8, 1993. The stocks
included in the Nikkei 300 Index (such stocks being hereinafter
referred to as the "Underlying Stocks") were selected from a
reference group of stocks which were selected by excluding stocks
listed in the First Section of the TSE that have relatively low
market liquidity or extremely poor financial results. The
Underlying Stocks were selected from this reference group by (i)
selecting from the remaining stocks in this reference group the
stocks with the largest aggregate market value in each of 36
industrial sectors and (ii) selecting additional stocks (with
priority within each industrial sector given to the stock with
the largest aggregate market value) so that the selection ratios
(i.e. the ratio of the aggregate market value of the included
stocks to that of the stocks in the reference group) with respect
to all 36 industry sectors will be as nearly equal as possible
and the total number of companies with stocks included in the
Nikkei 300 Index will be 300.
In order to maintain continuity in the level of the Nikkei 300
Index, the Nikkei 300 Index will be reviewed annually at the
beginning of October by NKS and the Underlying Stocks may be
replaced, if necessary, in accordance with the "deletion/addition
rule". The "deletion/addition" rule provides generally for the
deletion of a stock from the Nikkei 300 Index if such stock is no
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longer included in the reference group or if the aggregate market
value of such stock is low relative to other stocks in the
relevant industry sector. Stocks deleted pursuant to the
"deletion/addition" rule will be replaced by stocks included in
the reference group which have relatively high aggregate market
values. In addition, stocks may be added or deleted from time to
time for extraordinary reasons.
The Index is computed once a day after the close of the market
after October 12, 1993. The Index is calculated minute by minute
by QUICK Corp. from January 31, 1994. The Index is published in
the Nihon Keizai Shimbun morning and evening editions as well as
through electronic services such as Nikkei Telecom.
All rights, including copyright and intellectual property rights,
in the name "Nikkei" and the "Nikkei 300 Index" belong to NKS.
NKS has the right to amend the contents, and to suspend the
publication of the Nikkei 300 Index.
The information included herein with respect to the Nikkei 300
Index consists only of extracts from, or summaries of,
information published by NKS. Goldman, Sachs & Co. and the
Company only accept responsibility that such information has been
correctly extracted or summarized but do not accept
responsibility in respect of the accuracy or the completeness of
the information set forth herein concerning the Index, or that
there has not occurred any event which would affect the accuracy
or completeness of such information.
NKS does not intend by this document to offer or solicit to buy
or sell any securities. NKS, its clients and officers may have a
position or engage in transactions in any of the securities
mentioned.
All disclosure contained in this Pricing Supplement regarding the
Nikkei 300 Index or its publisher, NKS is derived from publicly
available information. NKS has no relationship with the Company
or the Notes; it does not sponsor, endorse, authorize, sell or
promote the Notes and has no obligation or liability in
connection with the administration, marketing or trading of the
Notes.
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NKS makes no warranty expressly or impliedly as to the
merchantability or fitness for a particular purpose of the Index
or any product or securities described in this document ("the
products") and is not responsible for the construction or
operation of the products or for the performance of or for any
error in the Index or the products nor is under any obligation to
advise any person of any error in the Indices or the products.
NKS does not give any assurance regarding the continued
calculation or publication of the Index or any changes in the
constituents or in the methodology used in its calculation.
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LICENSE AGREEMENT
NKS and Goldman, Sachs & Co. have entered into a license
agreement providing for the license to Goldman, Sachs & Co., in
exchange for a fee, of the right to use indices owned and
published by NKS in connection with certain securities, including
the Notes, and the Company is an authorized sublicensee thereof.
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
The following is a summary of certain United States federal tax
considerations of the ownership and disposition of the Notes. It
deals only with purchasers who acquired Notes at original
issuance or pursuant to this offering, who hold Notes and who
would hold the underlying stocks that comprise the Index as
capital assets and does not deal with special classes of holders,
such as life insurance companies, banks, tax-exempt
organizations, dealers in securities, persons holding the Notes
as a hedge or hedged against security price risks or as part of a
"straddle", or United States Holders (as defined below) whose
functional currency is not the U.S. dollar.
Prospective purchasers of the Notes should consult their own tax
advisors concerning the application of the United States federal
tax laws in their particular situations as well as any
consequences arising under the laws of any other taxing
jurisdiction.
For purposes of this summary, "United States Holder" means a
beneficial owner of a Note who or which is (i) a citizen or
resident of the United States, (ii) a domestic corporation or
(iii) a person otherwise subject to United States federal income
taxation on a net income basis in respect of the Notes.
There are no final regulations, published rulings or judicial
decisions involving the characterization for U.S. federal income
tax purposes of securities with terms similar to the Notes. The
Notes should be treated as debt obligations of the Company for
U.S. Federal income tax purposes.
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General
Under general principles of U.S. federal income tax law and the
Internal Revenue Code of 1986, as amended (the "Code"), interest
on a Note would be included in income when it is paid or accrued,
depending on a United States Holder's method of accounting for
tax purposes, and, in the case of accrual basis taxpayers, would
not be accrued prior to the time it becomes fixed. Under this
analysis, a United States Holder would not recognize income, gain
or loss with respect to a Note prior to the Stated Maturity Date,
or earlier disposition of the Note or, in the case of an accrual
taxpayer, the date the Principal Redemption Amount of the Note
becomes fixed at 199.0% in the event the Closing Index Value on
any Index Business Day exceeds 561.05, if applicable.
On February 28, 1991, the Treasury Department issued proposed
regulations relating to debt instruments providing for contingent
payments (the "Existing Proposed Regulations") that, if adopted,
would by their terms apply to the Notes. Under the Existing
Proposed Regulations, a Note would be "bifurcated" and treated as
consisting of two separate instruments: (i) the fixed payment,
consisting of the right to receive a payment at Stated Maturity
equal to 100% of the face amount of the Note (the "Minimum
Redemption Amount"), which would be treated as a zero coupon debt
instrument for U.S. federal income tax purposes (the "Zero Coupon
Debt"), and (ii) the contingent payment, consisting of the right
to receive any amount in excess of the Minimum Redemption Amount,
which would likely be treated as a cash settlement option on the
value of the Index (the "Option").
In addition, in January 1993, the Treasury Department delivered
to the Federal Register new proposed regulations (the "Suspended
Proposed Regulations") that were to replace the Existing Proposed
Regulations. However the Suspended Proposed Regulations were
withdrawn for review prior to their official publication in
connection with the change from the Bush to Clinton
administrations.
The Suspended Proposed Regulations were proposed to be effective
for debt instruments issued at least 60 days after they were
issued as final regulations. If the Suspended Proposed
Regulations were applicable to the Notes, they would generally
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have required that a United States Holder include interest during
the term of the Note pursuant to one of several alternative
computation methods.
Thus, the Existing Proposed Regulations remain in effect as
proposed regulations and, if finalized in their current form,
would be applicable to the Notes. Based on the Suspended
Proposed Regulations, however, it appears that the Existing
Proposed Regulations may not be finalized in their current form.
Moreover, because the Suspended Proposed Regulations had a
prospective effective date, it is possible that no regulations
will ultimately apply to the Notes, in which case general
principles of U.S. federal income tax law and the Code would
apply.
The proper treatment of the Notes is therefore unclear. The
Company intends to treat the Notes for tax reporting and other
purposes in a manner consistent with the Existing Proposed
Regulations unless future developments indicate that such
treatment is incorrect or inadvisable.
Existing Proposed Regulations
Under the Existing Proposed Regulations, as indicated above, a
Note would be "bifurcated" into the Zero Coupon Debt and an
Option, and the issue price of the Note would be allocated
between these two instruments. The Company intends to treat the
Zero Coupon Debt as having an issue price equal to the present
value of the Minimum Redemption Amount, discounted at the rate
indicated on page 2 of the Notes. The remaining portion of issue
price of the Note would be allocated to the Option (i.e., as
premium deemed paid for the Option). On the foregoing basis,
68.65% of the issue price of the Note would be allocated to the
Zero Coupon Debt and the remaining 31.35% of such issue price
would be allocated to the Option. The Company currently intends
to file information returns with the Internal Revenue Service
utilizing this allocation. A United States Holder that wishes to
use a different allocation will be required to disclose that it
is doing so on its U.S. federal income tax return.
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Under the Existing Proposed Regulations, the Zero Coupon Debt
would be subject to the original issue discount rules of the
Code, which generally require the accrual of original issue
discount on a constant-yield method over the term of the Note.
The Zero Coupon Debt would be treated as having been issued with
original issue discount in an amount equal to the excess of the
Minimum Redemption Amount over the issue price allocated to the
Zero Coupon Debt. United States Holders, including those using
the cash method of accounting for tax purposes, would have to
include accrued original issue discount in income prior to the
receipt of cash attributable to such income.
Under the Existing Proposed Regulations, a United States Holder
generally would recognize gain or loss with respect to the Option
upon the Stated Maturity in an amount equal to the difference
(gain if positive and loss if negative) between (i) the amount of
payment of the Note in excess of the Minimum Redemption Amount,
if any and (ii) the United States Holder's basis in the Option,
which would generally be the portion of the issue price allocated
to the Option, as described above. If, however, the Principal
Redemption Amount of the Note is fixed at 199.0% by virtue of the
Closing Index Value on any Index Business Date exceeding 561.05
prior to June 20, 1999, the United States Holder will recognize
gain at that time to the extent the "amount realized" exceeds the
basis in the Option. For this purpose, the "amount realized"
equals the present value at that time of receiving 99.00% at
maturity discounted at 7.04787%. (The difference between the
"amount realized" and 99.00% will be additional original issue
discount that is accrued as interest income over the remaining
life of the Note). The United States Holder will increase his
basis in the Note by the amount realized and by the original
issue discount, thereon, as it accrues. The gain or loss
recognized with respect to the Option would be capital gain or
loss and generally would be long-term capital gain or loss if the
Note has been held for more than one year.
Purchasers at Other than the Initial Offering Price
Although the matter is not entirely clear under the Existing
Proposed Regulations, it is likely that a United States Holder
who purchases a Note at other than the Initial Offering (a
"subsequent purchaser") would be required to allocate the
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purchase price of the Note between the Zero Coupon Debt and the
Option and, except as discussed below in the next two paragraphs,
account for income and loss with respect to these two instruments
in the same manner as described above under "Existing Proposed
Regulations". The allocation by a subsequent purchaser of its
purchase price of the Note to the Zero Coupon Debt and the Option
would likely be based on the relative fair market values of the
two instruments at the time the purchaser acquires the Note.
If the subsequent purchaser's purchase price allocated to the
Zero Coupon Debt or Option (this and the following paragraph are
relevant to the Option only if prior to the purchase, the
Principal Redemption Amount of the Note is fixed at 199.0% prior
to June 20, 1999) is greater than the adjusted issue price of the
Zero Coupon Debt or Option (i.e., generally, the issue price
allocated to the Zero Coupon Debt upon the initial issuance of
the Notes and any original issue discount that has accrued
thereon, or in the case of the Option, the amount realized when
the Principal Redemption Amount became fixed, plus any original
discount that has accrued thereon) on the purchase date, then
such purchaser would be considered to have purchased the Zero
Coupon Debt or Option at an acquisition premium. In this case, a
subsequent purchaser would reduce the amount of original issue
discount (but not below zero) includible in income for any
taxable year (or part thereof in which it holds the Note) by the
portion of the acquisition premium properly allocable to such
period on a consistent yield to maturity basis.
If the amount of the subsequent purchaser's purchase price
allocated to the Zero Coupon Debt or Option is less than the
adjusted issue price of the Zero Coupon Debt or Option and the
difference is at least equal to 1/4 of 1% of such adjusted issue
price multiplied by the remaining number of complete years to the
Stated Maturity Date (after the acquisition of the Note), then
such purchaser would be considered to have purchased the Zero
Coupon Debt or Option with market discount. In this case, any
gain recognized by the subsequent purchaser upon the Stated
Maturity Date or disposition of a Note that is attributable to
the Zero Coupon Debt or Option would be treated as ordinary
income to the extent that such gain does not exceed the accrued
market discount on the Zero Coupon Debt or Option.
Alternatively, the subsequent purchaser may elect to include
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market discount in income currently over the life of the Zero
Coupon Debt or Option, generally on a straight-line basis unless
the subsequent purchaser elects (on a debt instrument-by-debt
instrument basis) to accrue such market discount on the constant
yield to maturity basis. The election to include market discount
currently in income applies to all debt instruments with market
discount acquired by the electing subsequent purchaser on or
after the first day of the first taxable year to which the
election applies and may not be revoked without the consent of
the Internal Revenue Service. A subsequent purchaser who does
not elect to include market discount currently in income
generally will be required to defer deductions for interest on
borrowings allocable to the Zero Coupon Debt or Option in an
amount not exceeding the accrued market discount on such Zero
Coupon Debt or Option until the Stated Maturity Date or
disposition of the Note.
Sale or Exchange of Notes
Upon the sale or exchange of a Note, a United States Holder would
recognize gain or loss equal to the difference between the amount
realized on such sale or exchange and the United States Holder's
adjusted tax basis in the Note. A United States Holder's
adjusted tax basis in a Note will generally be the amount paid
for the Note, increased by the amount of original issue discount
and market discount (if any) included in income with respect to
the Zero Coupon Debt or Option during the period that the United
States Holder held the Note plus the amount realized, if any,
upon the Principal Redemption Amount becoming fixed at 199.0%.
Except as discussed above under the heading "Purchasers at Other
than the Initial Offering Price", assuming that a United States
Holder has included original issue discount in income as
described under the heading "Existing Proposed Regulations", gain
or loss recognized by the United States Holder upon the sale or
exchange of a Note would generally be capital gain or loss and
would be long-term capital gain or loss if the Note had been held
for more than one year.
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LEGAL OPINIONS
Certain legal matters in connection with the Notes will be
passed upon for the Company by James B. Currie, Esq., General
Counsel and Secretary of the Company, and for the Agent by
McDermott, Will & Emery, Chicago, Illinois. McDermott, Will &
Emery from time to time acts as counsel in certain matters for
the Company and certain of its subsidiaries, including as special
tax counsel to the Company with respect to the Notes.
_______________________________________
IT IS SUGGESTED THAT PROSPECTIVE INVESTORS WHO CONSIDER
PURCHASING THE NOTES SHOULD BE EXPERIENCED WITH RESPECT TO EQUITY
INDICES, OPTIONS AND OPTION TRANSACTIONS AND FOREIGN MARKETS AND
REACH AN INVESTMENT DECISION ONLY AFTER CAREFULLY CONSIDERING,
WITH THEIR ADVISERS, THE SUITABILITY OF THE NOTES IN THE LIGHT OF
THEIR PARTICULAR CIRCUMSTANCES.
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