<PAGE> 1
PRICING SUPPLEMENT FILED PURSUANT TO RULE 424(b)(5)
(TO PROSPECTUS DATED JANUARY 17, 1996, REGISTRATION NO. 033-64459
AS SUPPLEMENTED BY A PROSPECTUS
SUPPLEMENT DATED DECEMBER 12, 1997)
$50,000,000
6.00% REMARKETABLE OR REDEEMABLE SECURITIES(SM) ("ROARS"(SM))
DUE JANUARY 15, 2011
IBP, INC.
The annual interest rate on the 6.00% Remarketable or Redeemable Securities
(the "ROARS") due January 15, 2011 (the "Stated Maturity") issued by IBP, inc.
(the "Company") for the period to January 15, 2001 is 6.00%. If NationsBanc
Montgomery Securities LLC, as Remarketing Dealer (the "Remarketing Dealer"),
elects to remarket the ROARS as described herein, the ROARS will be subject to
mandatory tender to the Remarketing Dealer at 100% of the principal amount
thereof for remarketing on January 16, 2001 (the "Remarketing Date"), except in
the limited circumstances described herein. See "Description of
ROARS -- Mandatory Tender of ROARS; Remarketing". If the Remarketing Dealer for
any reason does not purchase all tendered ROARS on the Remarketing Date or
elects not to remarket the ROARS, or in certain other limited circumstances
described herein, the Company will be required to repurchase the entire
principal amount of the ROARS from the Beneficial Owners (as defined herein)
thereof at 100% of the principal amount thereof plus accrued interest, if any,
to the Remarketing Date. See "Description of ROARS -- Repurchase".
Interest on the ROARS is payable semi-annually on January 15 and July 15 of
each year, commencing July 15, 1998. Except in the limited circumstances
described herein, the ROARS are not subject to redemption by the Company prior
to the Stated Maturity.
(continued on next page)
------------------------
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 PRICING SUPPLEMENT, THE PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The ROARS are offered by NationsBanc Montgomery Securities LLC (the
"Underwriter"), which has agreed to purchase the entire aggregate principal
amount of the ROARS from the Company for resale to one or more investors. The
Underwriter proposes to offer the ROARS from time to time for sale in negotiated
transactions or otherwise, at prices relating to prevailing market prices
determined by the Underwriter at the time of each sale. The proceeds to the
Company will be 102.757% of the principal amount of the ROARS sold to the
Underwriter, and the aggregate proceeds will be $51,378,500, in each case plus
accrued interest, if any, from January 15, 1998. See "Plan of Distribution".
------------------------
The Underwriter reserves the right to withdraw, cancel or modify such offer
and to reject orders in whole or in part. It is anticipated that delivery of the
ROARS will be made through the book-entry facilities of The Depository Trust
Company (the "Depository") on or about January 15, 1998.
NATIONSBANC MONTGOMERY SECURITIES LLC
The date of this Pricing Supplement is January 6, 1998.
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(sm) Service Mark of NationsBanc Montgomery Securities LLC
<PAGE> 2
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE ROARS.
SPECIFICALLY, THE UNDERWRITER MAY OVER-ALLOT IN CONNECTION WITH THE OFFERING AND
MAY BID FOR AND PURCHASE ROARS IN THE OPEN MARKET.
IT IS EXPECTED THAT DELIVERY OF THE ROARS WILL BE MADE AGAINST PAYMENT
THEREFOR ON OR ABOUT THE DATE SPECIFIED IN THE LAST PARAGRAPH OF THE COVER PAGE,
WHICH IS THE SEVENTH BUSINESS DAY FOLLOWING THE DATE HEREOF (SUCH SETTLEMENT
CYCLE BEING HEREIN REFERRED TO AS "T+7"). PURCHASERS OF ROARS SHOULD NOTE THAT
THE ABILITY TO SETTLE SECONDARY MARKET TRADES OF THE ROARS PRIOR TO THE
SETTLEMENT DATE MAY BE EFFECTED BY THE T+7 SETTLEMENT. SEE "PLAN OF
DISTRIBUTION".
The ROARS are being issued pursuant to a Prospectus Supplement dated
December 12, 1997 (the "Prospectus Supplement") to a Prospectus dated January
16, 1996 (the "Prospectus"), under which Prospectus Supplement there may from
time to time be offered the Company's Medium-Term Notes (the "Notes") in an
aggregate principal amount (or in the case of Notes issued at a discount from
the principal amount, an aggregate initial offering price) of up to $300,000,000
or the equivalent thereof in one or more Foreign Currencies (as defined in the
Prospectus Supplement). This Pricing Supplement establishes the terms of the
ROARS.
ROARS will be issued in denominations of $100,000 and integral multiples of
$1,000 in excess thereof. Each ROARS will be issued in fully registered
book-entry form (a "Book-Entry Note") and will be represented by one or more
fully registered global securities (the "Global Notes") deposited with or on
behalf of the Depository and registered in the name of the Depository or the
Depository's nominee. Interests in the Global Notes will be shown on, and
transfers thereof will be effected only through, records maintained by the
Depository (with respect to its participants' interests) and the Depository's
participants (with respect to Beneficial Owners). Except as described in the
Prospectus Supplement under "Description of Notes -- Book-Entry Notes", owners
of beneficial interests in the Global Notes will not be entitled to receive
physical delivery of Notes in definitive form and will not be considered the
Holders thereof.
------------------------
References herein to "U.S. dollars" or "U.S. $" or "$" are to the lawful
currency of the United States of America.
For definitions of certain terms used in this Pricing Supplement and
accompanying Prospectus and Prospectus Supplement, see "Glossary" on page S-25
of the Prospectus Supplement.
<PAGE> 3
USE OF PROCEEDS
The net proceeds to the Company from the sale of the ROARS offered hereby
will be added to the working capital of the Company and may be used to reduce
short-term borrowings. Any remaining proceeds will be available for general
corporate purposes.
DESCRIPTION OF ROARS
GENERAL
The following description of the particular terms of the ROARS supplements
and, to the extent inconsistent therewith, replaces, the description of the
Notes set forth in the accompanying Prospectus Supplement and the Prospectus.
Except as expressly provided in this Pricing Supplement, the terms and
conditions set forth in the Prospectus Supplement will apply to the ROARS
offered hereby.
Capitalized terms used herein but not otherwise defined shall have the
meanings assigned to such terms in the Indenture, dated as of January 26, 1996
(the "Indenture"), between the Company and The Bank of New York, as trustee (the
"Trustee"). The following summaries of certain provisions of the Indenture do
not purport to be complete, and are subject to, and are qualified in their
entirety by reference to, the provisions of the Indenture. The Indenture
provides for the issuance from time to time of various series of Debt
Securities, including the ROARS offered hereby. Each series may differ as to
terms, including Maturity, interest rate, redemption and sinking fund
provisions, covenants, and events of default. As of January 6, 1998, the Company
had outstanding $200 million aggregate principal amount of Debt Securities under
the Indenture.
The ROARS offered hereby will be unsubordinated and unsecured obligations
of the Company and will rank pari passu in right of payment with all other
unsubordinated and unsecured indebtedness of the Company. The ROARS will not
limit other indebtedness or securities which may be incurred or issued by the
Company or any of its subsidiaries or contain financial or similar restrictions
of the Company or any of its subsidiaries.
The terms applicable to the series of Notes offered hereby are as follows:
(1) Currency: U.S. dollars
(2) Aggregate Principal
Amount: $50,000,000
(3) Interest rate basis: Fixed rate
(4) Price at which ROARS
will be offered to
the public: The ROARS will be offered from time to time for
sale by the Underwriter in negotiated transactions
or otherwise, at prices relating to prevailing
market prices determined by the Underwriter at the
time of each sale.
(5) Stated Maturity: January 15, 2011
(6) Interest rate: The ROARS will bear interest at 6.00% per annum for
the period to January 15, 2001 (the "Remarketing
Date"). If the Remarketing Dealer elects to
remarket the ROARS, except in the limited
circumstances described herein, (a) the ROARS will
be subject to mandatory tender to the Remarketing
Dealer at 100% of the principal amount thereof for
remarketing on the Remarketing Date, on the terms
and subject to the conditions described herein, and
(b) on and after the Remarketing Date, the ROARS
will bear interest at the rate determined by the
Remarketing Dealer in accordance with the
procedures set forth below (the "Interest
2
<PAGE> 4
Rate to Maturity"). See "Mandatory Tender of ROARS;
Remarketing" below.
(7) Interest Payment
Dates: The ROARS will bear interest from January 15, 1998,
payable semi-annually on January 15 and July 15 of
each year (each, an "Interest Payment Date"),
commencing July 15, 1998, to the persons in whose
name the ROARS are registered on the 15th calendar
day (whether or not a Business Day) immediately
preceding the related Interest Payment Date (each,
a "Record Date").
(8) Business Day: Any day that is not a day on which banking
institutions in New York, New York are authorized
or obligated by law or executive order to close.
(9) Mandatory Tender of
ROARS: Provided that the Remarketing Dealer gives notice
to the Company and the Trustee on a Business Day
not later than five Business Days prior to the
Remarketing Date of its intention to purchase the
ROARS for remarketing (the "Notification Date"),
each of the ROARS will be automatically tendered,
or deemed tendered, to the Remarketing Dealer for
purchase on the Remarketing Date, except in the
circumstances described under "Repurchase" or
"Redemption" below. The purchase price for the
tendered ROARS to be paid by the Remarketing Dealer
will be equal to 100% of the principal amount
thereof. See "Notification of Results; Settlement".
When the ROARS are tendered for remarketing, the
Remarketing Dealer may remarket the ROARS for its
own account at varying prices to be determined by
the Remarketing Dealer at the time of each sale.
From and after the Remarketing Date, the ROARS will
bear interest at the Interest Rate to Maturity. If
the Remarketing Dealer elects to remarket the
ROARS, the obligation of the Remarketing Dealer to
purchase the ROARS on the Remarketing Date is
subject, among other things, to the conditions
that, since the Notification Date, no material
adverse change in the consolidated financial
condition, stockholders' equity or results of
operations or business of the Company and its
subsidiaries taken as a whole shall have occurred
and that no Event of Default (as defined in the
Indenture), or any event which, with the giving of
notice or passage of time, or both, would
constitute an Event of Default, with respect to the
ROARS shall have occurred and be continuing. If for
any reason the Remarketing Dealer does not purchase
all tendered ROARS on the Remarketing Date, the
Company will be required to repurchase the ROARS
from the Beneficial Owners thereof at a price equal
to the principal amount thereof plus all accrued
and unpaid interest, if any, on the ROARS to the
Remarketing Date. See "Repurchase" below.
(10) Interest Rate to
Maturity: The Interest Rate to Maturity on any Remarketed
ROARS shall be determined by the Remarketing Dealer
by 3:30 p.m., New York City time, on the third
Business Day immediately preceding the Remarketing
Date (the "Determination Date") to the nearest one
hundred-thousandth (0.00001) of one percent per
annum, and will be equal to the sum of 5.530% (the
"Base Rate") and the Applicable Spread (as defined
below), which will be based on the Dollar Price (as
defined below) of the ROARS.
3
<PAGE> 5
For this purpose, the following terms have the
following meanings:
"Applicable Spread" The lowest bid indication, expressed as a spread
(in the form of a percentage or in basis points)
above the Base Rate, obtained by the Remarketing
Dealer on the Determination Date from the bids
quoted by five Reference Corporate Dealers (as
defined below) for the full aggregate outstanding
principal amount of the ROARS at the Dollar Price,
but assuming (a) an issue date that is the
Remarketing Date, with settlement on such date
without accrued interest, (b) a maturity date that
is the Stated Maturity and (c) a stated annual
interest rate equal to the Base Rate plus the
spread bid by the applicable Reference Corporate
Dealer. If fewer than five Reference Corporate
Dealers bid as described above, then the Applicable
Spread shall be the lowest of such bid indications
obtained as described above. The Interest Rate to
Maturity announced by the Remarketing Dealer,
absent manifest error, shall be binding and
conclusive upon the holders of beneficial interests
in the ROARS (the "Beneficial Owners"), the Holders
(as defined in the Indenture) of the ROARS, the
Company and the Trustee.
"Comparable Treasury
Issues" The United States Treasury security or securities
selected by the Remarketing Dealer as having an
actual or interpolated maturity or maturities
comparable to the remaining term of the ROARS being
purchased by the Remarketing Dealer.
"Comparable Treasury
Price" With respect to the Remarketing Date, (a) the offer
prices for the Comparable Treasury Issues
(expressed in each case as a percentage of its
principal amount) on the Determination Date, as set
forth on "Telerate Page 500" (or such other page as
may replace Telerate Page 500) or (b) if such page
(or any successor page) is not displayed or does
not contain such offer prices on such Business Day,
(i) the average of the Reference Treasury Dealer
Quotations (as defined below) for such Remarketing
Date, after excluding the highest and lowest of
such Reference Treasury Dealer Quotations, or (ii)
if the Remarketing Dealer obtains fewer than four
such Reference Treasury Dealer Quotations, the
average of all such Reference Treasury Dealer
Quotations. "Telerate Page 500" means the display
designated as "Telerate Page 500" on Dow Jones
Markets (or such other page as may replace Telerate
Page 500 on such service) or such other service
displaying the offer prices specified in (a) above
as may replace Dow Jones Markets. "Reference
Treasury Dealer Quotations" means, with respect to
each Reference Treasury Dealer and the Remarketing
Date, the offer prices for the Comparable Treasury
Issues (expressed in each case as a percentage of
its principal amount) quoted in writing to the
Remarketing Dealer by such Reference Treasury
Dealer by 3:30 p.m., on the Determination Date.
"Dollar Price" With respect to the ROARS, the present value, as of
the Remarketing Date, of the Remaining Scheduled
Payments (as defined below) discounted to the
Remarketing Date on a semi-annual basis (assuming a
360-day year consisting of twelve 30-day months) at
the Treasury Rate (as defined below).
4
<PAGE> 6
"Reference Corporate
Dealers" Each of NationsBanc Montgomery Securities LLC,
BankAmerica Robertson Stephens, Donaldson, Lufkin &
Jenrette Securities Corporation, Salomon Smith
Barney and UBS Securities LLC and their respective
successors; provided that if any of the foregoing
or their affiliates shall cease to be a leading
dealer of publicly traded debt securities of the
Company (a "Primary Corporate Dealer"), the
Remarketing Dealer shall substitute therefor
another Primary Corporate Dealer.
"Reference Treasury
Dealer" Each of NationsBanc Montgomery Securities LLC,
BankAmerica Robertson Stephens, Donaldson, Lufkin &
Jenrette Securities Corporation, Salomon Smith
Barney and UBS Securities LLC and their respective
successors; provided that if any of the foregoing
or their affiliates shall cease to be a primary
U.S. Government securities dealer (a "Primary
Treasury Dealer"), the Remarketing Dealer shall
substitute therefor another Primary Treasury
Dealer.
"Remaining Scheduled
Payments" With respect to the ROARS, the remaining scheduled
payments of the principal thereof and interest
thereon, calculated at the Base Rate only, that
would be due after the Remarketing Date to and
including the Stated Maturity; provided that if the
Remarketing Date is not an Interest Payment Date
with respect to the ROARS, the amount of the next
succeeding scheduled interest payment thereon,
calculated at the Base Rate only, will be reduced
by the amount of interest accrued thereon,
calculated at the Base Rate only, to the
Remarketing Date.
"Treasury Rate" With respect to the Remarketing Date, the rate per
annum equal to the semi-annual equivalent yield to
maturity or interpolated (on a day count basis)
yield to maturity of the Comparable Treasury Issues
(as defined above), assuming a price for the
Comparable Treasury Issues (expressed as a
percentage of its principal amount), equal to the
Comparable Treasury Price (as defined above) for
such Remarketing Date.
(11) Notification of
Results;
Settlement: Provided the Remarketing Dealer has previously
notified the Company and the Trustee on the
Notification Date of its intention to purchase all
tendered ROARS on the Remarketing Date, the
Remarketing Dealer will notify the Company, the
Trustee and the Depository by telephone, confirmed
in writing, by 4:00 p.m., New York City time, on
the Determination Date, of the Interest Rate to
Maturity.
All the tendered ROARS will be automatically
delivered to the account of the Trustee, by
book-entry through the Depository pending payment
of the purchase price therefor, on the Remarketing
Date.
The Remarketing Dealer will make or cause the
Trustee to make payment to the Depository
participant (each, a "Participant") of each
tendering Beneficial Owner of ROARS, by book entry
through the Depository by the close of business on
the Remarketing Date against delivery through the
Depository of such Beneficial Owner's tendered
ROARS, of the purchase price for tendered ROARS
that have been purchased for remarketing by the
Remarketing Dealer. The purchase price of such
tendered ROARS will be equal to 100% of the
principal amount thereof. If the Remarketing Dealer
does not purchase all of the
5
<PAGE> 7
ROARS on the Remarketing Date, it will be the
obligation of the Company to make or cause to be
made such payment for the ROARS, as described below
under "Repurchase". In any case, the Company will
make or cause the Trustee to make payment of
interest to each Beneficial Owner of ROARS due on
the Remarketing Date by book entry through the
Depository by the close of business on the
Remarketing Date.
The transactions described above will be executed
on the Remarketing Date through the Depository in
accordance with the procedures of the Depository,
and the accounts of the respective Participants
will be debited and credited and the ROARS
delivered by book entry as necessary to effect the
purchases and sales thereof.
Transactions involving the sale and purchase of
ROARS remarketed by the Remarketing Dealer on and
after the Remarketing Date will settle in
immediately available funds through the
Depository's Same-Day Funds Settlement System.
The tender and settlement procedures described
above, including provisions for payment by
purchasers of ROARS in the remarketing or for
payment to selling Beneficial Owners of tendered
ROARS, may be modified, notwithstanding any
contrary terms of the Indenture, to the extent
required by the Depository or, if the book-entry
system is no longer available for the ROARS at the
time of the remarketing, to the extent required to
facilitate the tendering and remarketing of ROARS
in certificated form. In addition, the Remarketing
Dealer may, notwithstanding any contrary terms of
the Indenture, modify the settlement procedures set
forth above in order to facilitate the settlement
process.
As long as the Depository's nominee holds the
certificates representing any ROARS in the book
entry system of the Depository, no certificates for
such ROARS will be delivered by any selling
Beneficial Owner to reflect any transfer of such
ROARS effected in the remarketing. In addition,
under the terms of the ROARS and the Remarketing
Agreement (as defined below), the Company has
agreed that, notwithstanding any provision to the
contrary set forth in the Indenture, (a) it will
use its best efforts to maintain the ROARS in
book-entry form with the Depository or any
successor thereto and to appoint a successor
depository to the extent necessary to maintain the
ROARS in book-entry form and (b) it will waive any
discretionary right it otherwise has under the
Indenture to cause the ROARS to be issued in
certificated form.
For further information with respect to transfers
and settlement through the Depository, see
"Description of Notes -- Book-Entry Notes" in the
accompanying Prospectus Supplement.
(12) Remarketing Dealer: On or prior to the date of original issuance of the
ROARS, the Company and the Remarketing Dealer will
enter into a Remarketing Agreement (the
"Remarketing Agreement").
The Remarketing Dealer will not receive any fees or
reimbursement of expenses from the Company in
connection with the remarketing. If the Remarketing
Agreement is terminated at the option of the
Remarketing Dealer based upon the occurrence of any
of certain specified termination events, the
Company maybe obligated thereunder to reimburse the
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<PAGE> 8
Remarketing Dealer for all of its reasonable
out-of-pocket expenses. In addition, in the event
of any such termination or in the event that,
following the Remarketing Dealer's election to
remarket the ROARS, certain conditions to the
Remarketing Dealer's election to remarket the
ROARS, certain conditions to the Remarketing
Dealers obligation to remarket the ROARS are not
satisfied, the Company may be obligated to pay to
the Remarketing Dealer the fair market value,
calculated as set forth in the Remarketing
Agreement, of the Remarketing Dealer's right to
purchase and remarket the ROARS pursuant to the
Remarketing Agreement.
The Company will agree to indemnify the Remarketing
Dealer against certain liabilities, including
liabilities under the Securities Act of 1933, as
amended (the "Securities Act"), arising out of or
in connection with its duties under the Remarketing
Agreement.
In the event that the Remarketing Dealer elects to
remarket the ROARS as described herein, the
obligation of the Remarketing Dealer to purchase
ROARS from tendering Beneficial Owners of ROARS
will be subject to several conditions precedent set
forth in the Remarketing Agreement that are
customary in the Company's public offerings,
including the conditions that, since the
Notification Date, no material adverse change in
the consolidated financial condition, stockholders'
equity or results of operations of business of the
Company and its subsidiaries taken as a whole, and
that no Event of Default (as defined in the
Indenture), or any event which, with the giving of
notice or passage of time, or both, would
constitute an Event of Default, shall have occurred
and be continuing with respect to the ROARS. In
addition, the Remarketing Agreement will provide
for the termination thereof, or redetermination of
the Interest Rate to Maturity, by the Remarketing
Dealer on or before the Remarketing Date, upon the
occurrence of certain events that are also
customary in the Company's public securities
offerings.
No Beneficial Owner of any ROARS shall have any
rights or claims under the Remarketing Agreement or
against the Company or the Remarketing Dealer as a
result of the Remarketing Dealer not purchasing
such ROARS.
The Remarketing Agreement will also provide that
the Remarketing Dealer may resign at any time as
Remarketing Dealer, such resignation to be
effective 10 business days after the delivery to
the Company and the Trustee of notice of such
resignation. In such case, it shall be the sole
obligation of the Company to appoint a successor
Remarketing Dealer.
The Remarketing Dealer, in its individual or any
other capacity, may buy, sell, hold and deal in any
of the ROARS. The Remarketing Dealer may exercise
any vote or join in any action which any Beneficial
Owner of ROARS may be entitled to exercise or take
with like effect as if it did not act in any
capacity under the Remarketing Agreement. The
Remarketing Dealer, in its individual capacity,
either as principal or agent, may also engage in or
have an interest in any financial or other
transaction with the Company as freely as if it did
not act in any capacity under the Remarketing
Agreement.
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<PAGE> 9
(13) Repurchase: In the event that (a) the Remarketing Dealer for
any reason does not notify the Company of the
Interest Rate to Maturity by 4:00 p.m., New York
City time, on the Determination Date, or (b) prior
to the Remarketing Date, the Remarketing Dealer has
resigned and no successor has been appointed on or
before the Determination Date, or (c) since the
Notification Date, a material adverse change in the
condition of the Company and its subsidiaries,
considered as one enterprise, shall have occurred
or an Event of Default, or any event which, with
the giving of notice or passage of time, or both,
would constitute an Event of Default, with respect
to the ROARS shall have occurred and be continuing,
or any other event constituting a termination event
under the Remarketing Agreement shall have
occurred, or (d) the Remarketing Dealer elects not
to remarket the ROARS, or (e) the Remarketing
Dealer for any reason does not purchase all
tendered ROARS on the Remarketing Date, the Company
will repurchase the ROARS as a whole on the
Remarketing Date at a price equal to 100% of the
aggregate principal amount of the ROARS plus all
accrued and unpaid interest, if any, on the ROARS
to the Remarketing Date. In any such case, payment
will be made by the Company to the Participant of
each tendering Beneficial Owner of ROARS, by book
entry through the Depository by the close of
business on the Remarketing Date against delivery
through the Depository of such Beneficial Owner's
tendered ROARS.
(14) Redemption: Except in the limited circumstances described
below, the ROARS are not subject to redemption at
the option of the Company. If the Remarketing
Dealer elects to remarket the ROARS on the
Remarketing Date, the ROARS will be subject to
mandatory tender to the Remarketing Dealer for
remarketing on such date, in each case subject to
the conditions described above under "Mandatory
Tender of ROARS; Remarketing" and "Repurchase" and
to the Company's right to redeem the ROARS from the
Remarketing Dealer as described in the next
sentence. The Company will notify the Remarketing
Dealer and the Trustee, not later than the Business
Day immediately preceding the Determination Date,
if the Company irrevocably elects to exercise its
right to redeem the ROARS, in whole but not in
part, from the Remarketing Dealer on the
Remarketing Date at the Optional Redemption Price.
The "Optional Redemption Price" shall be the
greater of (a) 100% of the aggregate principal
amount of the ROARS and (b) the sum of the present
values of the Remaining Scheduled Payments thereon,
as determined by the Remarketing Dealer, discounted
to the Remarketing Date on a semi-annual basis
(assuming a 360-day year consisting of twelve
30-day months) at the Treasury Rate, plus in either
case accrued and unpaid interest from the
Remarketing Date on the principal amount being
redeemed to the date of redemption. If the Company
elects to redeem the ROARS, it shall pay the
redemption price therefor in same-day funds by wire
transfer to an account designated by the
Remarketing Dealer on the Remarketing Date.
(15) Sinking Fund: None
8
<PAGE> 10
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary of certain United States Federal income tax
consequences of the purchase, ownership and disposition of the ROARS is based
upon laws, regulations, rulings and decisions now in effect, all of which are
subject to change (including changes in effective dates) or possible differing
interpretations. It deals only with initial purchasers who hold ROARS as capital
assets and does not purport to deal with persons in special tax situations, such
as financial institutions, insurance companies, regulated investment companies,
dealers in securities or currencies, persons holding ROARS as a hedge against
currency risk or as a position in a "straddle" for tax purposes, or persons
whose functional currency is not the U.S. dollar. In addition, this discussion
only addresses the Federal income tax consequences of the ROARS until the
Remarketing Date. Persons considering the purchase of ROARS must consult their
own tax advisors concerning the application of United States Federal income tax
laws to their particular situations as well as any consequences of the purchase,
ownership and disposition of the ROARS arising under the laws of any other
taxing jurisdiction.
As used herein, the term "U.S. Holder" means a beneficial owner of a ROARS
that is for United States Federal income tax purposes (i) a citizen or resident
of the United States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or of any political
subdivision thereof (other than a partnership that is not treated as a United
States person under any applicable Treasury regulations), (iii) an estate whose
income is subject to United States Federal income tax regardless of its source,
(iv) a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United States
persons have the authority to control all substantial decisions of the trust, or
(v) any other person whose income or gain in respect of a ROARS is effectively
connected with the conduct of a United States trade or business. Notwithstanding
the preceding sentence, to the extent provided in Treasury regulations, certain
trusts in existence on August 20, 1996, and treated as United States persons
prior to such date, that elect to continue to be treated as United States
persons also will be a U.S. Holder. As used herein, the term "non-U.S. Holder"
means a beneficial owner of a ROARS that is not a U.S. Holder.
U.S. HOLDERS
The United States Federal income tax treatment of debt obligations such as
the ROARS is not certain. Because the ROARS are subject to mandatory tender on
the Remarketing Date, the Company intends to treat the ROARS as maturing on the
Remarketing Date for United States Federal income tax purposes. By purchasing
the ROARS, a U.S. Holder agrees to follow such treatment for United States
Federal income tax purposes. Based on such treatment, interest on the ROARS will
constitute "qualified stated interest" and generally will be taxable to a U.S.
Holder as ordinary interest income at the time such payments are accrued or
received (in accordance with the U.S. Holder's regular method of tax
accounting). Under the foregoing, if the ROARS are issued to a U.S. Holder at
par value or alternatively, the excess of the par value over the issue price is
less than the statutory de minimis amount (generally 1/4 of 1% of the ROARS'
stated redemption price at the Remarketing Date multiplied by the number of
complete years to the Remarketing Date from its issue date), the ROARS will not
be treated as having original issue discount.
If the ROARS are issued at a discount greater than the statutory de minimis
amount, a U.S. Holder must include original issue discount in income as ordinary
interest for United States Federal income tax purposes as it accrues under a
constant yield method in advance of receipt of the cash payments attributable to
such income, regardless of the U.S. Holder's regular method of accounting. In
general, the amount of original issue discount included in income by an initial
U.S. Holder of a ROARS would be the sum of the daily portions of original issue
discount with respect to such ROARS for each day during the taxable year (or
portion of the taxable year) on which such U.S. Holder held such ROARS. The
"daily portion" of original issue discount on any ROARS is determined by
allocating to each day in any accrual period a ratable portion of the original
issue discount allocable to that accrual period. An "accrual period" may be of
any length and the accrual periods may vary in length over the term of the
ROARS, provided that each accrual period is no longer than one year and each
scheduled payment of principal or interest occurs either on the final day of an
accrual period or on the first day of an accrual period. The amount of original
issue discount allocable to each accrual period is generally equal to the
difference between (i) the product of (x) the ROARS' adjusted issue price at the
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<PAGE> 11
beginning of such accrual period and appropriately adjusted to take into account
the length of the particular accrual period and (y) the yield of the ROARS (ii)
the amount of any qualified stated interest payments allocable to such accrual
period. The "adjusted issue price" of a ROARS at the beginning of any accrual
period is the sum of the issue price of the ROARS plus the amount of original
issue discount allocable to all prior accrual periods minus the amount of any
prior payments on the ROARS that were not qualified stated interest payments.
Under these rules, U.S. Holders generally will have to include in income
increasingly greater amounts of original issue discount in successive accrual
periods.
Under the foregoing treatment, upon the sale, exchange or retirement of a
ROARS, a U.S. Holder generally will recognize taxable gain or loss equal to the
difference between the amount realized on the sale, exchange or retirement
(other than amounts representing accrued and unpaid interest) and such U.S.
Holder's adjusted tax basis in the ROARS. A U.S. Holder's adjusted tax basis in
the ROARS generally will equal such U.S. Holder's initial investment in the
ROARS increased by any original issue discount included in income (and accrued
market discount, if any, if the U.S. Holder has included such market discount in
income) and decreased by the amount of any payments, other than qualified stated
interest payments, received and amortizable bond premium taken with respect to
such ROARS. Subject to the application of the market discount rules, such gain
or loss will be capital if the ROARS are held as a capital asset.
The Taxpayer Relief Act of 1997 (the "1997 Act") reduces the maximum rates
on long-term capital gains recognized on capital assets held by individual
taxpayers for more than eighteen months as of the date of disposition (and would
further reduce the maximum rates on such gains in the year 2001 and thereafter
for certain individual taxpayers who meet specified conditions). The capital
gains rate for capital assets held by individual taxpayers for more than twelve
months but not more than eighteen months ("mid term") was not changed by the
1997 Act. The 1997 Act does not change the capital gain rates for corporations.
Prospective investors should consult their own tax advisors concerning these tax
law changes.
There can be no assurance that the Internal Revenue Service ("IRS") will
agree with the Company's treatment of ROARS, and the IRS could seek to treat the
ROARS as maturing on the Stated Maturity. In the event the ROARS were treated as
maturing on the Stated Maturity for United States Federal income tax purposes,
because the Interest Rate to Maturity will not be determined until the
Determination Date, the ROARS would be treated as having contingent interest
under the Code. In such event, under Treasury Regulations governing debt
instruments that provide for contingent payments (the "Contingent Payment
Regulations"), the Company would be required to construct a projected payment
schedule for the ROARS based upon the Company's current borrowing costs for
comparable debt instruments of the Company, from which an estimated yield on the
ROARS would be calculated. A U.S. Holder would be required to include in income
as ordinary interest an amount equal to the sum of the daily portions of
interest on the ROARS that would be deemed to accrue at this estimated yield for
each day during the U.S. Holder's taxable year on which the U.S. Holder holds
the ROARS. The amount of interest that would be deemed to accrue in any accrual
period would equal the product of this estimated yield (properly adjusted for
the length of the accrual period) and the ROARS' adjusted issue price (as
defined below) at the beginning of the accrual period. The daily portions of
interest would be determined by allocating to each day in the accrual period the
ratable portion of the interest that would be deemed to accrue during the
accrual period. In general, for these purposes, the ROARS' adjusted issue price
would equal the ROARS' issue price increased by the interest previously accrued
on the ROARS, and reduced by all payments made on the ROARS. As a result of the
application of the Contingent Payment Regulations, it is possible that a U.S.
Holder would be required to include interest in income in excess of actual cash
payments received for certain taxable years.
Under the Contingent Payment Regulations, upon the sale or exchange of a
ROARS (including a sale pursuant to the mandatory tender on the Remarketing
Date), a U.S. Holder would be required to recognize taxable income or loss in an
amount equal to the difference, if any, between the amount realized by the U.S.
Holder upon such sale or exchange and the U.S. Holder's adjusted tax basis in
the ROARS as of the date of disposition. A U.S. Holder's adjusted tax basis in
the ROARS generally would equal such U.S. Holder's initial investment in the
ROARS increased by any interest previously included in income with respect to
the
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<PAGE> 12
ROARS by the U.S. Holder, and decreased by any payments received by the U.S.
Holder. Any taxable income generally would be treated as ordinary income. Any
such taxable loss generally would be treated (i) first as an offset to any
interest otherwise includible in income by a U.S. Holder with respect to the
ROARS for the taxable year in which the sale or exchange occurs to the extent of
the amount of such includible interest, and (ii) then as an ordinary loss to the
extent of the U.S. Holder's total interest inclusions on the ROARS in previous
taxable years. Any remaining loss in excess of the amounts described in (i) and
(ii) above generally would be treated as short-term, mid-term, or long
term-capital loss (depending upon the U.S. Holder's holding period for the
ROARS). All amounts includible in income by a U.S. Holder as ordinary income
pursuant to the Contingent Payment Treasury Regulations would be treated as
original issue discount.
NON-U.S. HOLDERS
A non-U.S. Holder will not be subject to United States Federal income taxes
on payments of principal or interest (including original issue discount and
accruals under the Treasury regulations applicable to contingent payment debt
obligations, if any) on a ROARS, unless such non-U.S. Holder owns actually or
constructively 10% or more of the total combined voting power of the Company, is
a controlled foreign corporation related to the Company through stock ownership
or is a bank receiving interest described in section 881(c)(3)(A) of the
Internal Revenue Code of 1986, as amended (the "Code"). To qualify for the
exemption from taxation, the last United States payor in the chain of payment
prior to payment to a non-U.S. Holder (the "Withholding Agent") must have
received in the year in which a payment of interest or principal occurs, or in
either of the two preceding calendar years, a statement that (i) is signed by
the Beneficial Owner of the ROARS under penalties of perjury, (ii) certifies
that such owner is not a U.S. Holder and (iii) provides the name and address of
the Beneficial Owner. The statement may be made on an IRS Form W-8 or a
substantially similar form, and the Beneficial Owner must inform the Withholding
Agent of any change in the information on the statement within 30 days of such
change. If a ROARS is held through a securities clearing organization or certain
other financial institutions, the organization or institution may provide a
signed statement to the Withholding Agent. However, in such case, the signed
statement must be accompanied by a copy of the IRS Form W-8 or the substitute
form provided by the Beneficial Owner to the organization or institution. The
Treasury Department is considering implementation of further certification
requirements aimed at determining whether the issuer of a debt obligation is
related to holders thereof.
Generally, a non-U.S. Holder will not be subject to United States Federal
income taxes on any amount which constitutes gain upon retirement or disposition
of a ROARS, provided the gain is not effectively connected with the conduct of a
trade or business in the United States by the non-U.S. Holder. Certain other
exceptions may be applicable, and a non-U.S. Holder should consult its tax
advisor in this regard.
The ROARS will not be includible in the estate of a non-U.S. Holder unless
the individual is a direct or indirect 10% or greater shareholder of the Company
or, at the time of such individual's death, payments in respect of the ROARS
would have been effectively connected with the conduct by such individual of a
trade or business in the United States.
BACKUP WITHHOLDING
Backup withholding of United States Federal income tax at a rate of 31% may
apply to payments made in respect of the ROARS to registered owners who are not
"exempt recipients" and who fail to provide certain identifying information
(such as the registered owner's taxpayer identification number) in the required
manner. Generally, individuals are not exempt recipients, whereas corporations
and certain other entities generally are exempt recipients. Payments made in
respect of the ROARS to a U.S. Holder must be reported to the IRS, unless the
U.S. Holder is an exempt recipient or establishes an exemption. Compliance with
the identification procedures described in the preceding section would establish
an exemption from backup withholding for those non-U.S. Holders who are not
exempt recipients.
In addition, upon the sale of a ROARS to (or through) a broker, the broker
must withhold 31% of the entire purchase price, unless either (i) the broker
determines that the seller is a corporation or other exempt recipient or (ii)
the seller provides, in the required manner, certain identifying information
and, in the case of
11
<PAGE> 13
a non-U.S. Holder, certifies that such seller is a non-U.S. Holder (and certain
other conditions are met). Such a sale must also be reported by the broker to
the IRS, unless either (i) the broker determines that the seller is an exempt
recipient or (ii) the seller certifies its non-U.S. Holder status (and certain
other conditions are met). Certification of the registered owner's non-U.S.
Holder status would be made normally on an IRS Form W-8 under penalties of
perjury, although in certain cases it may be possible to submit other
documentary evidence.
Any amounts withheld under the backup withholding rules from a payment to a
Beneficial Owner generally would be allowed as a refund or a credit against such
Beneficial Owner's United States Federal income tax provided the required
information is furnished to the IRS.
NEW WITHHOLDING REGULATIONS
On October 6, 1997, the Treasury Department issued new regulations (the
"New Regulations") which make certain modifications to the withholding, backup
withholding and information reporting rules described above. The New Regulations
attempt to unify certification requirements and modify reliance standards. The
New Regulations will generally be effective for payments made after December 31,
1998, subject to certain transition rules. Prospective investors are urged to
consult their own tax advisors regarding the New Regulations.
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<PAGE> 14
PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in an underwriting agreement
(the "Purchase Agreement") between the Company and NationsBanc Montgomery
Securities LLC (the "Underwriter"), the Company has agreed to sell to the
Underwriter, and the Underwriter has agreed to purchase from the Company, the
entire principal amount of the ROARS at a price equal to 102.757% of the
principal amount thereof, plus accrued interest, if any, from January 15, 1998.
The aggregate proceeds to the Company from the sale of the ROARS to the
Underwriter will be $51,378,500 plus accrued interest, if any, from January 15,
1998.
In the Purchase Agreement, the Underwriter has agreed, subject to the terms
and conditions set forth therein, to purchase all the ROARS offered hereby if
any ROARS are purchased. The Underwriter has advised the Company that the
Underwriter proposes to offer the ROARS from time to time for sale in negotiated
transactions or otherwise, at prices relating to prevailing market prices
determined by the Underwriter at the time of each sale. The Underwriter may
effect such transactions by selling ROARS to or through dealers and such dealers
may receive compensation in the form of underwriting discounts, concessions or
commissions from the Underwriter and any purchasers of ROARS for whom they may
act as agent. The Underwriter and any dealers that participate with the
Underwriter in the distribution of the ROARS may be deemed to be underwriters,
and any discounts or commissions received by them and any profit on the resale
of the ROARS by them may be deemed to be underwriting compensation.
The ROARS are a new issue of securities with no established trading market.
The Company has been advised by the Underwriter that the Underwriter intends to
make a market in the ROARS, but it is not obligated to do so and may discontinue
market making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the ROARS.
The Underwriter is permitted to engage in certain transactions that
maintain or otherwise affect the price of the ROARS. Such transactions may
include over-allotment transactions and purchases to cover short positions
created by the Underwriter in connection with the offering. If the Underwriter
creates a short position in the ROARS in connection with the offering, i.e., if
it sells ROARS in an aggregate principal amount exceeding that set forth on the
cover page of this Prospectus Supplement, the Underwriter may reduce that short
position by purchasing ROARS in the open market. In general, purchases of a
security to reduce a short position could cause the price of the security to be
higher than it might be in the absence of such purchases.
Neither the Company nor the Underwriter makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the ROARS. In addition, neither the
Company nor the Underwriter makes any representation that the Underwriter will
engage in such transactions or that such transactions, once commenced, will not
be discontinued without notice.
It is expected that delivery of the ROARS will be made against payment
therefor on or about the date specified in the last paragraph of the cover page
hereof, as agreed upon by the Company and the Underwriter pursuant to Rule
15c6-1 under the Exchange Act, which is the seventh business day following the
date hereof. Accordingly, purchasers who wish to trade ROARS on the date hereof
or prior to settlement will be required, by virtue of the fact that the ROARS
initially will settle in T+7, to specify alternate settlement arrangements to
prevent a failed settlement.
In the ordinary course of business, the Underwriter and its affiliates have
engaged and may in the future engage in investment banking transactions with the
Company and certain of its affiliates. The Underwriter has been appointed as the
Remarketing Dealer for the ROARS. See "Description of ROARS -- Remarketing".
NationsBank, N.A., an affiliate of the Underwriter, currently participates as a
lender in the Company's revolving credit facility.
The Company has agreed to indemnify the Underwriter and certain other
persons against certain liabilities, including liabilities under the Securities
Act, or to make contribution to certain payments in respect thereof.
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======================================================
No dealer, salesperson or other individual has been authorized to give any
information or to make any representations other than contained or incorporated
by reference in this Pricing Supplement, the Prospectus Supplement or the
Prospectus in connection with the offer made by this Pricing Supplement, the
Prospectus Supplement and the Prospectus and, if given or made, such information
or representations must not be relied upon as having been authorized by the
Company or the Underwriter. Neither the delivery of this Pricing Supplement, the
Prospectus Supplement or the Prospectus nor any sale made hereunder and
thereunder shall under any circumstance create an implication that there has not
been any change in the affairs of the Company since the date hereof. This
Pricing Supplement, the Prospectus 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 is
not qualified to do so or to anyone to whom it is unlawful to make such offer or
solicitation.
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TABLE OF CONTENTS
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<TABLE>
<CAPTION>
Page
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<S> <C>
PRICING SUPPLEMENT
Use of Proceeds....................... 2
Description of ROARS.................. 2
Certain United States Federal Tax
Considerations...................... 9
Plan of Distribution.................. 13
</TABLE>
======================================================
======================================================
$50,000,000
IBP, INC.
6.00% REMARKETABLE OR
REDEEMABLE SECURITIES ("ROARS"(SM))
DUE JANUARY 15, 2011
----------------------------
PRICING SUPPLEMENT
----------------------------
NATIONSBANC
MONTGOMERY SECURITIES LLC
January 6, 1998
======================================================
