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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 20, 2000.
REGISTRATION NO. 333-46490
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
MCCORMICK & COMPANY, INCORPORATED
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
MARYLAND 52-0408290
(State or other jurisdiction (I.R.S. Employer
of Identification Number)
incorporation or organization)
</TABLE>
18 LOVETON CIRCLE
SPARKS, MARYLAND 21152
(410) 771-7301
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
ROBERT W. SKELTON
MCCORMICK & COMPANY, INCORPORATED
18 LOVETON CIRCLE
SPARKS, MARYLAND 21152
(410) 771-7301
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
--------------------
COPY TO:
<TABLE>
<S> <C>
ALAN L. DYE, ESQ. STEPHAN J. FEDER, ESQ.
Hogan & Hartson L.L.P. Simpson Thacher & Bartlett
555 Thirteenth Street, N.W. 425 Lexington Avenue
Washington, D.C. 20004 New York, New York 10017
(202) 637-5600 (212) 455-2000
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
--------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Debt Securities............... $375,000,000 100% $375,000,000 (1) $99,000 (2)
</TABLE>
(1) Or, if any such securities are issued at original issue discount, such
greater principal amount as shall result in an aggregate initial offering
price of $375,000,000. Securities may be denominated in U.S. Dollars or in
one or more foreign currencies or units of two or more foreign currencies or
composite currencies.
(2) Previously paid.
--------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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--------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED NOVEMBER 20, 2000
Prospectus Supplement to Prospectus dated November , 2000.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE OR JURISDICTION WHERE THE OFFER OR SALE IS NOT
PERMITTED.
<PAGE>
$375,000,000
MCCORMICK & COMPANY, INCORPORATED
Medium-Term Notes
-------------
TERMS OF SALE
The following terms may apply to the Notes which McCormick & Company,
Incorporated may sell at one or more times. The final terms for each Note will
be included in a pricing supplement. McCormick will receive between $374,531,250
and $371,625,000 of the proceeds from the sale of the Notes, after paying the
agents commissions of between $468,750 and $3,375,000.
- Mature 9 months to 40 years
- Fixed or floating interest rate or indexed Notes or zero-coupon or other
original issue discount Notes. The floating interest rate may be based on:
- Commercial Paper Rate
- Prime Rate
- CD Rate
- Federal Funds Rate
- LIBOR
- Treasury Rate
- CMT Rate
- Any other rate specified by us in the pricing supplement
- Any combination of rates specified in a pricing supplement
- Certificated or book-entry form
- Subject to redemption and repurchase at option of McCormick or the holder
- Interest paid on Fixed Rate Notes semi-annually
- Interest paid on Floating Rate Notes monthly, quarterly, semi-annually or
annually
- Minimum denominations of $1,000 increased in multiples of $1,000
- May be foreign currency or composite currency denominated
- Same day settlement and payment in immediately available funds
The aggregate initial offering price of the Notes that McCormick offers will
be limited to $375,000,000 or its equivalent in one or more foreign currencies
or composite currencies, but this limit will decrease if McCormick sells other
securities that are described in the attached prospectus.
SEE "RISK FACTORS" ON PAGE S-2 TO READ ABOUT CERTAIN RISK FACTORS YOU SHOULD
CONSIDER BEFORE BUYING ANY NOTES.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY
HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------
McCormick may sell the Notes directly or through one or more agents or
dealers, including the agent listed below. The agents are not required to sell
any specific number or amount of the Notes. They will use their reasonable
efforts to sell the Notes offered.
GOLDMAN, SACHS & CO.
Prospectus Supplement dated November , 2000.
<PAGE>
RISK FACTORS
YOUR INVESTMENT IN THE NOTES IS SUBJECT TO CERTAIN RISKS, ESPECIALLY IF THE
NOTES INVOLVE IN SOME WAY A FOREIGN CURRENCY. THIS PROSPECTUS SUPPLEMENT DOES
NOT DESCRIBE ALL OF THE RISKS OF AN INVESTMENT IN THE NOTES, WHETHER ARISING
BECAUSE THE NOTES ARE DENOMINATED IN A CURRENCY OTHER THAN U.S. DOLLARS OR
BECAUSE THE RETURN ON THE NOTES IS LINKED TO ONE OR MORE INTEREST RATES OR
CURRENCY INDICES OR FORMULAE. YOU SHOULD CONSULT YOUR OWN FINANCIAL AND LEGAL
ADVISORS ABOUT THE RISKS ENTAILED BY AN INVESTMENT IN THE NOTES AND THE
SUITABILITY OF YOUR INVESTMENT IN THE NOTES IN LIGHT OF YOUR PARTICULAR
CIRCUMSTANCES. THE NOTES MAY NOT BE AN APPROPRIATE INVESTMENT FOR INVESTORS WHO
ARE UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS OR
TRANSACTIONS INVOLVING THE TYPE OF INDEX OR FORMULA USED TO DETERMINE AMOUNTS
PAYABLE. BEFORE INVESTING IN THE NOTES, YOU SHOULD CONSIDER CAREFULLY, AMONG
OTHER FACTORS, THE MATTERS DESCRIBED BELOW.
NOTES DENOMINATED IN FOREIGN CURRENCIES ARE SUBJECT TO SIGNIFICANT RISKS
ASSOCIATED WITH EXCHANGE RATE FLUCTUATION, FOREIGN EXCHANGE CONTROLS AND OTHER
FACTORS OVER WHICH WE HAVE NO CONTROL.
If you invest in Foreign Currency Notes and currency Indexed Notes, your
investment will be subject to significant risks not associated with investments
in debt instruments denominated in U.S. dollars or U.S. dollar-based indices.
Such risks include the possibility of significant changes in the rate of
exchange between the U.S. dollar and your payment currency and the imposition or
modification of foreign exchange controls by either the United States or the
applicable foreign governments. We have no control over the factors that
generally affect these risks, such as economic, financial and political events
and the supply and demand for the applicable currencies. In recent years, rates
of exchange between the U.S. dollar and certain foreign currencies have been
volatile, and such volatility may continue in the future. Past fluctuations in
any particular exchange rate are not necessarily indicative, however, of
fluctuations that may occur in the future. Fluctuations in exchange rates
against the U.S. dollar could result in a decrease in the U.S. dollar-equivalent
yield of your Foreign Currency Notes or currency Indexed Notes, in the U.S.
dollar-equivalent value of the principal and premium, if any, payable at
maturity of your Notes and, generally, in the U.S. dollar-equivalent market
value of your Notes. We may further describe the currency risks with respect to
your Foreign Currency Notes or currency Indexed Notes in the applicable pricing
supplement.
Foreign exchange rates can either float or be fixed by sovereign
governments. Governments, however, often do not voluntarily allow their
currencies to float freely in response to economic forces. Instead, governments
use a variety of techniques, such as intervention by that country's central bank
or the imposition of regulatory controls or taxes, to affect the exchange rate
of their currencies. Governments may also issue a new currency to replace an
existing currency or alter the exchange rate or relative exchange
characteristics by the devaluation or revaluation of a currency. Thus, an
important risk in purchasing Foreign Currency Notes or currency Indexed Notes
for U.S. dollar-based investors is that the U.S. dollar-equivalent yield of the
Notes could be affected by, among other things, governmental actions that could
change or interfere with a currency valuation that was previously freely
determined, fluctuations in response to other market forces, and the movement of
currencies across borders. We will make no adjustments or changes in the terms
of the Foreign Currency Notes or currency Indexed Notes if exchange rates become
fixed, if any devaluation or revaluation or imposition of exchange or other
regulatory controls or taxes occur, or if other developments affecting the U.S.
dollar or any applicable currency occur.
The calculation agent, the paying agent and the exchange rate agent will
make calculations relating to your Foreign Currency Notes or currency Indexed
Notes. All such determinations will, in the absence of clear
S-2
<PAGE>
error, be binding on beneficial owners of the Notes.
On January 1, 1999, Austria, Belgium, Finland, France, Germany, Ireland,
Italy, Luxembourg, The Netherlands, Portugal and Spain (the "Participating
States") commenced a new stage of economic and monetary union and introduced a
single currency (the "euro"), which will be legal tender in the Participating
States in substitution for the national currencies of those countries. The
current currencies of the Participating States will remain legal tender in those
countries as the physical currency denominating and representing the euro until
December 31, 2001, but all financial records and accounts will thereafter be
stated in the euro. The conversion rates between the current currencies of each
Participating State and the euro were fixed irrevocably by the Council of the
European Union effective January 1, 1999. The Council of the European Union has
adopted regulations providing specific rules for the introduction of the euro.
For Notes with a specified currency other than U.S. dollars, we will include
in the applicable pricing supplement information concerning historical exchange
rates for that currency against the U.S. dollar and a brief description of any
relevant exchange controls.
EXCHANGE RATES MAY AFFECT THE VALUE OF A JUDGMENT OF A U.S. COURT INVOLVING
FOREIGN CURRENCY NOTES.
The Indenture and the Notes, except to the extent that we specify otherwise
in a pricing supplement, will be governed by, and construed in accordance with,
the laws of the State of New York. As a holder of Notes, you may bring an action
based upon an obligation payable in a currency other than U.S. dollars in courts
in the United States. However, courts in the United States have not customarily
rendered judgments for money damages denominated in any currency other than U.S.
dollars. In addition, it is not clear whether, in granting such judgment, a
court would determine the rate of conversion with reference to the date of
default, the date judgment is rendered or any other date. The Judiciary Law of
the State of New York provides, however, that an action based upon an obligation
payable in a currency other than U.S. dollars will be rendered in the currency
of the underlying obligation and converted into U.S. dollars at a rate of
exchange prevailing on the date the judgment or decree is entered. In these
cases, holders of Foreign Currency Notes would bear the risk of exchange rate
fluctuations between the time the dollar amount of the judgment is calculated
and the time U.S. dollars were paid to the holders.
NOTES INDEXED TO INTEREST RATE, CURRENCY OR OTHER INDICES OR FORMULAS ARE MORE
VOLATILE THAN CONVENTIONAL DEBT SECURITIES.
If you invest in Indexed Notes, your investment will be subject to
significant risks that are not associated with an investment in a conventional
debt security. Indexation of the interest rate of a Note may result in lower
interest compared to a conventional fixed rate debt security issued at the same
time, or no interest. Indexation of the principal and premium, if any, on a Note
may result in the payment of a lower amount of principal and/or premium (or no
principal and/or premium) compared to the original purchase price of the Note.
The value of an index can fluctuate based on a number of interrelated factors,
including economic, financial and political events over which we have no
control. Additionally, if any formula that we specify to determine the amount of
principal, premium and/or interest payable with respect to Indexed Notes
contains a multiple or leverage factor, that feature will magnify the effect of
any change in the index. You should not take the historical experience of an
index as an indication of its future performance.
THERE MAY NOT BE ANY TRADING MARKET FOR YOUR NOTES; MANY FACTORS AFFECT THE
TRADING AND MARKET VALUE OF YOUR NOTES.
Upon issuance, your Notes will not have an established trading market. We
cannot assure you a trading market for your Notes will ever develop or be
maintained if developed. In addition to our creditworthiness, many factors
S-3
<PAGE>
affect the trading market for, and trading value of, your Notes. These factors
include:
- the complexity and volatility of the index or formula applicable to your
Notes,
- the method of calculating the principal, premium and interest in respect
of your Notes,
- the time remaining to the maturity of your Notes,
- the outstanding amount of Notes related to your Notes,
- any redemption features of your Notes,
- the amount of other debt securities linked to the index or formula
applicable to your Notes, and
- the level, direction and volatility of market interest rates generally.
There may be a limited number of buyers when you decide to sell your Notes.
This may affect the price you receive for your Notes or your ability to sell
your Notes at all. In addition, Notes that are designed for specific investment
objectives or strategies often experience a more limited trading market and more
price volatility than those not so designed. You should not purchase Notes
unless you understand and know you can bear all of the investment risks
involving your Notes.
OUR CREDIT RATINGS MAY NOT REFLECT ALL RISKS OF AN INVESTMENT IN THE NOTES.
The credit ratings on the Notes may not reflect the potential impact of all
risks related to structure and other factors on the value of the Notes. In
addition, real or anticipated changes in our credit ratings will generally
affect the market value of the Notes.
ABOUT THIS PROSPECTUS SUPPLEMENT AND THE PRICING SUPPLEMENTS
We intend to use this prospectus supplement, the attached prospectus and a
related pricing supplement to offer our Notes from time to time.
This prospectus supplement provides you with certain terms of the Notes and
supplements the description of the Debt Securities contained in the attached
prospectus. If information in this prospectus supplement is inconsistent with
the prospectus, this prospectus supplement will replace the inconsistent
information in the prospectus.
Each time we issue Notes, we will prepare a pricing supplement that will
contain additional terms of the offering and the specific description of the
Notes offered. The pricing supplement may also add, update or change information
in this prospectus supplement or the attached prospectus, including provisions
describing the calculation of interest and the method of making payments under
the terms of a Note. The flexibility available to us to set or negotiate
individualized terms for Notes means that there may be transactions,
particularly with Indexed Notes, that are quite complex. Frequently, the terms
of the Notes may differ from the terms that we describe in this prospectus
supplement. Any information in a pricing supplement that is inconsistent with
this prospectus supplement will replace the inconsistent information in this
prospectus supplement.
S-4
<PAGE>
DESCRIPTION OF NOTES
THE FOLLOWING SUMMARY OF CERTAIN TERMS OF THE NOTES IS NOT COMPLETE. FOR
ADDITIONAL TERMS OF THE NOTES, YOU SHOULD ALSO READ THE INDENTURE UNDER WHICH
THE NOTES WILL BE ISSUED, WHICH IS AN EXHIBIT TO OUR SHELF REGISTRATION
STATEMENT. THE FOLLOWING DESCRIPTION OF THE NOTES SUPPLEMENTS, AND, TO THE
EXTENT THE DESCRIPTIONS ARE INCONSISTENT, REPLACES THE DESCRIPTION OF THE
GENERAL TERMS AND PROVISIONS OF THE DEBT SECURITIES THAT IS FOUND UNDER THE
HEADING "DESCRIPTION OF DEBT SECURITIES" IN THE ATTACHED PROSPECTUS. THE
FOLLOWING DESCRIPTIONS WILL APPLY TO EACH NOTE UNLESS WE SPECIFY OTHERWISE IN
THE PRICING SUPPLEMENT.
WHEN WE REFER TO YOU, WE MEAN THOSE WHO INVEST IN THE NOTES BEING OFFERED BY
THIS PROSPECTUS SUPPLEMENT AND THE ATTACHED PROSPECTUS, WHETHER THEY ARE THE
HOLDERS OR ONLY INDIRECT HOLDERS OF THOSE DEBT SECURITIES. WHEN WE REFER TO YOUR
NOTES, WE MEAN THE NOTES IN WHICH YOU HOLD A DIRECT OR INDIRECT INTEREST.
GENERAL
We will offer Notes on a continuous basis. The aggregate initial public
offering price of the Notes that we offer will be limited to $375,000,000 or its
equivalent in one or more foreign currencies or composite currencies, but this
limit will decrease if we sell other securities that are described in the
attached prospectus.
The Notes are our unsecured obligations and rank equally with all of our
other unsecured and unsubordinated debt.
The Notes offered by this prospectus supplement will form a part of the
medium-term notes due from 9 months to 40 years from date of issue issued under
the Indenture. At August 31, 2000, we and our consolidated subsidiaries had
total consolidated long-term indebtedness of approximately $233 million (in
addition to approximately $4 million in the current portion of our long-term
indebtedness) and we had no subordinated indebtedness outstanding.
The Indenture does not limit the amount of our Notes or other debt
obligations that we may issue thereunder.
The covenant defeasance provisions of the Indenture described under
"Description of Debt Securities -- Covenant Defeasance" in the attached
prospectus will apply to the Notes.
Unless we specify otherwise in the applicable pricing supplement, we will
denominate the Notes in U.S. dollars and will make all payments on the Notes in
U.S. dollars. For further information regarding Foreign Currency Notes, see
"Risk Factors" and "Special Provisions Relating to Foreign Currency Notes".
You must pay the purchase price of the Notes in immediately available funds.
As used in this prospectus supplement, "Business Day" means any day, other
than a Saturday or Sunday, that is neither a legal holiday nor a day on which
commercial banks are authorized or required by law, regulation or executive
order to close in The City of New York; PROVIDED, HOWEVER, that with respect to
Foreign Currency Notes, such day is also not a day on which commercial banks are
authorized or required by law, regulation or executive order to close in the
Principal Financial Center (as defined below) of the country issuing the
specified currency (or, if the specified currency is the euro, such day is also
a day on which the Trans-European Automated Real-Time Gross Settlement Express
Transfer System is open); PROVIDED, FURTHER, that with respect to Notes as to
which LIBOR is an applicable interest rate basis, such day is also a London
Business Day.
"London Business Day" means a day on which commercial banks are open for
business (including dealings in the designated LIBOR Currency) in London.
"Principal Financial Center" means:
- the capital city of the country issuing the specified currency; or
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- the capital city of the country to which the designated LIBOR Currency
relates, as applicable,
except that, with respect to U.S. dollars, Australian dollars, Canadian dollars,
Deutsche marks, Dutch guilders, Portuguese escudos, South African rand and Swiss
francs, the "Principal Financial Center" will be The City of New York, Sydney
and (solely in the case of the specified currency) Melbourne, Toronto,
Frankfurt, Amsterdam, London (solely in the case of the designated LIBOR
Currency), Johannesburg and Zurich, respectively.
The authorized denominations of Notes denominated in U.S. dollars will be
integral multiples of $1,000. We will designate the authorized denominations of
Foreign Currency Notes in the applicable pricing supplement.
BOOK-ENTRY SECURITIES
Except under certain circumstances, we will issue Notes in book-entry form
only. This means that we will not issue actual Notes or certificates to you.
Instead, we will issue a Global Security representing Notes with similar terms,
and such Global Security will be held by The Depository Trust Company ("DTC") or
its nominee. In order to own a beneficial interest in a Note, you must be an
institution that has an account with DTC or have an account with an institution,
such as a brokerage firm, that has an account with DTC. For a more complete
description of Book-Entry Securities, see "Description of Debt Securities --
Book-Entry Securities" in the prospectus.
Payments of principal and premium, if any, and interest on Notes represented
by a Global Security will be made in same-day funds to DTC in accordance with
arrangements then in effect between the Trustee and DTC.
INTEREST AND INTEREST RATES
GENERAL
Each Note will begin to accrue interest, if any, from the date it is
originally issued. In the related pricing supplement, we will designate each
Note as a Fixed Rate Note, an OID Note, a Floating Rate Note, an Amortizing Note
or an Indexed Note and describe the method of determining the interest rate,
including any spread and/or spread multiplier. For an Indexed Note, we will
describe in the related pricing supplement the method for the calculation and
payment of principal and interest. We also may specify a maximum and a minimum
interest rate in the pricing supplement for a Floating Rate Note or Indexed
Note.
We may also issue a Note that combines fixed and floating rate terms.
Interest rates that we offer with respect to Notes may differ depending
upon, among other things, the aggregate principal amount of Notes purchased in
any single transaction. We may offer Notes with similar variable terms but
different interest rates, as well as Notes with different variable terms,
concurrently to different investors. We may, from time to time, change the
interest rates or formulae and other terms of Notes, but no such change will
affect any Note that we already have issued or as to which we already have
accepted an offer to purchase.
FIXED RATE NOTES
In the pricing supplement for Fixed Rate Notes, we will specify a fixed
interest rate payable semiannually in arrears on each and
(each an "Interest Payment Date"), or such other dates specified in the
applicable pricing supplement, to holders of record on the corresponding Regular
Record Date. If a Fixed Rate Note is issued between a Regular Record Date and
the corresponding date which would otherwise be the initial Interest Payment
Date, we will make our first payment of interest, if any, on the Interest
Payment Date following the next Regular Record Date. The "Regular Record Date",
as referred to in this paragraph, is the close of business on the fifteenth day
(whether or not a Business Day), prior to an Interest Payment Date. We will
compute interest on Fixed Rate Notes on the basis of a 360-day year of twelve
30-day months. If the maturity date or an Interest Payment Date for any Fixed
Rate Note is not a Business Day, we will pay
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principal of and premium, if any, and interest for that Note, as applicable, on
the next Business Day, and no interest will accrue from and after the maturity
date or Interest Payment Date.
ORIGINAL ISSUE DISCOUNT NOTES
We may issue original issue discount Notes (including zero coupon Notes)
("OID Notes"), which are Notes issued at a discount from the principal amount
payable at the maturity date. An OID Note might not have periodic interest
payments. For these Notes, interest normally accrues during the life of the
Note, and you receive it at the maturity date or upon earlier redemption. Upon a
redemption, repayment or acceleration of the maturity of an OID Note, we will
determine the amount payable to you as set forth under "-- Optional Redemption,
Repayment and Repurchase". Normally, this amount is less than the amount that we
would otherwise pay at the maturity date.
AMORTIZING NOTES
We may issue amortizing Notes, which are Fixed Rate Notes for which combined
principal and interest payments are made in installments over the life of each
Note ("Amortizing Notes"). We apply payments on Amortizing Notes first to pay
interest due and then to reduce the unpaid principal amount. We will include a
table setting forth repayment information in the related pricing supplement for
an Amortizing Note.
FLOATING RATE NOTES
Each Floating Rate Note will have an interest rate basis or formula. We may
base that formula on:
- the CD Rate;
- the Commercial Paper Rate;
- LIBOR;
- the Federal Funds Rate;
- the Prime Rate;
- the Treasury Rate;
- the CMT Rate; or
- any other rate, or combination of rates, specified in the pricing
supplement.
In the pricing supplement, we also will indicate any spread and/or spread
multiplier, which would be applied to the interest rate formula to determine the
interest rate. Any Floating Rate Note may have a maximum or minimum interest
rate limitation. In addition to any maximum interest rate limitation, the
interest rate on the Floating Rate Notes will in no event be higher than the
maximum rate permitted by New York law, as the same may be modified by United
States law for general application.
We will appoint a calculation agent to calculate interest rates on the
Floating Rate Notes. Unless we identify a different party in the pricing
supplement, the paying agent will be the calculation agent for each Note. In
most cases, a Floating Rate Note will have a specified "Interest Reset Date",
"Interest Determination Date" and "Calculation Date" associated with it. An
Interest Reset Date is the date on which the interest rate on the Note changes.
An Interest Determination Date is the date as of which the new interest rate is
determined for a particular Interest Reset Date, based on the interest rate
basis or formula as of that Interest Determination Date. The Calculation Date is
the date by which the calculation agent will determine the new interest rate
that became effective on a particular Interest Reset Date, based on the interest
rate basis or formula as of the applicable Interest Determination Date.
CHANGE OF INTEREST RATE
We may set the interest rate on each Floating Rate Note daily, weekly,
monthly, quarterly, semiannually, annually or on some other basis that we
specify (each, an "Interest Reset Date"). Unless otherwise stated in the pricing
supplement, the Interest Reset Date will be:
- for Notes with interest that resets daily, each Business Day;
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- for Notes (other than Treasury Rate Notes) with interest that resets
weekly, Wednesday of each week;
- for Treasury Rate Notes with interest that resets weekly, Tuesday of each
week;
- for Notes with interest that resets monthly, the third Wednesday of each
month;
- for Notes with interest that resets quarterly, the third Wednesday of each
of the four months of each year indicated in the applicable pricing
supplement;
- for Notes with interest that resets semiannually, the third Wednesday of
each of the two months of each year indicated in the applicable pricing
supplement;
- for Notes with interest that resets annually, the third Wednesday of the
month of each year indicated in the applicable pricing supplement; and
- for Notes which reset at intervals other than those described above, the
days specified in the applicable pricing supplement.
The related pricing supplement will describe the initial interest rate or
interest rate formula on each Note. That rate is effective until the following
Interest Reset Date. Thereafter, the interest rate will be the rate determined
on each Interest Determination Date. Each time a new interest rate is
determined, it becomes effective on the subsequent Interest Reset Date. If any
Interest Reset Date is not a Business Day, then the Interest Reset Date is
postponed to the next Business Day, except, in the case of a LIBOR Note, if the
next Business Day is in the next calendar month, the Interest Reset Date is the
immediately preceding Business Day.
DATE INTEREST RATE IS DETERMINED
The Interest Determination Date for all Floating Rate Notes (except LIBOR
Notes and Treasury Rate Notes) will be the second Business Day before the
Interest Reset Date. The Interest Determination Date in the case of LIBOR Notes
will be the second London Business Day immediately preceding the applicable
Interest Reset Date.
The Interest Determination Date for Treasury Rate Notes will be the day of
the week in which the Interest Reset Date falls on which Treasury bills of the
same Index Maturity are normally auctioned. Treasury bills usually are sold at
auction on Monday of each week, unless that day is a legal holiday, in which
case the auction usually is held on Tuesday. Sometimes, the auction is held on
the preceding Friday. If an auction is held on the preceding Friday, that day
will be the Interest Determination Date relating to the Interest Reset Date
occurring in the next week. If an auction date falls on a day which would
otherwise be an Interest Reset Date, then the Interest Reset Date will instead
be the first Business Day immediately following the auction date.
CALCULATION DATE
Unless we specify a different date in a pricing supplement, the "Calculation
Date", if applicable, relating to an Interest Determination Date will be the
earlier of:
- the tenth calendar day after such Interest Determination Date or, if that
day is not a Business Day, the next succeeding Business Day; or
- the Business Day immediately preceding the relevant Interest Payment Date
or the maturity date, as the case may be.
Upon the request of the beneficial holder of any Floating Rate Note, the
calculation agent will provide the interest rate then in effect and, if
different, the interest rate that will become effective on the next Interest
Reset Date for the Floating Rate Note.
PAYMENT OF INTEREST
Unless otherwise stated in the pricing supplement, we will pay installments
of interest on Floating Rate Notes as follows:
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- for Notes with interest payable monthly, on the third Wednesday of each
month;
- for Notes with interest payable quarterly, on the third Wednesday of each
of the four months of each year indicated in the applicable pricing
supplement;
- for Notes with interest payable semiannually, on the third Wednesday of
each of the two months specified in the applicable pricing supplement;
- for Notes with interest payable annually, on the third Wednesday of the
month specified in the applicable pricing supplement (each of the above an
"Interest Payment Date"); and
- at maturity, redemption or repurchase.
Each interest payment on a Floating Rate Note will include interest accrued
from, and including, the issue date or the last Interest Payment Date, as the
case may be, to, but excluding, the following Interest Payment Date or the
maturity or redemption date, as the case may be.
We will pay installments of interest on Floating Rate Notes beginning on the
first Interest Payment Date after its issue date to the holders of record on the
corresponding Regular Record Date. If a Floating Rate Note is issued between a
Regular Record Date and the corresponding date which would otherwise be the
initial Interest Payment Date, we will make our first payment of interest, if
any, on the Interest Payment Date following the next Regular Record Date. The
"Regular Record Date", as referred to in this paragraph, is the close of
business on the fifteenth day (whether or not a Business Day), prior to an
Interest Payment Date. If an Interest Payment Date (but not the maturity date)
is not a Business Day, the Interest Payment Date will be deferred until the next
Business Day; however, in the case of LIBOR Notes, the Interest Payment Date
will be the preceding Business Day if the next Business Day is in the next
calendar month. If the maturity date of any Floating Rate Note is not a Business
Day, we will pay principal of and premium, if any, and interest for that Note on
the next Business Day, and no interest will accrue from and after the maturity
date.
We and the calculation agent will calculate accrued interest on a Floating
Rate Note by multiplying the principal amount of a Note by an accrued interest
factor. The accrued interest factor is the sum of the interest factors
calculated for each day in the period for which accrued interest is being
calculated. The interest factor for each day is computed by dividing the
interest rate in effect on that day by:
- 360, in the case of CD Rate Notes, Commercial Paper Rate Notes, LIBOR
Notes (except where a 360 day convention is not customary, E.G., for LIBOR
Notes denominated in pounds sterling), Federal Funds Rate Notes and Prime
Rate Notes;
- 365, in the case of other LIBOR Notes (E.G., LIBOR Notes denominated in
pounds sterling); or
- the actual number of days in the year, in the case of Treasury Rate Notes
and CMT Rate Notes.
All percentages resulting from any calculation will be rounded to the
nearest one hundred-thousandth of a percentage point, with five one-millionths
or more of a percentage point rounded upward. For example, 9.876545% (or
.09876545) will be rounded to 9.87655% (or .0987655). Dollar amounts used in the
calculation will be rounded to the nearest cent (with one-half cent being
rounded upward).
CALCULATION OF INTEREST
In this section, we will explain how we and the calculation agent will
calculate the interest rate on different Floating Rate Notes.
CD RATE NOTES
The "CD Rate" for any Interest Determination Date is the rate on that date
for negotiable certificates of deposit having the Index Maturity described in
the related pricing supplement, as published in H.15 (519) prior to
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3:00 P.M., New York City time, on the Calculation Date, for that Interest
Determination Date under the heading "CDs (secondary market)". The "Index
Maturity" is the period to maturity of the instrument or obligation with respect
to which the related interest rate basis or formulae will be calculated.
We and the calculation agent will observe the following procedures if the CD
Rate cannot be determined as described above:
- If the above rate is not published in H.15 (519) by 3:00 P.M., New York
City time, on the Calculation Date, the CD Rate will be the rate on that
Interest Determination Date for negotiable certificates of deposit of the
Index Maturity described in the pricing supplement as published in H.15
Daily Update, or such other recognized electronic source used for the
purpose of displaying such rate, under the caption "CDs (secondary
market)".
- If that rate is not published in H.15 (519), H.15 Daily Update or another
recognized electronic source by 3:00 P.M., New York City time, on the
Calculation Date, then the calculation agent will determine the CD Rate to
be the average of the secondary market offered rates as of 10:00 A.M., New
York City time, on that Interest Determination Date, quoted by three
leading non-bank dealers of negotiable U.S. dollar certificates of deposit
of major United States money market banks in The City of New York of the
highest credit standing (in the market for negotiable certificates of
deposit) for negotiable certificates of deposit in a denomination of
$5,000,000 with a remaining maturity closest to the Index Maturity
described in the pricing supplement. The calculation agent, after
consultation with us, will select the three dealers referred to above.
- If fewer than three dealers are quoting as mentioned above, the CD Rate
will remain the CD Rate then in effect on that Interest Determination
Date.
"H.15 (519)" means the weekly statistical release designated as such, or any
successor publication, published by the Board of Governors of the Federal
Reserve System.
"H.15 Daily Update" means the daily update of H.15 (519), available through
the world-wide web site of the Board of Governors of the Federal Reserve System
at http://www.bog.frb.fed.us/releases/h15/update, or any successor site or
publication.
COMMERCIAL PAPER RATE NOTES
The "Commercial Paper Rate" for any Interest Determination Date is the Money
Market Yield of the rate on that date for commercial paper having the Index
Maturity described in the related pricing supplement, as published in H.15 (519)
prior to 3:00 P.M., New York City time, on the Calculation Date for that
Interest Determination Date under the heading "Commercial Paper --
Nonfinancial". We and the calculation agent will observe the following
procedures if the Commercial Paper Rate cannot be determined as described above:
- If the above rate is not published in H.15 (519) by 3:00 P.M., New York
City time, on the Calculation Date, the Commercial Paper Rate will be the
Money Market Yield of the rate on that Interest Determination Date for
commercial paper having the Index Maturity described in the pricing
supplement, as published in H.15 Daily Update, or such other recognized
electronic source used for the purpose of displaying such rate, under the
caption "Commercial Paper -- Nonfinancial".
- If that rate is not published in H.15 (519), H.15 Daily Update or another
recognized electronic source by 3:00 P.M., New York City time, on the
Calculation Date, then the calculation agent will determine the Commercial
Paper Rate to be the Money Market Yield of the average of the offered
rates of three leading dealers of U.S. dollar commercial paper in The City
of New York as of 11:00 A.M., New York City
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time, on that Interest Determination Date for commercial paper having the
Index Maturity described in the pricing supplement placed for an
industrial issuer whose bond rating is "Aa", or the equivalent, from a
nationally recognized securities rating organization. The calculation
agent, after consultation with us, will select the three dealers referred
to above.
- If fewer than three dealers selected by the calculation agent are quoting
as mentioned above, the Commercial Paper Rate will remain the Commercial
Paper Rate then in effect on that Interest Determination Date.
"Money Market Yield" means a yield (expressed as a percentage) calculated in
accordance with the following formula:
<TABLE>
<S> <C> <C>
D X 360
---------------
Money Market Yield = 360 - (D X M) X 100
</TABLE>
Where "D" refers to the applicable per annum rate for commercial paper
quoted on a bank discount basis and expressed as a decimal, and "M" refers to
the actual number of days in the interest period for which interest is being
calculated.
LIBOR NOTES
On each Interest Determination Date, the calculation agent will determine
LIBOR as follows:
- If the pricing supplement specifies "LIBOR Telerate", LIBOR on any
Interest Determination Date will be the rate for deposits in the LIBOR
Currency having the Index Maturity described in the related pricing
supplement on the applicable Interest Reset Date, as such rate appears on
the Designated LIBOR Page as of 11:00 A.M., London time, on that Interest
Determination Date.
- If the pricing supplement specifies "LIBOR Reuters", LIBOR on any Interest
Determination Date will be the average of the offered rates for deposits
in the LIBOR Currency having the Index Maturity described in the related
pricing supplement on the applicable Interest Reset Date, as such rates
appear on the Designated LIBOR Page as of 11:00 A.M., London time, on that
Interest Determination Date, if at least two such offered rates appear on
the Designated LIBOR Page.
If the pricing supplement does not specify "LIBOR Telerate" or "LIBOR
Reuters", the LIBOR Rate will be LIBOR Telerate. In addition, if the Designated
LIBOR Page by its terms provides only for a single rate, that single rate will
be used regardless of the foregoing provisions requiring more than one rate.
On any Interest Determination Date on which fewer than the required number
of applicable rates appear or no rate appears on the applicable Designated LIBOR
Page, the calculation agent will determine LIBOR as follows:
- The calculation agent will determine LIBOR on the basis of the offered
rates at which deposits in the LIBOR Currency having the Index Maturity
described in the related pricing supplement on the Interest Determination
Date and in a principal amount that is representative of a single
transaction in that market at that time are offered by four major banks in
the London interbank market at approximately 11:00 A.M., London time, for
the period commencing on the Interest Reset Date to prime banks in the
London interbank market. The calculation agent will select the four banks
and request the principal London office of each of those banks to provide
a quotation of its rate for deposits in the LIBOR Currency. If the banks
provide at least two quotations, LIBOR for that Interest Determination
Date will be the average of those quotations.
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- If the banks provide fewer than two quotations as mentioned above, LIBOR
will be the average of the rates quoted by three major banks in the
Principal Financial Center selected by the calculation agent at
approximately 11:00 A.M. in the Principal Financial Center, on the
Interest Determination Date for loans to leading European banks in the
LIBOR Currency having the Index Maturity designated in the pricing
supplement for the period commencing on the Interest Reset Date and in a
principal amount that is representative of a single transaction in the
LIBOR Currency in that market at that time. The calculation agent will
select the three banks referred to above.
- If fewer than three banks selected by the calculation agent are quoting as
mentioned above, LIBOR will remain LIBOR then in effect on that Interest
Determination Date.
"LIBOR Currency" means the currency specified in the applicable pricing
supplement as to which LIBOR will be calculated or, if no such currency is
specified in the applicable pricing supplement, U.S. dollars.
"Designated LIBOR Page" means:
- if the pricing supplement specifies "LIBOR Reuters", the display on the
Reuters Monitor Money Rates Service (or any successor service) on the page
specified in such pricing supplement (or any other page as may replace
such page on such service) for the purpose of displaying the London
interbank rates of major banks for the LIBOR Currency; or
- if the pricing supplement specifies "LIBOR Telerate" or it specifies
neither "LIBOR Reuters" nor "LIBOR Telerate" as the method of calculating
LIBOR, the display on Bridge Telerate, Inc. or any successor service
("Telerate") on the page specified in such pricing supplement (or any
other page as may replace such page on such service) for the purpose of
displaying the London interbank rates of major banks for the LIBOR
Currency.
FEDERAL FUNDS RATE NOTES
The "Federal Funds Rate" for any Interest Determination Date is the rate on
that date for Federal Funds, as published in H.15 (519) prior to 3:00 P.M., New
York City time, on the Calculation Date for that Interest Determination Date
under the heading "Federal Funds (Effective)", as such rate is displayed on
Telerate on page 120 (or any other page as may replace such page) ("Telerate
Page 120").
We and the calculation agent will observe the following procedures if the
Federal Funds Rate cannot be determined as described above:
- If the above rate does not appear on Telerate Page 120 or is not published
in H.15 (519) by 3:00 P.M., New York City time, on the Calculation Date,
the Federal Funds Rate will be the rate on that Interest Determination
Date, as published in H.15 Daily Update, or such other recognized
electronic source used for the purpose of displaying such rate, under the
caption "Federal Funds (Effective)".
- If the above rate does not appear on Telerate Page 120 or is not published
in H.15 (519) or H.15 Daily Update or such other recognized electronic
source as described above by 3:00 P.M., New York City time, on the
Calculation Date, then the calculation agent will determine the Federal
Funds Rate to be the average of the rates for the last transaction in
overnight Federal Funds arranged by three leading dealers of Federal Funds
transactions in The City of New York as of 9:00 A.M., New York City time,
on that Interest Determination Date. The calculation agent, after
consultation with us, will select the three dealers referred to above.
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- If fewer than three brokers selected by the calculation agent are quoting
as mentioned above, the Federal Funds Rate will be the Federal Funds Rate
then in effect on that Interest Determination Date.
PRIME RATE NOTES
The "Prime Rate" for any Interest Determination Date is the prime rate or
base lending rate on that date, as published in H.15 (519) by 3:00 P.M., New
York City time, on the Calculation Date for that Interest Determination Date
under the heading "Bank Prime Loan" or, if not published by 3:00 P.M., New York
City time, on the related Calculation Date, the rate on such Interest
Determination Date as published in H.15 Daily Update, or such other recognized
electronic source used for the purpose of displaying such rate, under the
caption "Bank Prime Loan".
We and the calculation agent will observe the following procedures if the
Prime Rate cannot be determined as described above:
- If the rate is not published in H.15 (519), H.15 Daily Update or another
recognized electronic source by 3:00 P.M., New York City time, on the
Calculation Date, then the calculation agent will determine the Prime Rate
to be the average of the rates of interest publicly announced by each bank
that appears on the Reuters screen designated as "USPRIME1" as that bank's
prime rate or base lending rate as in effect for that Interest
Determination Date.
- If at least one rate but fewer than four rates appear on the Reuters
screen USPRIME1 on the Interest Determination Date, then the Prime Rate
will be the average of the prime rates or base lending rates quoted (on
the basis of the actual number of days in the year divided by a 360-day
year) as of the close of business on the Interest Determination Date by
three major money center banks in The City of New York selected by the
calculation agent.
- If the banks selected by the calculation agent are not quoting as
mentioned above, the Prime Rate will remain the Prime Rate then in effect
on the Interest Determination Date.
TREASURY RATE NOTES
The "Treasury Rate" for any Interest Determination Date is the rate set at
the auction of direct obligations of the United States ("Treasury bills") having
the Index Maturity described in the related pricing supplement under the caption
"INVESTMENT RATE" on the display on Telerate on page 56 (or any other page as
may replace such page) ("Telerate Page 56") or page 57 (or any other page as may
replace such page) ("Telerate Page 57") by 3:00 P.M., New York City time, on the
Calculation Date for that Interest Determination Date.
We and the calculation agent will observe the following procedures if the
Treasury Rate cannot be determined as described above:
- If the rate is not published by 3:00 P.M., New York City time, on the
Calculation Date, the Treasury Rate will be the auction rate of such
Treasury bills (expressed as a bond equivalent on the basis of a year of
365 or 366 days, as applicable, and applied on a daily basis) as published
in H.15 Daily Update, or such recognized electronic source used for the
purpose of displaying such rate, under the caption "U.S. Government
securities Treasury bills/Auction high".
- If the rate is not published by 3:00 P.M., New York City time, on the
Calculation Date and cannot be determined as described in the immediately
preceding paragraph, the Treasury Rate will be the average auction rate of
such Treasury bills (expressed as a bond equivalent on the basis of a year
of 365 or 366 days, as applicable, and applied on a daily basis) as
otherwise announced by the United States Department of the Treasury on the
Calculation Date.
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- If the results of the most recent auction of Treasury bills having the
Index Maturity described in the pricing supplement are not published or
announced as described above by 3:00 P.M., New York City time, on the
Calculation Date, or if no auction is held on the Interest Determination
Date, then the Treasury Rate will be the rate (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) on such Interest Determination Date of Treasury
bills having the Index Maturity specified in the applicable pricing
supplement as published in H.15 (519) under the caption "U.S. Government
securities/Treasury bills/Secondary market" or, if not published by
3:00 P.M., New York City time, on the related Calculation Date, the rate
on such Interest Determination Date of such Treasury bills as published in
H.15 Daily Update, or such other recognized electronic source used for the
purpose of displaying such rate, under the caption "U.S. Government
securities/ Treasury bills/Secondary market".
- If such rate is not yet published in H.15 (519), H.15 Daily Update or
another recognized electronic source by 3:00 P.M., New York City time, on
the related Calculation Date, then the calculation agent will determine
the Treasury Rate to be the Bond Equivalent Yield of the average of the
secondary market bid rates, as of approximately 3:30 P.M., New York City
time, on the Interest Determination Date of three leading primary
U.S. government securities dealers (which may include the Agent or its
affiliates) for the issue of Treasury bills with a remaining maturity
closest to the Index Maturity described in the related pricing supplement.
The calculation agent will select the three dealers referred to above.
- If fewer than three dealers selected by the calculation agent are quoting
as mentioned above, the Treasury Rate will remain the Treasury Rate then
in effect on that Interest Determination Date.
"Bond Equivalent Yield" means a yield (expressed as a percentage) calculated
in accordance with the following formula:
<TABLE>
<S> <C> <C>
Bond Equivalent Yield = D X N X 100
--------------
360 - (D X M)
</TABLE>
where "D" refers to the applicable per annum rate for Treasury Bills quoted on a
bank discount basis. "N" refers to 365 or 366 days, as applicable, and "M"
refers to the actual number of days in the applicable Interest Reset Period.
CMT RATE NOTES
The "CMT Rate" for any Interest Determination Date is the rate displayed on
the Designated CMT Telerate Page by 3:00 P.M., New York City time, on the
Calculation Date for that Interest Determination Date under the caption
"-- Treasury Constant Maturities -- Federal Reserve Board Release H.15 --
Mondays Approximately 3:45 P.M.", under the column for the Designated CMT
Maturity Index described in the related pricing supplement for:
- if the Designated CMT Telerate Page is 7051 or any successor page, the
rate on such Interest Determination Date; or
- if the Designated CMT Telerate Page is 7052 or any successor page, the
weekly or monthly average for the week or the month, as specified in the
related pricing supplement, ended immediately preceding the week or the
month in which the related Interest Determination Date occurs.
The following procedures will be used if the CMT Rate cannot be determined
as described above:
- If the relevant page does not display the rate by 3:00 P.M., New York City
time, on the Calculation Date, then the CMT Rate will be the Treasury
constant maturity rate for the Designated CMT Maturity Index, as published
in H.15 (519).
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- If that rate is not published in H.15 (519) by 3:00 P.M., New York City
time, on the Calculation Date, then the CMT Rate will be the Treasury
constant maturity rate (or other United States Treasury rate) for the
Designated CMT Maturity Index for the Interest Determination Date as may
then be published by either the Board of Governors of the Federal Reserve
System or the United States Department of the Treasury that the
calculation agent determines (with our concurrence) to be comparable to
the rate formerly displayed on the Designated CMT Telerate Page and
published in H.15 (519).
- If that information is not provided by 3:00 P.M., New York City time, on
the Calculation Date, then the calculation agent will determine the CMT
Rate to be a yield to maturity based on the arithmetic average of the
secondary market closing offered rates, as of approximately 3:30 P.M., New
York City time, on the Interest Determination Date reported, according to
their written records, by three leading primary United States government
securities dealers (each, a "Reference Dealer") in The City of New York.
The calculation agent will select five Reference Dealers and will
eliminate the highest quotation (or, in the event of equality, one of the
highest quotations) and the lowest quotation (or, in the event of
equality, one of the lowest quotations), for the most recently issued,
direct, noncallable fixed rate obligations of the United States ("Treasury
Notes") with an original maturity approximately equivalent to that of the
Designated CMT Maturity Index, and a remaining term to maturity not less
than that of the Designated CMT Maturity Index minus one year.
- If the calculation agent cannot obtain three Treasury Note quotations, the
calculation agent will determine the CMT Rate to be a yield to maturity
based on the arithmetic average of the secondary market offered rates as
of approximately 3:30 P.M., New York City time, on the Interest
Determination Date of three Reference Dealers in The City of New York
(selected using the same method described above) for Treasury Notes with
an original maturity of the number of years that is the next highest to
that of the Designated CMT Maturity Index, and with a remaining term to
maturity closest to that of the Designated CMT Maturity Index, which has
an outstanding balance of at least $100,000,000. If two such Treasury
Notes with an original maturity have remaining terms to maturity equally
close to that of the Designated CMT Maturity Index, the calculation agent
will obtain quotations for the Treasury Note with the shorter remaining
term to maturity.
- If three or four (but not five) Reference Dealers are quoting as mentioned
above, then the CMT Rate will be based on the arithmetic average of the
offered rates obtained, and neither the highest nor the lowest of those
quotations will be eliminated.
- If fewer than three Reference Dealers selected by the calculation agent
are quoting as mentioned above, the CMT Rate will remain the CMT Rate then
in effect on the Interest Determination Date.
"Designated CMT Telerate Page" means the display on Telerate, on the page
specified in the applicable pricing supplement (or any other page as may replace
such page) for the purpose of displaying Treasury Constant Maturities as
reported in H.15 (519) or, if no such page is specified in the applicable
pricing supplement, page 7052 (or any other page as may replace such page).
"Designated CMT Maturity Index" means the original period to maturity of the
U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years) specified in
the applicable pricing supplement with respect to which the CMT Rate will be
calculated or, if no such
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maturity is specified in the applicable pricing supplement, two years.
INDEXED NOTES
We may issue Notes for which the amount of interest or principal that you
will receive will not be known on your date of purchase. We will specify the
formula for computation of principal and premium, if any, and interest payments
for these types of Notes, which we call "Indexed Notes", by reference to
securities, financial or non-financial indices, currencies, commodities,
interest rates, or composites or baskets of any or all of the above. Examples of
indexed items that we may use include a published stock index, the common stock
price of a publicly traded company, the value of the U.S. dollar versus the
Japanese yen, or the price in a particular market of a particular commodity.
If you purchase an Indexed Note, you may receive a principal amount at
maturity that is greater than or less than the Note's face amount, and an
interest rate that is greater than or less than the interest rate that you would
have earned if you had instead purchased a conventional debt security issued by
us at the same time with the same maturity. The amount of principal and premium,
if any, and interest that you will receive will depend on the structure of the
Indexed Note and the level of the specified indexed item throughout the term of
the Indexed Note and at maturity. Specific information pertaining to the method
of determining the interest payments, principal amounts and/or premium amounts,
as well as additional risk factors unique to the Indexed Note, certain
historical information for the specified indexed item and certain additional
United States federal tax considerations, will be described in the pricing
supplement.
RENEWABLE NOTES
We may issue renewable Notes ("Renewable Notes"), which are Notes that will
automatically renew at their maturity date unless the holder of the Renewable
Note elects to terminate the automatic extension feature by giving notice in the
manner described in the related pricing supplement.
The holder of the Renewable Note must give notice of termination at least
15, but not more than 30 days, prior to the Renewal Date. The holder of a
Renewable Note may terminate the automatic extension for less than all of their
Renewable Notes only if the terms of the Note specifically permit partial
termination. An election to terminate the automatic extension of any portion of
the Renewable Note is irrevocable and will be binding on the holder of the Note.
If the holder elects to terminate the automatic extension of the maturity of the
Note, the holder will become entitled to the principal and interest accrued up
to the Renewal Date. The related pricing supplement will identify a final
maturity date beyond which the maturity date cannot be renewed.
If a Note is represented by a Global Security, DTC or its nominee will be
the holder of the Note and, therefore, will be the only entity that can exercise
a right to terminate the automatic extension of a Note. In order to ensure that
DTC or its nominee will exercise a right to terminate the automatic extension
provisions of a particular Note, the beneficial owner of the Note must instruct
the broker or other DTC participant through which it holds an interest in the
Note to notify DTC of its desire to terminate the automatic extension of the
Note. Different firms have different cutoff times for accepting instructions
from their customers, and accordingly, each beneficial owner should consult the
broker or other participant through which it holds an interest in a Renewable
Note to ascertain the cutoff time by which an instruction must be given for
delivery of timely notice to DTC or its nominee.
EXTENDIBLE NOTES
We may issue Notes whose stated maturity date may be extended at our option
(an "Extendible Note") for one or more whole year periods (each an "Extension
Period"), up to but not beyond a final maturity date described in the related
pricing supplement (but not to exceed 30 years from the date of issue).
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We may exercise our option to extend the Extendible Note by notifying the
Trustee (or any duly appointed paying agent) at least 50 but not more than 60
days prior to the then effective maturity date. If we elect to extend the
Extendible Note, the Trustee (or paying agent) will mail, at least 40 days prior
to the maturity date, to the registered holder of the Extendible Note a notice
(an "Extension Notice") informing the holder of our election, the new maturity
date and any updated terms. Upon the mailing of the Extension Notice, the
maturity of such Note will be extended automatically as set forth in the
Extension Notice.
However, we may, not later than 20 days prior to the maturity date of an
Extendible Note (or, if such date is not a Business Day, on the immediately
succeeding Business Day), at our option, establish a higher interest rate, in
the case of a Fixed Rate Note, or a higher spread and/or spread multiplier, in
the case of a Floating Rate Note, for the Extension Period by mailing or causing
the Trustee (or paying agent) to mail notice of such higher interest rate or
higher spread and/or spread multiplier to the holder of the Extendible Note. The
notice will be irrevocable.
If we elect to extend the maturity of an Extendible Note, the holder of the
Note will have the option to instead elect repayment of the Note by us on the
then effective maturity date. In order for an Extendible Note to be so repaid on
the maturity date, we must receive, at least 15 days but not more than 30 days
prior to the maturity date:
- the Note with the form "Option to Elect Repayment" on the reverse of the
Note duly completed; or
- a facsimile transmission, telex or letter from a member of a national
securities exchange or the National Association of Securities
Dealers, Inc. or a commercial bank or trust company in the United States
setting forth the name of the holder of the Note, the principal amount of
the Note, the principal amount of the Note to be repaid, the certificate
number or a description of the tenor and terms of the Note, a statement
that the option to elect repayment is being exercised thereby and a
guarantee that the Note to be repaid, together with the duly completed
form entitled "Option to Elect Repayment" on the reverse of the Note, will
be received by the Trustee (or paying agent) not later than the fifth
Business Day after the date of the facsimile transmission, telex or
letter; PROVIDED, HOWEVER, that the facsimile transmission, telex or
letter will only be effective if the Trustee or paying agent receives the
Note and form duly completed by that fifth Business Day.
A holder of an Extendible Note may exercise this option for less than the
aggregate principal amount of the Note then outstanding if the principal amount
of the Note remaining outstanding after repayment is an authorized denomination.
If a Note is represented by a Global Security, DTC or its nominee will be
the holder of that Note and, therefore, will be the only entity that can
exercise a right to repayment. To ensure that DTC or its nominee timely
exercises a right to repayment with respect to a particular Note, the beneficial
owner of that Note must instruct the broker or other participant through which
it holds an interest in the Note to notify DTC of its desire to exercise a right
of repayment. Different firms have different cutoff times for accepting
instructions from their customers and, accordingly, each beneficial owner should
consult the broker or other participant through which it holds an interest in a
Note to determine the cutoff time by which an instruction must be given for
timely notice to be delivered to DTC or its nominee.
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OPTIONAL REDEMPTION, REPAYMENT
AND REPURCHASE
We will indicate in the pricing supplement for a Note whether we will have
the option to redeem the Note before the stated maturity and the price or prices
at which, and date or dates on which, redemption may occur. If we are allowed to
redeem a Note, we may exercise the option by notifying the Trustee at least 60
days prior to the redemption date. At least 30 but not more than 60 days before
the redemption date, the Trustee will mail notice or cause the paying agent to
mail notice of redemption to the holders. If we redeem a Note in part, we will
issue a new Note or Notes for the unredeemed portion.
We also will indicate in the pricing supplement for a Note whether you will
have the option to elect repayment by us prior to the stated maturity and the
price or prices at which, and the date or dates on which, repayment may occur.
For a Note to be repaid at your option, the paying agent must receive, at
least 30 but not more than 60 days prior to an optional repayment date, such
Note with the form entitled "Option to Elect Repayment" on the reverse of the
Note duly completed. If you present a Note for repayment, such act will be
irrevocable. You may exercise the repayment option for less than the entire
principal of the Note, provided the remaining principal outstanding is an
authorized denomination. If you elect partial repayment, your Note will be
canceled, and we will issue a new Note or Notes for the remaining amount.
DTC or its nominee will be the holder of each Global Security and will be
the only party that can exercise a right of repayment. If you are a beneficial
owner of a Global Security and you want to exercise your right of repayment, you
must instruct your broker or indirect participant through which you hold an
interest in the Note to notify DTC. You should consult your broker or such
indirect participant to discuss the appropriate cutoff times and any other
requirements for giving this instruction. The giving of any such instruction
will be irrevocable.
If a Note is an OID Note (other than an Indexed Note), the amount payable in
the event of redemption or repayment prior to its stated maturity will be the
amortized face amount on the redemption or repayment date, as the case may be.
The amortized face amount of an OID Note will be equal to:
- the issue price, plus
- that portion of the difference between the issue price and the principal
amount of the Note that has accrued at the yield to maturity described in
the pricing supplement (computed in accordance with generally accepted
U.S. bond yield computation principles) by the redemption or repayment
date.
However, in no case will the amortized face amount of an OID Note exceed its
principal amount.
We may purchase Notes at any time and at any price, in the open market or
otherwise. We may hold, resell or surrender for cancellation any Notes that we
purchase.
SPECIAL PROVISIONS RELATING TO FOREIGN CURRENCY NOTES
GENERAL
Unless we indicate otherwise in the applicable pricing supplement, we will
denominate the Notes in U.S. dollars, we will pay the principal of and premium,
if any, and interest on the Notes in U.S. dollars, and you must pay the purchase
price of the Notes in immediately available U.S. dollar funds. If any of the
Notes ("Foreign Currency Notes") are to be denominated or payable in a currency
other than U.S. dollars, the following provisions will apply in addition to,
and, to the extent inconsistent therewith, will replace, the description of
general terms and provisions of Notes set forth in the attached prospectus and
elsewhere in this prospectus supplement.
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A pricing supplement with respect to any Foreign Currency Note (which may
include information with respect to applicable current foreign exchange
controls) is a part of this prospectus and prospectus supplement. If we furnish
you any information concerning exchange rates, we do so as a matter of
information only, and you should not regard it as indicative of the range of or
trends in fluctuations in currency exchange rates that may occur in the future.
CURRENCIES
We may offer Foreign Currency Notes denominated and/or payable in a
specified currency or specified currencies. Unless we indicate otherwise in the
applicable pricing supplement, you are required to pay for Foreign Currency
Notes in the specified currency. At the present time, there are limited
facilities in the United States for conversion of U.S. dollars into specified
currencies and vice versa, and banks may elect not to offer non-U.S. dollar
checking or savings account facilities in the United States. However, at your
request, on or prior to the third Business Day preceding the date of delivery of
the Foreign Currency Notes, or by such other day as determined by the Agent who
presents such offer to purchase Foreign Currency Notes to us, such Agent may be
prepared to arrange for the conversion of U.S. dollars into the applicable
specified currency set forth in the applicable pricing supplement to enable the
purchasers to pay for the Foreign Currency Notes. Each such conversion will be
made by the Agent or Agents on terms and subject to conditions, limitations and
charges as the Agents may from time to time establish in accordance with their
regular foreign exchange practices. If you purchase Foreign Currency Notes, you
will bear all costs of exchange which are related to your purchase.
The applicable pricing supplement will set forth information about the
specified currency in which a particular Foreign Currency Note is denominated
and/or payable, including historical exchange rates and a description of the
currency and any exchange controls and, in the case of a currency unit, will
include a description thereof and a description of provisions for payment in the
event the currency unit is no longer used for the purposes for which it was
established.
PAYMENT OF PRINCIPAL AND INTEREST
If you are a holder of Foreign Currency Notes, we will pay you in U.S.
dollars converted from the specified currency unless you elect to be paid in the
specified currency or unless the applicable pricing supplement provides
otherwise. Currently, banks do not generally offer non-U.S. dollar denominated
account facilities in their offices in the United States, although they are
permitted to do so for most foreign currencies.
If you hold Foreign Currency Notes, we will base any U.S. dollar amount that
you receive on the highest bid quotation in The City of New York received by the
exchange rate agent that we have specified in the applicable pricing supplement
at approximately 11:00 A.M., New York City time, on the second Business Day
preceding the applicable payment date from three recognized foreign exchange
dealers (one of whom may be the exchange rate agent) for the purchase by the
quoting dealer of the specified currency for U.S. dollars for settlement on such
payment date in the aggregate amount of the specified currency payable to all
holders of Foreign Currency Notes scheduled to receive U.S. dollar payments and
at which the applicable dealer commits to execute a contract. The exchange rate
agent will select, and we may approve, the recognized foreign dealers who
provide the bid quotations. If three bid quotations are not available, we will
make payments in the specified currency. All currency exchange costs relating to
the payment will be borne by the holders of the Foreign Currency Note by
deductions from such payments.
Unless we indicate otherwise in the applicable pricing supplement, as a
holder of Foreign Currency Notes, you may elect to receive payment of the
principal of and premium, if any, and interest on the Foreign Currency Notes in
the specified currency by
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transmitting a written request for such payment to the corporate trust office of
the Trustee in The City of New York on or prior to the Regular Record Date or at
least 15 calendar days prior to maturity, as the case may be. You may make this
request in writing (mailed or hand delivered) or by facsimile transmission or
telex. As a holder of a Foreign Currency Note, you may elect to receive payment
in the specified currency for all principal and interest payments and need not
file a separate election for each payment. Your election will remain in effect
until revoked by written notice to the Trustee, but written notice of any such
revocation must be received by the Trustee on or prior to the Regular Record
Date or at least 15 calendar days prior to the maturity date, as the case may
be.
If a Note is represented by a Global Security, DTC or its nominee will be
the holder of the Note and will be entitled to all payments on the Note.
Although DTC can hold Notes denominated in foreign currencies, DTC currently
will only accept payments in U.S. dollars. As a result, if the specified
currency of a Note is other than U.S. dollars, a beneficial owner of the related
Global Security who elects to receive payments in the specified currency must
notify the participant through which it owns its interest on or prior to the
applicable Record Date or at least 15 calendar days prior to the maturity date,
as the case may be, of such beneficial owner's election. The participant must
notify DTC of such election on or prior to the third Business Day after such
Record Date or at least 12 calendar days prior to the maturity date, as the case
may be, and DTC will notify the Trustee of such election on or prior to the
fifth Business Day after such Record Date or at least ten calendar days prior to
the maturity date, as the case may be. If the participant receives complete
instructions from the beneficial owner that are forwarded by the participant to
DTC, and by DTC to the Trustee, on or prior to such dates, then the beneficial
owner will receive payments in the specified currency. See "Description of Debt
Securities -- Book-Entry Securities".
We will pay principal and premium, if any, and interest on Foreign Currency
Notes to be paid in U.S. dollars in the manner specified in the attached
prospectus and this prospectus supplement with respect to Notes denominated in
U.S. dollars. See "Description of Notes -- General". We will pay interest on
Foreign Currency Notes to be paid in the specified currency by wire transfer to
a bank account maintained by the holder in the country of the specified currency
or, in the case of euros, a bank account maintained by the holder in any of the
Participating States, or, if appropriate wire transfer instructions are not
received by the Trustee on or prior to the applicable Regular Record Date, by
check mailed on the relevant Interest Payment Date, made payable to the persons
entitled thereto, to the address of such holders as they appear in the Security
Register. The principal of Foreign Currency Notes, together with interest
accrued and unpaid thereon, due at the maturity date will be paid in immediately
available funds upon surrender of such Notes at the corporate trust office of
the Trustee in The City of New York, or, at our option, by wire transfer to such
bank account.
PAYMENT CURRENCY
If a specified currency is not available for the payment of principal and
premium, if any, or interest with respect to a Foreign Currency Note due to the
imposition of exchange controls or other circumstances beyond our control, we
will be entitled to satisfy our obligations to holders of Foreign Currency Notes
by making such payment in U.S. dollars on the basis of the noon buying rate in
The City of New York for cable transfers of the specified currency as certified
for customs purposes (or, if not so certified, as otherwise determined) by the
Federal Reserve Bank of New York (the "Market Exchange Rate") as computed by the
exchange rate agent on the second Business Day prior to such payment or, if not
then available, on the basis of the most recently available Market Exchange Rate
or as otherwise indicated in an applicable pricing supplement. Any payment made
under such circumstances in U.S. dollars where the required payment is in a
specified currency will
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not constitute a default under the Indenture with respect to the Notes.
All determinations referred to above which are made by the exchange rate
agent will be at its sole discretion and will, in the absence of clear error, be
conclusive for all purposes and binding on the holders of the Foreign Currency
Notes.
AS INDICATED ABOVE, IF YOU INVEST IN FOREIGN CURRENCY NOTES OR CURRENCY
INDEXED NOTES, YOUR INVESTMENT WILL BE SUBJECT TO SUBSTANTIAL RISKS, THE EXTENT
AND NATURE OF WHICH CHANGE CONTINUOUSLY. AS WITH ANY INVESTMENT THAT YOU MAKE IN
A SECURITY, YOU SHOULD CONSULT YOUR OWN FINANCIAL AND LEGAL ADVISORS AS TO THE
RISKS ENTAILED IN AN INVESTMENT IN FOREIGN CURRENCY NOTES OR CURRENCY INDEXED
NOTES. SUCH NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR YOU IF YOU ARE
UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY MATTERS.
UNITED STATES TAXATION
The following is a summary of the material U.S. federal income tax
consequences of the purchase, ownership, and disposition of a Note, subject to
the limitations stated below. Such opinion is based on the Internal Revenue Code
of 1986, as amended (the "Code"), Treasury Regulations (including proposed
Regulations and temporary Regulations) promulgated thereunder, rulings, official
pronouncements and judicial decisions, all as in effect on the date of this
prospectus supplement and all of which are subject to change, possibly with
retroactive effect, or to different interpretations. This summary provides
general information only and does not address all of the federal income tax
consequences that may be applicable to a holder of a Note. It does not address
all of the tax consequences that may be relevant to certain types of holders
subject to special treatment under the federal income tax law, such as
individual retirement and other tax-deferred accounts, dealers in securities or
currencies, life insurance companies, tax-exempt organizations, persons holding
Notes as a hedge or hedged against currency risk, as a position in a straddle
for tax purposes, as part of a "synthetic security" or other integrated
investment comprised of a Note and one or more other investments, United States
persons (as defined below) whose functional currency is other than the U.S.
dollar or to certain U.S. expatriates. It also does not discuss the tax
consequences to subsequent purchasers of Notes and is limited to investors who
hold Notes as a capital asset. The federal income tax consequences of
purchasing, holding or disposing of a particular Note will depend, in part, on
the particular terms of such Note as set forth in the applicable pricing
supplement. The federal income tax consequences of purchasing, holding or
disposing of certain Floating Rate Notes, Foreign Currency Notes (other than
Single Foreign Currency Notes, as defined below), Amortizing Notes, Floating
Rate/Fixed Rate Notes, Indexed Notes, Renewable Notes and exchangeable or
convertible Debt Securities will be set out in the applicable pricing
supplement. Persons considering the purchase of Notes and making any election
under the Code or the Treasury Regulations with respect to such Notes should
consult their own tax advisors concerning the application of the U.S. federal
income tax law to their particular situations as well as any tax consequences
arising under the law of any state, local or foreign tax jurisdiction, subject
to the limitations stated below.
"Single Foreign Currency Note" means a Note on which all payments a holder
is entitled to receive are denominated in or determined by reference to the
value of a single Foreign Currency. "Foreign Currency" means a currency, other
than a hyperinflationary currency, as defined in the Code, or the U.S. dollar.
UNITED STATES PERSONS
For purposes of the following discussion, "United States person" means an
individual who is a citizen or resident of the United States, an estate subject
to U.S. federal income taxation without regard to the source of
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its income, a corporation, partnership or other business entity created or
organized in or under the laws of the United States, any state thereof or the
District of Columbia, or a trust if both:
- 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.
The following discussion pertains only to a holder of a Note who is a beneficial
owner of such Note and who is a United States person.
PAYMENTS OF INTEREST ON NOTES THAT ARE NOT OID NOTES
Except as discussed below under "OID Notes" and "Short-Term Notes", payments
of interest on a Note will be taxable to a holder as ordinary interest income at
the time it is accrued or received in accordance with the holder's method of tax
accounting. If the payment is denominated in or determined with reference to a
single Foreign Currency, the amount required to be included in income by a cash
basis holder will be the U.S. dollar value of the amount paid (determined on the
basis of the "spot rate" on the date such payment is received) regardless of
whether the payment is in fact converted into U.S. dollars. No exchange gain or
loss will be recognized with respect to the receipt of such payment.
Except in the case of a Spot Rate Convention Election (as defined below), a
holder of a Single Foreign Currency Note who uses the accrual method of
accounting or is otherwise required to accrue interest income prior to receipt
will be required to include in income for each taxable year the U.S. dollar
value of the interest that has accrued during such year, determined by
translating such interest at the average rate of exchange for the period or
periods during which such interest has accrued. The average rate of exchange for
an interest accrual period (or partial period) is the simple average of the spot
exchange rates for each Business Day of such period (or such other average that
is reasonably derived and consistently applied by the holder). Upon receipt of
an interest payment, such holder will recognize ordinary gain or loss in an
amount equal to the difference between the U.S. dollar value of the Foreign
Currency received (determined on the basis of the "spot rate" on the date such
payment is received) or, in the case of interest received in U.S. dollars rather
than in Foreign Currency, the amount so received and the U.S. dollar value of
the interest income that such holder has previously included in income with
respect to such payment. Any such gain or loss generally will not be treated as
interest income or expense, except to the extent provided by administrative
pronouncements of the Internal Revenue Service (the "Service").
A holder may elect (a "Spot Rate Convention Election") to translate accrued
interest into U.S. dollars at the "spot rate" on the last day of an accrual
period for the interest, or, in the case of an accrual period that spans two
taxable years, at the "spot rate" on the last day of the taxable year.
Additionally, if a payment of interest is received within five Business Days of
the last day of the accrual period, an electing holder may instead translate
such accrued interest into U.S. dollars at the "spot rate" on the day of
receipt. Any such election will apply to all debt instruments held by the United
States person at the beginning of the first taxable year to which the election
applies or thereafter acquired by the United States person and cannot be revoked
without the consent of the Service.
For purposes of this discussion, the "spot rate" generally means a rate that
reflects a fair market rate of exchange available to the public for currency
under a "spot contract" in a free market and involving representative amounts. A
"spot contract" is a contract to buy or sell a currency on or before two
Business Days following the date of the execution of the contract. If such a
spot rate cannot be demonstrated, the Service has the authority to determine the
spot rate.
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PURCHASE, SALE, EXCHANGE OR RETIREMENT OF NOTES
A holder's tax basis in a Note generally will be the U.S. dollar cost of the
Note to such holder (which, in the case of a Note purchased with Foreign
Currency, will be determined by translating the purchase price at the spot rate
on the date of purchase or, in the case of a Note that is traded on an
established securities market, on the settlement date if the holder is a cash
basis taxpayer or an accrual basis taxpayer that so elects), increased by any
original issue discount, market discount or acquisition discount (all as defined
below) previously included in the holder's gross income (as described below),and
reduced by any amortized premium (as described below) and any principal payments
and payments of stated interest that are not payments of qualified stated
interest (as defined below).
Upon the sale, exchange or retirement of a Note, a holder generally will
recognize gain or loss equal to the difference between the amount realized on
the sale, exchange or retirement (or the U.S. dollar value of the amount
realized in a Foreign Currency at the spot rate on the date of the sale,
exchange or retirement or, in the case of a Note that is traded on an
established securities market, on the settlement date if the holder is a cash
basis taxpayer or an accrual basis taxpayer that so elects), except to the
extent such amount is attributable to accrued interest, and the holder's tax
basis in the Note. Except with respect to:
- gains or losses attributable to changes in exchange rates (as described in
the next paragraph);
- gains attributable to market discount (as described below); and
- gain on the disposition of a Short-Term Note (as described below);
gain or loss so recognized will be capital gain or loss and will be long-term
capital gain or loss, if, at the time of the sale, exchange or retirement, the
Note was held for more than one year. Under current law, long-term capital gains
of individuals are, under certain circumstances, taxed at lower rates than items
of ordinary income. The deductibility of capital losses is subject to certain
limitations.
Gain or loss recognized by a holder on the sale, exchange or retirement of a
Single Foreign Currency Note that is attributable to changes in exchange rates
will be treated as ordinary income or loss and generally will not be treated as
interest income or expense except to the extent provided by administrative
pronouncements of the Service. Gain or loss attributable to changes in exchange
rates is recognized on the sale, exchange or retirement of a Single Foreign
Currency Note only to the extent of the total gain or loss recognized on such
sale, exchange or retirement.
EXCHANGE OF FOREIGN CURRENCY
A holder's tax basis in Foreign Currency purchased by the holder generally
will be the U.S. dollar value thereof at the spot rate on the date such Foreign
Currency is purchased. A holder's tax basis in Foreign Currency received as
interest on, or on the sale, exchange or retirement of, a Single Foreign
Currency Note will be the U.S. dollar value thereof at the spot rate at the time
such Foreign Currency is received. The amount of gain or loss recognized by a
holder on a sale, exchange or other disposition of Foreign Currency will be
equal to the difference between:
- the amount of U.S. dollars, the U.S. dollar value at the spot rate of the
Foreign Currency, or the fair market value in U.S. dollars of the property
received by the holder in the sale, exchange or other disposition; and
- the holder's tax basis in the Foreign Currency.
Accordingly, a holder that purchases a Note with Foreign Currency will
recognize gain or loss in an amount equal to the difference, if any, between
such holder's tax basis in the Foreign Currency and the U.S. dollar value at the
spot rate of the Foreign Currency on the date of purchase. Generally, any such
gain or loss will be ordinary income or loss and will not be treated as interest
income or expense,
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except to the extent provided by administrative pronouncements of the Service.
SUBSEQUENT INTEREST PERIODS AND EXTENSION OF MATURITY
If so specified in the pricing supplement relating to a Note, we may have
the option:
- to reset the interest rate, in the case of a Fixed Rate Note, or to reset
the spread, the spread multiplier or other formulae by which the interest
rate basis is adjusted, in the case of a Floating Rate Note; and/or
- to extend the maturity of such Note.
See "Description of Notes -- Interest and Interest Rates" and "Description of
Notes -- Extendible Notes". The treatment of a holder of Notes with respect to
which such an option has been exercised who does not elect to have us repay such
Notes will depend on the terms established for such Notes by us pursuant to the
exercise of such option (the "revised terms"). Depending on the particular
circumstances, such holder may be treated as having surrendered such Notes for
new Notes with the revised terms in either a taxable exchange or a
recapitalization qualifying for nonrecognition of gain or loss.
OID NOTES
The following summary is a general description of U.S. federal income tax
consequences to holders of Notes issued with original issue discount ("OID
Notes") and is based on the provisions of the Code as in effect on the date
hereof and on certain Treasury Regulations promulgated thereunder relating to
original issue discount (the "OID Regulations").
For U.S. federal income tax purposes, original issue discount is the excess
of the stated redemption price at maturity of each OID Note over its issue
price, if such excess is greater than or equal to a de minimis amount (generally
1/4 of 1% of the OID Note's stated redemption price at maturity multiplied by
the number of complete years to maturity from the issue date). The issue price
of an issue of OID Notes that are issued for cash will be equal to the first
price at which a substantial amount of such Notes are sold for money. For this
purpose, sales to bond houses, brokers or similar persons or organizations
acting in the capacity of underwriters, placement agents or wholesalers are
ignored. The stated redemption price at maturity of an OID Note is the sum of
all payments provided by the OID Note other than payments of qualified stated
interest. Under the OID Regulations, "qualified stated interest" includes stated
interest that is unconditionally payable in cash or property (other than debt
instruments of the issuer) at least annually at a single fixed rate (with
certain exceptions for lower rates paid during some periods) or certain variable
rates as described below. Interest is payable at a single fixed rate only if the
rate appropriately takes into account the length of the interval between
payments. Except as described below with respect to Short-Term Notes, a holder
of an OID Note will be required to include original issue discount in taxable
income as it accrues before the receipt of cash attributable to such income,
regardless of such holder's method of accounting for tax purposes. Special
rules for Variable Rate Notes are described below under "-- Variable Rate
Notes".
The amount of original issue discount includible in taxable income by the
initial holder of an OID Note is the sum of the daily portions of original issue
discount with respect to such Note for each day during the taxable year on which
such holder held such Note ("accrued original issue discount"). Generally, the
daily portion of the original issue discount is determined by allocating to each
day in any accrual period a ratable portion of the original issue discount
allocable to such accrual period. Under the OID Regulations, the "accrual
periods" for an OID Note may be selected by each holder, may be of any length,
and may vary in length over the term of an OID Note, provided that each accrual
period is no longer than one year and each scheduled payment of principal or
interest occurs either on the first day or final day of an accrual period. The
amount of original issue discount
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allocable to each accrual period is equal to the excess, if any, of:
- the product of an OID Note's adjusted issue price at the beginning of such
accrual period and its yield to maturity (determined on the basis of
compounding at the close of each accrual period and adjusted for the
length of such accrual period) over
- the amount of qualified stated interest, if any, payable on such OID Note
and allocable to such accrual period.
The "adjusted issue price" of an OID Note at the beginning of any accrual period
generally is the sum of the issue price of an OID Note plus the accrued original
issue discount allocable for all prior accrual periods, reduced by any prior
payment on the OID Note other than a payment of qualified stated interest. The
OID Regulations generally allow any reasonable method to be used in determining
the amount of original issue discount allocable to a short initial accrual
period (if all other accrual periods are of equal length other than a short
final accrual period) and require that the amount of original issue discount
allocable to the final accrual period equal the excess of the amount payable at
the maturity of the OID Note (other than any payment of qualified stated
interest) over the OID Note's adjusted issue price as of the beginning of the
final accrual period. Under these rules, a holder of an OID Note generally will
have to include in taxable income increasingly greater amounts of original issue
discount in successive accrual periods.
Certain of the Notes (i) may be redeemable at the option of McCormick prior
to their stated maturity (a "call option") and/or (ii) may be repayable at the
option of the holder prior to their stated maturity (a "put option"). For
purposes of accruing original issue discount, a call option will be presumed to
be exercised if, by utilizing any date on which the Note may be redeemed or
repaid as its maturity date and the amount payable on that date in accordance
with the terms of the Note (the "redemption price") as its stated redemption
price at maturity, the yield on the Note is (i) in the case of a call option
exercisable by McCormick, lower than its yield to maturity, or, (ii) in the case
of a put option exercisable by a holder, is greater than its yield to maturity.
If such option is not in fact exercised when presumed to be, solely for the
purposes of accruing original issue discount, the Note will be treated as if it
were redeemed, and a new Note issued, on the presumed exercise date for an
amount equal to its adjusted issue price on that date. Investors intending to
purchase Notes with such features should consult their own tax advisors, since
the original issue discount consequences will depend, in part, on the particular
terms and features of the purchased Notes.
Original issue discount on an OID Note that is also a Single Foreign
Currency Note will be determined for any accrual period in the applicable
Foreign Currency and then translated into U.S. dollars in the same manner as
interest income accrued by a holder on the accrual basis, including the
application of a Spot Rate Convention Election. See "-- Payments of Interest on
Notes that Are not OID Notes". Likewise, upon receipt of payment attributable to
original issue discount (whether in connection with a payment of interest or the
sale, exchange or retirement of an OID Note), a holder will recognize exchange
gain or loss to the extent of the difference between such holder's basis in the
accrued original issue discount (determined in the same manner as for accrued
interest) and the U.S. dollar value of such payment (determined by translating
any Foreign Currency received at the spot rate on the date of payment).
Generally, any such exchange gain or loss will be ordinary income or loss and
will not be treated as interest income or expense, except to the extent provided
in administrative pronouncements of the Service. For this purpose, all payments
on a Note will be viewed first as the payment of qualified stated interest
(determined under the original issue discount rules), second as the payment of
previously accrued original issue discount (to the extent thereof), with
payments considered made for the earliest accrual periods first, and thereafter
as the payment of principal.
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If a holder's tax basis in an OID Note immediately after purchase exceeds
the adjusted issue price of the OID Note (the amount of such excess is
considered "acquisition premium") but is not greater than the stated redemption
price at maturity of such OID Note, the amount includible in income in each
taxable year as original issue discount is reduced (but not below zero) by that
portion of the excess properly allocable to such year.
If a holder purchases an OID Note for an amount in excess of the stated
redemption price at maturity, the holder does not include any original issue
discount in income and generally may be subject to the "bond premium" rules
discussed below. See "-- Amortizable Bond Premium". If a holder has a tax basis
in an OID Note that is less than the adjusted issue price of such OID Note, the
difference may be subject to the market discount provisions discussed below. See
"-- Market Discount".
Under the OID Regulations, a holder of a Note may elect to include in gross
income all interest that accrues on such Note using the constant yield method.
For this purpose, interest includes stated interest, acquisition discount,
original issue discount, de minimis original issue discount, market discount, de
minimis market discount and unstated interest, as adjusted by any amortizable
bond premium or acquisition premium. Special rules apply to elections made with
respect to Notes issued with amortizable bond premium or market discount. This
election applies only to the Note for which it is made and cannot be revoked
without the consent of the Service. A holder considering an election under these
rules should consult a tax advisor.
MARKET DISCOUNT
If a holder purchases a Note (other than an OID Note) for an amount that is
less than its stated redemption price at maturity, or purchases an OID Note for
less than its "revised issue price" (as defined under the Code) as of the
purchase date, the amount of the difference will be treated as "market discount"
unless such difference is less than a specified de minimis amount. Under the
market discount rules of the Code, a holder will be required to treat any
partial principal payment (or, in the case of an OID Note, any payment that does
not constitute qualified stated interest) on, or any gain realized on the sale,
exchange or retirement of, a Note as ordinary income to the extent of the market
discount which has not previously been included in income and is treated as
having accrued on such Note at the time of such payment or disposition. Further,
a disposition of a Note by gift (and in certain other circumstances) could
result in the recognition of market discount income, computed as if such Note
had been sold at its then fair market value. In addition, a holder who purchases
a Note with market discount may be required to defer the deduction of all, or a
portion, of the interest paid or accrued on any indebtedness incurred or
maintained to purchase or carry such Note until the maturity of the Note, or its
earlier disposition in a taxable transaction.
Market discount is considered to accrue ratably during the period from the
date of acquisition to the maturity date of a Note, unless the holder elects to
accrue market discount under the rules applicable to original issue discount. A
holder may elect to include market discount in income currently as it accrues,
in which case the rules described above regarding the deferral of interest
deductions will not apply.
With respect to a Single Foreign Currency Note, market discount is
determined in the applicable Foreign Currency. In the case of a holder who does
not elect current inclusion, accrued market discount is translated into U.S.
dollars at the spot rate on the date of disposition. No part of such accrued
market discount is treated as exchange gain or loss. In the case of a holder who
elects current inclusion, the amount currently includible in income for a
taxable year is the U.S. dollar value of the market discount that has accrued
during such year, determined by translating such market discount at the average
rate of exchange for the period or periods during which it accrued. Such an
electing holder will recognize exchange gain or loss with respect
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to accrued market discount under the same rules as apply to accrued interest on
a Single Foreign Currency Note received by a holder on the accrual basis. See
"-- Payments of Interest on Notes that Are not OID Notes".
AMORTIZABLE BOND PREMIUM
Generally, if a holder's tax basis in a Note held as a capital asset exceeds
the stated redemption price at maturity of such Note, such excess may constitute
amortizable bond premium that the holder may elect to amortize under the
constant interest rate method over the period from the holder's acquisition date
to the Note's maturity date. Under certain circumstances, amortizable bond
premium may be determined by reference to an early call date. Special rules
apply with respect to Single Foreign Currency Notes.
VARIABLE RATE NOTES
A "Variable Rate Note" is a Note that:
(1) has an issue price that does not exceed the total noncontingent
principal payments by more than the lesser of:
(a) the product of:
- the total noncontingent principal payments;
- the number of complete years to maturity from the issue date; and
- .015; or
(b) 15 percent of the total noncontingent principal payments; and
(2) does not provide for stated interest other than stated interest
compounded or paid at least annually at:
(a) one or more qualified floating rates;
(b) a single fixed rate and one or more qualified floating rates;
(c) a single objective rate; or
(d) a single fixed rate and a single objective rate that is a qualified
inverse floating rate.
A qualified floating rate or objective rate in effect at any time during the
term of the instrument must be set at a current value of that rate. A "current
value" of a rate is the value of the rate on any day that is no earlier than
three months prior to the first day on which that value is in effect and no
later than one year following that first day.
A variable rate is a "qualified floating rate" if:
(1) variations in the value of the rate can reasonably be expected to
measure contemporaneous variations in the cost of newly borrowed funds
in the currency in which the Note is denominated; or
(2) it is equal to the product of such a rate and either:
(a) a fixed multiple that is greater than .65 but not more than 1.35; or
(b) a fixed multiple greater than .65 but not more than 1.35, increased
or decreased by a fixed rate.
If a Note provides for two or more qualified floating rates that:
- are within 0.25 percent of each other on the issue date; or
- can reasonably be expected to have approximately the same values
throughout the term of the Note,
the qualified floating rates together constitute a single qualified floating
rate. A rate is not a qualified floating rate, however, if the rate is subject
to certain restrictions (including caps, floors, governors or other similar
restrictions) unless such restrictions are fixed throughout the term of the Note
or are not reasonably expected to significantly affect the yield on the Note.
An "objective rate" is a rate, other than a qualified floating rate, that is
determined using
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a single, fixed formula and that is based on objective financial or economic
information. A rate will not qualify as an objective rate if it is based on
information that is within the control of the issuer (or a related party) or
that is unique to the circumstances of the issuer (or a related party), such as
dividends, profits or the value of the issuer's stock (although a rate does not
fail to be an objective rate merely because it is based on the credit quality of
the issuer). A variable rate is not an objective rate, however, if it is
reasonably expected that the average value of the rate during the first half of
the Note's term will be either significantly less than or significantly greater
than the average value of the rate during the final half of the Note's term. An
objective rate is a "qualified inverse floating rate" if:
- the rate is equal to a fixed rate minus a qualified floating rate; and
- the variations in the rate can reasonably be expected to inversely reflect
contemporaneous variations in the qualified floating rate.
If interest on a Note is stated at a fixed rate for an initial period of one
year or less followed by either a qualified floating rate or an objective rate
for a subsequent period, and
- the fixed rate and the qualified floating rate or objective rate have
values on the issue date of the Note that do not differ by more than
0.25 percent; or
- the value of the qualified floating rate or objective rate is intended to
approximate the fixed rate,
then the fixed rate and the qualified floating rate or the objective rate
constitute a single qualified floating rate or objective rate.
Under these rules, CD Rate Notes, Commercial Paper Rate Notes, LIBOR Notes,
Federal Funds Rate Notes, Prime Rate Notes, Treasury Rate Notes, and CMT Rate
Notes generally will be treated as Variable Rate Notes.
In general, if a Variable Rate Note provides for stated interest at a single
qualified floating rate or objective rate and the interest is unconditionally
payable in cash at least annually, all stated interest on the Note is qualified
stated interest, and the amount of original issue discount, if any, is
determined by using, in the case of a qualified floating rate or qualified
inverse floating rate, the value as of the issue date of the qualified floating
rate or qualified inverse floating rate, or, in the case of any other objective
rate, a fixed rate that reflects the yield reasonably expected for the Note.
If a Variable Rate Note does not provide for stated interest at a single
qualified floating rate or a single objective rate, or at a single fixed rate
(other than at a single fixed rate for an initial period), the amount of
interest and original issue discount accruals on the Note are generally
determined by:
- determining a fixed rate substitute for each variable rate provided under
the Variable Rate Note (generally, the value of each variable rate as of
the issue date or, in the case of an objective rate that is not a
qualified inverse floating rate, a rate that reflects the reasonably
expected yield on the Note);
- constructing the equivalent fixed rate debt instrument (using the fixed
rate substitute described above);
- determining the amount of qualified stated interest and original issue
discount with respect to the equivalent fixed rate debt instrument; and
- making the appropriate adjustments for actual variable rates during the
applicable accrual period.
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If a Variable Rate Note provides for stated interest, either at one or more
qualified floating rates or at a qualified inverse floating rate, and in
addition provides for stated interest at a single fixed rate (other than at a
single fixed rate for an initial period), the amount of interest and original
issue discount accruals are determined as in the immediately preceding paragraph
with the modification that the Variable Rate Note is treated, for purposes of
the first three steps of the determination, as if it provided for a qualified
floating rate (or a qualified inverse floating rate, as the case may be) rather
than the fixed rate. The qualified floating rate (or qualified inverse floating
rate) replacing the fixed rate must be such that the fair market value of the
Variable Rate Note, as of the issue date, would be approximately the same as the
fair market value of an otherwise identical debt instrument that provides for
the qualified floating rate, (or qualified inverse floating rate) rather than
the fixed rate.
SHORT-TERM NOTES
In general, an individual or other cash method holder of a Note that matures
one year or less from the date of its issuance (a "Short-Term Note") is not
required to accrue original issue discount on such Note unless it has elected to
do so. Holders who report income for federal income tax purposes under the
accrual method, however, and certain other holders, including banks, dealers in
securities and electing holders, are required to accrue original issue discount
(unless the holder elects to accrue "acquisition discount" in lieu of original
issue discount) on such Note. "Acquisition discount" is the excess of the
remaining stated redemption price at maturity of the Short-Term Note over the
holder's tax basis in the Short-Term Note at the time of the acquisition. In the
case of a holder who is not required, and does not elect, to accrue original
issue discount on a Short-Term Note, any gain realized on the sale, exchange or
retirement of such Short-Term Note will be ordinary income to the extent of the
original issue discount accrued through the date of such sale, exchange or
retirement. Such a holder will be required to defer, until such Short-Term Note
is sold or otherwise disposed of, the deduction of a portion of the interest
expense on any indebtedness incurred or continued to purchase or carry such
Short-Term Note. Original issue discount or acquisition discount on a Short-Term
Note accrues on a straight-line basis unless an election is made to use the
constant yield method (based on daily compounding).
In the case of a Short-Term Note that is also a Single Foreign Currency
Note, the amount of original issue discount or acquisition discount subject to
current accrual and the amount of any exchange gain or loss on a sale, exchange
or retirement are determined under the same rules that apply to accrued interest
on a Single Foreign Currency Note held by a holder on the accrual basis. See
"-- Payments of Interest on Notes that Are not OID Notes".
The market discount rules will not apply to a Short-Term Note having market
discount.
NON-UNITED STATES PERSONS
Subject to the discussion of backup withholding below, payments of principal
and premium, if any, and interest (including original issue discount) by us or
our agent (in its capacity as such) to any holder who is a beneficial owner of a
Note but is not a United States person will not be subject to United States
federal withholding tax, provided, in the case of premium, if any, and interest
(including original issue discount) that:
(1) such holder does not actually or constructively own 10% or more of the
total combined voting power of all classes of our stock entitled to vote;
(2) such holder is not a controlled foreign corporation for United States
tax purposes that is related to us through stock ownership; and
(3) either
(a) the beneficial owner of the Note certifies to us or our agent, under
penalties of perjury, that such owner is not
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a United States person and provides its name and address (which
certification can be made on IRS Form W-8 or Form W-8BEN); or
(b) a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course of its
trade or business (a "financial institution") certifies to us or our agent,
under penalties of perjury, that the certification described in clause
(3)(a) above has been received from the beneficial owner by it or by another
financial institution acting for the beneficial owner.
Recently finalized Treasury Regulations provide alternative methods for
satisfying the certification requirement described in clauses (3)(a) and (3)(b)
above. These Regulations generally will be effective for payments made after
December 31, 2000, subject to certain transition rules.
These Regulations also would require, in the case of Notes held by a foreign
partnership, that:
- the certification described in clause (3)(a) above be provided by the
partners rather than by the foreign partnership; and
- the partnership provide certain information, including a United States
taxpayer identification number.
A look-through rule would apply in the case of tiered partnerships.
If a holder of a Note who is not a United States person cannot satisfy the
requirements of the "portfolio interest" exception described above, payments of
interest (including original issue discount) made to such holder generally will
be subject to a 30% withholding tax (or such lower rate as may be provided by an
applicable income tax treaty between the United States and a foreign country)
unless the beneficial owner of the Note provides us or our paying agent, as the
case may be, with a properly executed:
- IRS Form 1001 or Form W-8BEN claiming an exemption from withholding under
the benefit of a tax treaty; or
- IRS Form 4224 or Form W-8ECI stating that interest paid on the Note is not
subject to withholding tax because it is effectively connected with the
beneficial owner's conduct of a trade or business in the United States.
Under the recently finalized Treasury Regulations, holders who are not
United States persons will generally be required to provide the appropriate
IRS Form W-8 in lieu of the IRS Form 1001 and IRS Form 4224, although
alternative documentation may be applicable in certain situations.
If a holder of a Note who is not a United States person is engaged in a
trade or business in the United States and premium, if any, or interest
(including original issue discount) on the Note is effectively connected with
the conduct of such trade or business, such holder, although exempt from United
States withholding tax as discussed above (by reason of the delivery of a
properly completed IRS Form 4224 or Form W-8ECI), will be subject to United
States federal income tax on such premium, if any, and interest (including
original issue discount) in the same manner as if it were a United States
person. In addition, if such holder is a foreign corporation, it may be subject
to a branch profits tax equal to 30% of its effectively connected earnings and
profits for the taxable year, subject to adjustments.
Subject to the discussion of "backup" withholding below, any capital gain
realized upon the sale, exchange or retirement of a Note by a holder who is not
a United States person will not be subject to United States federal income or
withholding taxes unless:
- such gain is effectively connected with a United States trade or business
of the holder; or
- in the case of an individual, such holder is present in the United States
for
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183 days or more in the taxable year of the retirement or disposition and
certain other conditions are met.
Notes held by an individual, who at the time of death is neither a citizen
nor a resident of the United States for United States tax purposes, will not be
subject to United States federal estate tax, provided that the income from the
Notes was not or would not have been effectively connected with a United States
trade or business of such individual and that such individual qualified for the
exemption from United States federal withholding tax (without regard to the
certification requirements) that is described above.
BACKUP WITHHOLDING AND
INFORMATION REPORTING
The "backup" withholding and information reporting requirements may apply to
certain payments of principal of and premium, if any, and interest (including
original issue discount) on a Note and to certain payments of proceeds of the
sale or retirement of a Note. We, our agent, a broker, the Trustee or any paying
agent, as the case may be, will be required to withhold tax from any payment
that is subject to backup withholding at a rate of 31% of such payment if the
holder fails to furnish his taxpayer identification number (social security
number or employer identification number), to certify that such holder is not
subject to backup withholding, or to otherwise comply with the applicable
requirements of the backup withholding rules. Certain holders (including, among
others, corporations) are not subject to the backup withholding and reporting
requirements.
Under current Treasury Regulations, backup withholding and information
reporting will not apply to payments made by our company or any agent thereof
(in its capacity as such) to a holder of a Note who has provided the required
certification under penalties of perjury that such holder is not a United States
person as set forth in clause (3) under "Non-United States Persons" or has
otherwise established an exemption (provided that neither we nor such agent has
actual knowledge that the holder is a United States person or that the
conditions of any other exemption are not in fact satisfied). Recently finalized
Treasury Regulations would modify the application of the information reporting
requirements and backup withholding tax to holders who are not United States
persons for payments made after December 31, 2000. Among other things, these
regulations may require such holders to furnish new certifications of their
non-U.S. status.
Any amounts withheld under the backup withholding rules from a payment to a
holder may be claimed as a credit against such holder's U.S. federal income tax
liability, provided required information is furnished to the Service.
WE HAVE INCLUDED THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE FOR YOUR
GENERAL INFORMATION ONLY. IT MAY NOT BE APPLICABLE DEPENDING UPON YOUR
PARTICULAR SITUATION. YOU SHOULD CONSULT YOUR TAX ADVISOR WITH RESPECT TO THE
TAX CONSEQUENCES TO YOU OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES,
INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS
AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
SUPPLEMENTAL PLAN OF DISTRIBUTION
McCormick and Goldman, Sachs & Co. (the "Agent") have entered into a
distribution agreement with respect to the Notes. We also may appoint additional
firms to serve as Agents from time to time. Subject to certain conditions, the
Agent has agreed to use its reasonable efforts to solicit purchases of the
Notes. McCormick has the right to accept offers to purchase Notes and may reject
any proposed purchase of the Notes. The Agent may also reject any offer to
purchase Notes. McCormick will pay the Agent a commission on any Notes sold
through the Agent. Unless otherwise specified in the applicable pricing
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supplement, the commission will range from 0.125% to 0.900% of the principal
amount of the Notes, depending on the maturity of the Notes.
McCormick may also sell Notes to the Agent who will purchase the Notes as
principal for its own account. Any such sale will be made at a discount within
the range set forth on the cover page hereof if no other discount is agreed. Any
Notes the Agent purchases as principal may be resold at the market price or at
other prices determined by the Agent at the time of resale.
The Agent may resell any Notes it purchases to other brokers or dealers at a
discount which may include all or part of the discount the Agent received from
McCormick. The Agent will purchase the Notes at a price equal to 100% of the
principal amount less a discount. Unless otherwise stated the discount will
equal the applicable commission on an agency sale of Notes of the same maturity.
If all the Notes are not sold at the initial offering price, the Agent may
change the offering price and the other selling terms. McCormick may also sell
Notes directly on its own behalf. No commissions will be paid on Notes sold
directly by McCormick.
In connection with the offering, the Agent may purchase and sell Notes in
the open market. These transactions may include short sales, stabilizing
transactions and purchases to cover positions created by short sales. Short
sales involve the sale by the Agent of a greater number of Notes than it is
required to purchase in the offering. Stabilizing transactions consist of
certain bids or purchases made for the purpose of preventing or retarding a
decline in the market price of the Notes while the offering is in progress.
The Agent also may impose a penalty bid on other Agents, if any. This occurs
when a particular Agent repays to the other Agents a portion of the underwriting
discount received by it because the Agents have repurchased Notes sold by or for
the account of such Agent in stabilizing or short covering transactions.
These activities by the Agents may stabilize, maintain or otherwise affect
the market price of the Notes. As a result, the price of the Notes may be higher
than the price that otherwise might exist in the open market. If these
activities are commenced, they may be discontinued by the Agents at any time.
These transactions may be effected in the over-the-counter market or otherwise.
The Agent, whether acting as agent or principal, may be deemed to be an
"underwriter" within the meaning of the Securities Act of 1933 (the "Act").
McCormick has agreed to indemnify the Agent against certain liabilities,
including liabilities under the Act.
The Agent may sell to dealers who may resell to investors and the Agent may
pay all or part of the discount or commission it receives from McCormick to the
dealers. Such dealers may be deemed to be "underwriters" within the meaning of
the Act.
The Notes are a new issue of securities with no established trading market
and will not be listed on a securities exchange. No assurance can be given as to
the liquidity of the trading market for the Notes.
McCormick estimates that its share of the total expenses of the offering,
excluding underwriting discounts and commissions, will be approximately
$450,000.
Unless otherwise indicated in the applicable pricing supplement, the
purchase price of the Notes will be required to be paid in immediately available
funds in New York, New York.
The Agent may be a customer of, engage in transactions with and perform
services for McCormick in the ordinary course of business.
EXPERTS
The consolidated financial statements of McCormick & Company, Incorporated
and subsidiaries incorporated by reference in McCormick & Company, Incorporated
and
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subsidiaries' Annual Report on Form 10-K for the year ended November 30, 1999
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
LEGAL MATTERS
The validity of the Notes will be passed upon for us by Hogan & Hartson
L.L.P., Columbia Square, 555 Thirteenth Street, N.W., Washington, D.C. 20004,
and for any underwriters, dealers or agents by Simpson Thacher & Bartlett, 425
Lexington Avenue, New York, New York 10017.
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$375,000,000
MCCORMICK & COMPANY, INCORPORATED
Debt Securities
We may from time to time issue up to $375,000,000 aggregate initial offering
price of Debt Securities. This prospectus may not be used to sell securities
unless accompanied by a prospectus supplement. The accompanying prospectus
supplement will specify the terms of the securities.
We may sell these securities through agents designated from time to time,
through underwriters or dealers or we may sell them directly ourselves. Goldman,
Sachs & Co. may be one of such underwriters. The names of the underwriters or
agents will be set forth in the accompanying prospectus supplement.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY
HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------
GOLDMAN, SACHS & CO.
------------
Prospectus dated November , 2000.
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any document we file with the SEC at the SEC's public reference rooms at 450
Fifth Street, N.W., Washington D.C. 20549, and in New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
from the SEC's web site at http://www.sec.gov. Our non-voting common shares are
listed on the New York Stock Exchange and information about us also is available
there.
This prospectus is part of a registration statement that we have filed with
the SEC. The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to other documents that we identify as part of this prospectus.
Our subsequent filings of similar documents with the SEC will automatically
update and supersede this information. We incorporate by reference the documents
listed below and any future filings we make with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (1) after the date of
the filing of this registration statement and before its effectiveness and (2)
until our offering of securities has been completed:
- Annual Report on Form 10-K for the year ended November 31, 1999, filed on
February 24, 2000, and our amended Annual Report on Form 10-K/A filed on
May 30, 2000.
- Quarterly Report on Form 10-Q for the quarters ended February 29, 2000,
May 31, 2000 and August 31, 2000.
- Current Report on Form 8-K filed on September 15, 2000 and our amended
Current Report on Form 8-K/A filed on November 14, 2000.
- Definitive proxy statement dated February 15, 2000 concerning our Annual
Meeting of Shareholders on March 15, 2000.
You may obtain a copy of these filings at no cost, by writing to or
telephoning us at the following address:
McCormick & Company, Incorporated
Attn: Office of the Treasurer
18 Loveton Circle
Sparks, Maryland 21152
(telephone: 410-771-7301)
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. This prospectus is an offer to
sell or buy only the securities described in this document, but only under
circumstances and in jurisdictions where it is lawful to do so. The information
contained in this prospectus is current only as of the date of this prospectus.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the information incorporated by reference in it include
"forward-looking statements" within the meaning of Section 27A of the Securities
Act and Section 21E of the Securities Exchange Act. We intend the
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements in these sections. All statements regarding our
expected financial position and operating results, our business strategy, our
financing plans, our future capital requirements, forecasted demographic and
economic trends relating to our industry, our ability to complete acquisitions,
to realize anticipated cost savings and other benefits from acquisitions and to
recover acquisition-
2
<PAGE>
related costs, and similar matters are forward-looking statements. These
statements are subject to known and unknown risks, uncertainties and other
factors that could cause our actual results to differ materially from the
statements. The forward-looking information is based on various factors and was
derived using numerous assumptions. In some cases, you can identify these
statements by our use of forward-looking words such as "may," "will," "should,"
"anticipate," "estimate," "expect," "plan," "believe," "predict," "potential" or
"intend." You should be aware that these statements only reflect our
predictions. Actual events or results may differ substantially. Important
factors that could cause our actual results to be materially different from our
expectations include actions of competitors, customer relationships, market
acceptance of new products, actual amounts and timing of special charge items,
removal and disposal costs and final negotiations of third-party contracts, the
impact of stock market conditions on our share repurchase program, fluctuations
in the cost and availability of supply-chain resources and global economic
conditions, including interest and currency rate fluctuations and inflation
rates, as well as other factors discussed in this prospectus under the caption
"Risk Factors." We undertake no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information, future
events or otherwise, after the date on which this prospectus is no longer
required to be delivered to purchasers of Debt Securities.
3
<PAGE>
RISK FACTORS
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE FOLLOWING RISK FACTORS
BEFORE INVESTING IN ANY OF THE SECURITIES OFFERED HEREBY.
FLUCTUATIONS IN THE FOREIGN CURRENCY MARKETS MAY RESULT IN THE CONVERSION OF OUR
FOREIGN CURRENCY EARNINGS INTO U.S. DOLLARS AT UNFAVORABLE RATES AND THEREBY
IMPAIR OUR ABILITY TO PAY PRINCIPAL AND INTEREST ON DEBT SECURITIES DENOMINATED
IN U.S. DOLLARS.
We are exposed to fluctuations in foreign currency cash flows primarily
related to raw material purchases. We are also exposed to fluctuations in the
value of foreign currency investments in subsidiaries and unconsolidated
affiliates and cash flows related to repatriation of these investments.
Additionally, we are exposed to volatility in the translation of foreign
currency earnings to U.S. dollars. For example, weakening of foreign currencies
against the U.S. dollar could lower our revenues and earnings as denominated in
U.S. dollars. Our primary exposures include the U.S. dollar versus the
functional currencies of our major markets (British pounds, Euros, Canadian
dollars, Australian dollars, Mexican pesos, Chinese RMB and Japanese yen). On
occasion, we may enter into forward and option contracts to manage these foreign
currency risks. However, these contracts may not effectively limit or eliminate
our exposure to a decline in operating results due to foreign currency
translation. Therefore, future exchange rate fluctuations may have a negative
impact on our business, financial position or operating results, which may
impair our ability to pay principal and interest on our Debt Securities.
INCREASES IN INTEREST RATES MAY INCREASE OUR BORROWING COSTS OR EXPOSE US TO
LOSSES ON DERIVATIVE INSTRUMENTS WE OWN AND THEREBY IMPAIR OUR ABILITY TO PAY
PRINCIPAL AND INTEREST ON OUR DEBT SECURITIES.
We had total outstanding short-term borrowings of approximately
$603 million at an average interest rate of approximately 6.67% on August 31,
2000. Our policy is to manage our interest costs using a mix of fixed and
variable debt. We use interest swaps to achieve a desired proportion. We utilize
derivative financial instruments to enhance our ability to manage risk,
including foreign exchange and interest rate exposures that exist as part of our
ongoing business operations. We do not enter into contracts for trading
purposes, nor are we a party to any leveraged derivative instrument. Our use of
derivative financial instruments is monitored through regular communication with
senior management and the utilization of written guidelines. However, our use of
these instruments may not effectively limit or eliminate our exposure to a
decline in operating results due to changes in interest rates. Therefore, future
changes in interest rates may increase our overall interest costs, which may
impair our ability to pay principal and interest on our Debt Securities.
PRICE FLUCTUATIONS IN THE COMMODITY MARKETS MAY MAKE IT MORE EXPENSIVE FOR US TO
PURCHASE RAW MATERIALS FOR OUR PRODUCTS AND THEREBY REDUCE FUNDS AVAILABLE TO
PAY PRINCIPAL AND INTEREST ON OUR DEBT SECURITIES.
We purchase certain raw materials that are subject to price volatility
caused by weather and other unpredictable factors. Key raw materials include
pepper, vanilla, garlic, almonds, cinnamon, flour, cheese and other dairy
products, soy oil and tomato powder. While future movements of raw material
costs are uncertain, a variety of programs, including periodic raw material
purchases and customer price adjustments, help us address this risk. We also
identify and develop additional sources for certain raw materials that are not
widely available. Past examples of this secondary sourcing include vanilla beans
sourced in Uganda. Generally, we do not use derivatives to manage the volatility
related to this risk. Even if we did use such instruments, however, their use
might not effectively limit or eliminate our exposure to a decline in operating
results due to changes in commodity prices. Therefore, an increase in our raw
material costs due to future commodity price fluctuations may have a negative
impact on our profitability, which may impair our ability to pay principal and
interest on our Debt Securities.
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MCCORMICK & COMPANY, INCORPORATED
McCormick & Company, Incorporated is the largest spice company in the world.
Founded in 1889, we are the market leader in the manufacture, marketing and
distribution of spices, seasonings, flavors and other food products to the food
industry, including the retail, foodservice and food processor segments. In
addition, our packaging group manufactures and markets plastic bottles and tubes
for food, personal care, and other products.
Our products are processed at facilities strategically located around the
world and distributed in more than 100 countries. A major competitive advantage
that we enjoy is the global relationships we have built between ourselves and
growers within the source countries. With McCormick providing expertise,
technology and support to growers in the field, quality is "built in" from the
start.
Our consumer business manufactures and sells spices, herbs, extracts,
proprietary seasoning blends, sauces and marinades to grocery, mass merchandise,
drug and other retail outlets throughout the world.
We are a supplier of industrial business products to food processors both
domestically and internationally. We also supply products to restaurant chains,
distributors, warehouse clubs and institutional operations, such as schools and
hospitals. These products include spices, seasonings, condiments, coatings and
compound flavors. While the McCormick name may not always be on the food
package, our flavor is in a wide range of snack foods, savory side dishes,
desserts, beverages, confectionery items, cereals, baked goods and more.
We have consolidated operations in the U.S., Canada, El Salvador, United
Kingdom, France, Switzerland, Finland, Australia, Singapore and China. We also
have consumer joint ventures located in the U.S., Europe, Mexico, Philippines
and Japan.
Our technical support, operating out of centers around the world, provides
research and development, quality assurance, and sensory evaluation so the
flavor systems we create meet customer specifications and are of the highest
quality. We believe that our laboratories and kitchens have a well-earned
reputation for craftsmanship combined with modern, proprietary technology.
We have a worldwide workforce of approximately 8,400 employees and our
principal executive offices are located at 18 Loveton Circle, Sparks, Maryland
21152 (telephone: 410-771-7301).
RECENT DEVELOPMENTS
On August 31, 2000, we acquired, through our subsidiary, McCormick
France, S.A.S., one hundred percent (100%) of the share capital of Ducros, S.A.
("Ducros") and Sodis, S.A.S. ("Sodis") from Eridania Beghin-Say, S.A. Ducros is
a manufacturer and marketer of consumer spices and herbs and dessert aid
products in France and other European countries; Sodis manages the racking and
merchandising of the Ducros products in supermarkets and hypermarkets, and
manages a warehouse located in Gennevilliers, France. The purchase price for the
stock of Ducros and Sodis was 2.75 billion French Francs (equivalent to
approximately Euro 419 million or $379 million).
The Ducros business was founded in 1963 and is headquartered in France.
Ducros is the world's second largest manufacturer of consumer spices and herbs.
Ducros also is a leading manufacturer and distributor of dessert aid products.
Ducros sells its products primarily under the Ducros-Registered Trademark-,
Vahine-Registered Trademark-, Malile-Registered Trademark- and
Margao-Registered Trademark- brand names in France and/or other European
countries.
In France, Ducros has facilities for the manufacture, packaging and storage
of spices, herbs and dessert aid products, as well as
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headquarters, sales and marketing, and research and development facilities.
Ducros also has sales and marketing facilities in Belgium, Italy, Portugal,
Poland and Spain and has smaller production facilities in Portugal, Spain and
Albania. We intend to continue to use virtually all of these facilities.
We financed approximately $370 million of the purchase price through our
issuance on August 29, 2000 of commercial paper notes. These notes bear interest
at a rate of 6.72% and have maturities ranging from 27 to 31 days. We funded the
balance of the purchase price (approximately $9 million) from internally
generated funds. We intend to use a portion of the net proceeds from the sale of
the Debt Securities under this prospectus to repay the commercial paper notes
issued in connection with these acquisitions. See "Use of Proceeds."
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
NINE
MONTHS
ENDED YEAR ENDED NOVEMBER 30,
AUGUST 31, ----------------------------------------------------
2000 1999 1998 1997 1996 1995
----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings
to fixed charges.......... 5.16 5.47 5.27 4.90 2.69 4.15
</TABLE>
For the purpose of this ratio, "earnings" consist of consolidated net income
from continuing operations plus taxes on income, plus fixed charges exclusive of
capitalized interest and less undistributed income of unconsolidated affiliates
accounted for on the equity basis. "Fixed charges" consist of interest, whether
expensed or capitalized (including amortization of debt discount), and that
portion of rental expense that is representative of interest. The historical
ratio of earnings to fixed charges presented above does not reflect the impact
of the issuance of approximately $370,000,000 of commercial paper on August 29,
2000, the proceeds of which were used to fund the acquisition of the Ducros and
Sodis businesses.
USE OF PROCEEDS
Except as may be described otherwise in a prospectus supplement, we will use
the net proceeds from the sale of the Debt Securities under this prospectus to
repay the indebtedness incurred in connection with our purchase of the Ducros
and Sodis businesses from Eridania Beghin-Say, S.A., and in connection with
other corporate purposes. At September 1, 2000, this indebtedness totaled
approximately $370,000,000, had maturities ranging from 27 to 31 days and bore
interest at an average annual rate of approximately 6.72%.
PROSPECTUS
This prospectus is part of a registration statement that we filed with the
SEC utilizing a "shelf" registration process. Under this shelf process, we may
sell any combination of Debt Securities in one or more offerings up to a total
dollar amount of $375,000,000 or the equivalent if any of the securities are
denominated in a currency, currency unit or composite currency other than the
U.S. dollar.
PROSPECTUS SUPPLEMENT
This prospectus provides you with a general description of the Debt
Securities we may offer. Each time we sell securities, we will provide a
prospectus supplement that will contain specific information about the terms of
that offering. The prospectus supplement may also add to or change information
contained in this prospectus. If so, the prospectus supplement should be read as
superseding this prospectus. You should read both this
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prospectus and any prospectus supplement together with additional information
described under the heading "Where You Can Find More Information."
The prospectus supplement to be attached to the front of this prospectus
will describe:
- the terms of the Debt Securities that we offer;
- any initial public offering price, the purchase price and net proceeds to
McCormick and the other specific terms related to our offering of such
Debt Securities.
For more details on the terms of the Debt Securities, you should read
"Description of Debt Securities" and the exhibits filed with our registration
statements.
DESCRIPTION OF DEBT SECURITIES
THE FOLLOWING DESCRIPTION OF THE TERMS OF THE DEBT SECURITIES SETS FORTH
CERTAIN GENERAL TERMS AND PROVISIONS OF THE DEBT SECURITIES TO WHICH ANY
PROSPECTUS SUPPLEMENT MAY RELATE. THE DEBT SECURITIES ARE TO BE ISSUED UNDER AN
INDENTURE, DATED AS OF NOVEMBER , 2000 (THE "INDENTURE"), BETWEEN MCCORMICK
AND SUNTRUST BANK, A NATIONAL BANKING ASSOCIATION ORGANIZED UNDER THE LAWS OF
THE STATE OF GEORGIA, AS TRUSTEE (THE "TRUSTEE"), A COPY OF WHICH HAS BEEN FILED
WITH THE SEC AS AN EXHIBIT TO THE REGISTRATION STATEMENT AND IS INCORPORATED BY
REFERENCE HEREIN. 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, ALL PROVISIONS OF THE INDENTURE. CAPITALIZED TERMS ARE
DEFINED IN THE INDENTURE UNLESS OTHERWISE DEFINED HEREIN. WHEREVER PARTICULAR
PROVISIONS OR DEFINED TERMS OF THE INDENTURE ARE REFERRED TO, SUCH PROVISIONS OR
DEFINED TERMS ARE INCORPORATED HEREIN BY REFERENCE.
GENERAL
The Indenture does not limit the amount of Debt Securities which can be
issued under the Indenture and provides that Debt Securities may be issued under
the Indenture up to the aggregate principal amount which may be authorized from
time to time by us. The Debt Securities will be unsecured and will rank on a
parity with all other unsecured and unsubordinated indebtedness of McCormick.
Reference is hereby made to the prospectus supplement relating to the
applicable series of Debt Securities for the terms of such Debt Securities,
including where applicable:
(i) the title of the securities of the series;
(ii) any limit upon the aggregate principal amount of the securities of the
series which may be authenticated and delivered under the Indenture;
(iii) the date or dates on which the principal of the securities is payable;
(iv) the rate or rates at which the securities of the series shall bear
interest, if any, the date or dates from which such interest shall
accrue, the interest payment dates on which such interest shall be
payable and the regular record date for the interest payable on any
interest payment date;
(v) the place or places where the principal of (and premium, if any) and
interest on securities of the series shall be payable, any securities of
that series may be surrendered for exchange and notices and demands to
or upon McCormick in respect of the securities of that series and the
Indenture may be served;
(vi) the period or periods within which, the price or prices at which, the
currency or currency unit in which, and the terms and conditions upon
which securities of the series may be redeemed, in whole or in part, at
the option of McCormick;
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(vii) the obligation, if any, of McCormick to redeem or purchase securities
of the series under any sinking fund or analogous provisions or at the
option of a holder of those securities and the period or periods within
which, the price or prices at which, the currency or currency unit in
which, and the terms and conditions upon which securities of the series
shall be redeemed or purchased, in whole or in part, according to such
obligation;
(viii) the denominations in which securities of the series shall be issuable;
(ix) the portion of the principal amount of securities of the series which
shall be payable upon declaration of acceleration of the maturity of
those securities under the Indenture;
(x) any Events of Default and covenants of McCormick with respect to the
securities of that series, whether or not such Events of Default or
covenants are consistent with the Events of Default or covenants set
forth in the Indenture;
(xi) if other than the currency of the United States of America, the
currency or currency unit in which payment of the principal of (and
premium, if any) or interest, if any, on the securities of that series
shall be made or in which securities of that series shall be
denominated and the applicable provisions;
(xii) if the principal of (and premium, if any) and interest, if any, on the
securities of that series are to be payable, at the election of
McCormick or a holder of those securities, in a currency or currency
unit other than that in which such securities are denominated or stated
to be payable, the period or periods within which, and the terms and
conditions upon which, such election may be made, and the time and
manner of determining the exchange rate between the currency or
currency unit in which such securities are denominated or stated to be
payable and the currency or currency unit in which such securities are
to be so payable;
(xiii) if the amount of payments or principal of (and premium, if any) or
interest, if any, on the securities of the series may be determined
with reference to an index based on a currency or currency unit other
than that in which securities are denominated or stated to be payable
or any other index, the manner in which such amounts shall be
determined; and
(xiv) any other terms of the series (which terms shall not be inconsistent
with the provisions of the Indenture).
The Debt Securities may be issued in one or more series with the same or
various maturities and will be issued only in full registered form without
coupons.
The terms of the Debt Securities do not afford holders of the Debt
Securities protection in the event of a highly leveraged transaction involving
McCormick that may adversely affect holders of the Debt Securities.
TRANSFER AND EXCHANGE
The Debt Securities of a series may be issued in either registered form
("Registered Securities") or global form. See "Book-Entry Securities."
Registered Securities may be separated into smaller denominations or combined
into larger denominations, as long as the total principal amount is not changed.
(Section 3.5 of the Indenture). This is called an "exchange."
You may transfer Registered Securities of a series and you may exchange Debt
Securities of a series at the office of the Trustee. The Trustee will act as our
agent for registering Registered Securities in the names of holders and
transferring Debt Securities. We may designate someone else to perform this
function. Whoever maintains the list of registered holders is called the
"Security
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Registrar." The Security Registrar also will perform transfers. (Section 3.5 of
the Indenture)
You will not be required to pay a service charge to transfer or exchange
Debt Securities, but you may be required to pay for any tax or other
governmental charge associated with the exchange or transfer. The transfer or
exchange will be made only if the Security Registrar is satisfied with your
proof of ownership. (Section 3.5 of the Indenture).
If we designate additional transfer agents, we will name them in the
accompanying prospectus supplement. We may cancel the designation of any
particular transfer agent. We may also approve a change in the office through
which any transfer agent acts.
If we redeem less than all of the Debt Securities of a redeemable series, we
may block the transfer or exchange of Registered Securities during the period
beginning 15 days before the day of the selection for redemption of such
Registered Securities and ending on the day of the mailing of the relevant
notice of redemption in order to freeze the list of holders to prepare the
mailing. We may also decline to register transfers or exchanges of Debt
Securities selected for redemption, except that we will continue to permit
transfers and exchanges of the unredeemed portion of any Debt Security being
partially redeemed. (Section 3.5 of the Indenture).
If the offered Debt Securities are redeemable, we will describe the
procedures for redemption in the accompanying prospectus supplement.
IN THIS "TRANSFER AND EXCHANGE" SECTION OF THIS PROSPECTUS, "YOU" MEANS
DIRECT HOLDERS AND NOT INDIRECT HOLDERS OF DEBT SECURITIES.
BOOK-ENTRY SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities (the "Global Securities") which will be
deposited with, or on behalf of, The Depository Trust Company, New York, New
York (the "Depositary") and registered in the name of the Depositary's nominee.
Except as set forth below, the Global Securities may be transferred, in whole
and not in part, only to another nominee of the Depositary or to a successor of
the Depositary or its nominee.
The Depositary has advised us that it is a limited-purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. The Depositary was created to
hold securities for its participants and to facilitate the clearance and
settlement of securities transactions among its participants in such securities
through electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
Depositary's participants include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations, some of which
(and/or their representatives) own the Depositary. Access to the Depositary's
book-entry system is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a participant, either directly or indirectly. Persons who are not participants
may beneficially own securities held by the Depositary only through
participants.
Upon the issuance of Debt Securities by us represented by the Global
Securities, the Depositary will credit, on its book-entry registration and
transfer system, the respective principal amounts of the Debt Securities
represented by such Global Securities to the accounts of participants. The
accounts credited shall be initially designated by the underwriters or agents.
If the Depositary is at any time unwilling or unable to continue as
depositary, or if at any time there shall have occurred and be continuing an
Event of Default under the Indenture with respect to the Debt Securities, we
will issue Debt Securities in certificated form in exchange for the Global
Securities. In addition, we may at any time determine not to
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<PAGE>
have Debt Securities represented by the Global Securities, and, in such event
will issue Debt Securities in certificated form in exchange for the Global
Securities representing such Debt Securities. In any such instance, an owner of
a beneficial interest in the Global Securities will be entitled to physical
delivery in certificated form of Debt Securities equal in principal amount to
such beneficial interest and to have such Debt Securities registered in its
name.
DEFINITIONS
"Attributable Debt" with respect to any sale leaseback transaction that is
subject to the restrictions described under "Certain of our Covenants --
Limitation On Sale and Leaseback" means the lesser of:
- the total net amount of rent required to be paid during the remaining base
term of the related lease or until the earliest date on which the lessee
may terminate such lease upon payment of a penalty or a lump-sum
termination payment (in which case the total net rent shall include such
penalty or termination payment), discounted at the weighted average
interest rate borne by the Outstanding Securities (as defined in the
Indenture) under the Indenture, compounded semi-annually, or
- the sale price of the property so leased multiplied by a fraction, the
numerator of which is the remaining base term of the related lease and the
denominator of which is the base term of such lease.
"Consolidated Net Tangible Assets" means the total assets of McCormick and
its consolidated subsidiaries, including the investment in (at equity) and the
net amount of advances to and accounts receivable from corporations which are
not consolidated subsidiaries less the following:
- current liabilities of McCormick and its consolidated subsidiaries,
including an amount equal to indebtedness required to be redeemed by
reason of any sinking fund payment due in 12 months or less from the date
as of which current liabilities are to be determined;
- all other liabilities of McCormick and its consolidated subsidiaries other
than Funded Debt, deferred income taxes and liabilities for employee post-
retirement health plans other than pensions recognized in accordance with
Statement of Financial Accounting Standards No. 106;
- all depreciation and valuation reserves and all other reserves (except for
reserves for contingencies which have not been allocated to any particular
purpose) of McCormick and its consolidated subsidiaries;
- the book amount of all segregated intangible assets of McCormick and its
consolidated subsidiaries, including, but without limitation, such items
as goodwill, trademarks, trade names, patents and unamortized debt
discount and expense less unamortized debt premium; and
- appropriate adjustments on account of minority interests of other persons
holding stock in subsidiaries.
Consolidated Net Tangible Assets shall be determined on a consolidated basis in
accordance with generally accepted accounting principles.
"Principal Property" means any manufacturing or processing plant or
warehouse, together with the land upon which it is erected and any fixtures and
equipment comprising a part of the land, owned by McCormick or any Restricted
Subsidiary and located in the United States, the book value (net of
depreciation) of which on the date as of which the determination is being made
is an amount which exceeds 1% of Consolidated Net Tangible Assets, other than
any such manufacturing or processing plant or warehouse or any portion of the
plant or warehouse or any such fixture or equipment (together with the land upon
which it is erected and any fixtures and equipment comprising a
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part of the land) (i) which is financed by Industrial Development Bonds or
(ii) which, in the opinion of our board of directors, is not of material
importance to the total business conducted by us and our Subsidiaries, taken as
a whole.
"Restricted Subsidiary" means any Subsidiary that owns, operates or leases
one or more Principal Properties.
"Subsidiary" means each corporation of which we, or we and one or more
Subsidiaries, or any one or more Subsidiaries, directly or indirectly own
securities entitling the holders thereof to elect a majority of the directors,
either at all times or so long as there is no default or contingency that
permits the holders of any other class or classes of securities to vote for the
election of one or more directors.
CERTAIN OF OUR COVENANTS
LIMITATIONS ON LIENS
Except as described below under "-- Exempted Indebtedness", we covenant that
we will not, nor will we permit any Restricted Subsidiary to, create, assume or
suffer to exist any mortgage, security interest, pledge or lien ("Lien") of or
upon any Principal Property or any shares of capital stock or evidences of
indebtedness for borrowed money issued by any Restricted Subsidiary and owned by
us or any Restricted Subsidiary, without providing that the Notes shall be
secured equally and ratably by such Lien with any and all other indebtedness or
obligations thereby secured, so long as such indebtedness or obligations shall
be so secured.
This restriction does not apply to:
- Liens that exist on the date of the Indenture;
- Liens on property of any corporation existing at the time such corporation
becomes a Subsidiary;
- Liens in favor of us or any Subsidiary;
- Liens in favor of governmental bodies to secure progress, advance or other
payments pursuant to contract or statute or indebtedness incurred to
finance all or a part of construction of or improvements to property
subject to such Liens;
- Liens on property existing at the time of acquisition of the property
(including acquisition through merger or consolidation), and construction
and improvement liens that are entered into within 180 days from the date
of such construction or improvement, provided that in the case of
construction or improvement the Lien shall not apply to any property owned
by us or any Restricted Subsidiary except substantially unimproved real
property on which the property so constructed or the improvement is
located;
- mechanics' and similar Liens arising in the ordinary course of business in
respect of obligations not due or being contested in good faith;
- Liens for taxes, assessments, or governmental charges or levies that are
not delinquent or are being contested in good faith;
- Liens arising from any legal proceedings that are being contested in good
faith;
- any Liens that (a) are incidental to the ordinary conduct of our business
or the ownership of our properties and assets, (b) were not incurred in
connection with the borrowing of money or the obtaining of advances or
credit and (c) do not in the aggregate materially detract from the value
of our property or the property of any Subsidiary or materially impair the
use of our property in the operation of our business;
- Liens securing industrial development or pollution control bonds; and
- Liens for the sole purpose of extending, renewing or replacing (or
successively extending, renewing or replacing) in whole or in part any of
the Liens mentioned above. (Section 10.7 of the Indenture).
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LIMITATION ON SALE AND LEASEBACK
Except as described below under "Exempted Indebtedness," sale and leaseback
transactions by us or any Restricted Subsidiary (except for transactions
involving temporary leases for a term of three years or less) of any Principal
Property are prohibited unless either:
- we or such Restricted Subsidiary would be entitled, under the terms of the
fifth and the eleventh clauses of the covenant described under
"--Limitations on Liens" above, to incur a Lien on the Principal Property
to be leased without equally and ratably securing the Debt Securities, or
- the net proceeds of such sale are at least equal to the fair value of the
Principal Property sold and we will apply an amount equal to the net
proceeds of such sale to the retirement of our or a Restricted
Subsidiary's Securities or Funded Debt (as defined in the Indenture)
ranking prior to or on a parity with the Debt Securities. (Section 10.8 of
the Indenture).
EXEMPTED INDEBTEDNESS
Notwithstanding the limitations on Liens and sale and leaseback transactions
outlined above, we or any Restricted Subsidiary may create, assume or suffer to
exist Liens or enter into sale and leaseback transactions not otherwise
permitted as described above provided that at the time of such event, and after
giving effect to such event, the sum of outstanding indebtedness for borrowed
money incurred after the date of the Indenture and secured by such Liens plus
the Attributable Debt in respect of such sale and leaseback transactions entered
into after the date of the Indenture does not exceed 15% of Consolidated Net
Tangible Assets properly appearing on a consolidated balance sheet of McCormick.
(Sections 1.1, 10.7(b) and 10.8(b) of the Indenture).
MERGER AND CONSOLIDATION
We covenant that we will not merge, consolidate or convey, transfer or lease
our properties and assets substantially as an entirety and we will not permit
any Person (as defined in the Indenture) to consolidate with or merge into us or
convey, transfer or lease its properties and assets substantially as an entirety
to us unless, among other things:
- the successor Person is McCormick or another corporation organized and
existing under the laws of the United States, any state thereof or the
District of Columbia that assumes our obligations on the Debt Securities
and under the Indenture,
- immediately after giving effect to such transaction, McCormick or the
successor Person would not be in default under the Indenture, and
- if, as a result of any such consolidation or merger or such conveyance,
transfer or lease, any Principal Property of McCormick would become
subject to a Lien that would not be permitted by the Indenture, we or such
successor Person takes such steps as are necessary to effectively secure
the Debt Securities equally and ratably with (or, at our option, prior to)
all other secured indebtedness. (Section 8.1 of the Indenture).
EVENTS OF DEFAULT
An Event of Default with respect to the Debt Securities is defined in the
Indenture as being:
(i) default for 30 days in the payment of any installment of interest
on the Debt Securities;
(ii) default in the payment of any principal of the Debt Securities;
(iii) default by McCormick in the performance of any other covenants or
agreements in the Indenture which were contained in the Indenture for the
benefit of the Debt Securities which shall not have been remedied for a
period of 90 days after written notice of such default to McCormick by the
Trustee or to McCormick and the Trustee by the holders
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of at least 25% in aggregate principal amount of the Debt Securities;
(iv) certain events of bankruptcy, insolvency or reorganization of
McCormick; or
(v) any other Event of Default specified for a series in the applicable
prospectus supplement. (Section 5.1 of the Indenture).
The Indenture provides that if an Event of Default under clause (i),
(ii) or (iii) above shall have occurred and be continuing, either the Trustee or
the holders of not less than 25% in principal amount of the Debt Securities may
declare the principal of all the Debt Securities, together with any accrued
interest, to be due and payable immediately. (Sections 5.2 and 5.13 of the
Indenture).
If an Event of Default under clause (iv) above shall have occurred and be
continuing, then the principal of all the Debt Securities, together with any
accrued interest, will be due and payable immediately without any declaration or
other act on the part of the Trustee or any holder of a Debt Security. Upon
certain conditions such declaration (including a declaration caused by a default
in the payment of principal or interest, the payment for which has subsequently
been provided) may be annulled by the holders of a majority in principal amount
of the Debt Securities. (Sections 5.2 and 5.13 of the Indenture).
In addition, prior to the declaration of the acceleration of the maturity of
the Debt Securities, past defaults may be waived by the holders of a majority in
principal amount of the Debt Securities, except a default in the payment of
principal of or interest on any Debt Security or in respect of a covenant or
provision of the Indenture which cannot be modified or amended without the
approval of the holder of each Debt Security. (Sections 5.2 and 5.13 of the
Indenture).
The Indenture contains a provision entitling the Trustee, subject to the
duty of the Trustee during default to act with the required standard of care, to
be indemnified by the holders of Debt Securities issued under the Indenture
before proceeding to exercise any right or power under the Indenture at the
request of the holders of such Debt Securities. (Section 6.3 of the Indenture).
The Indenture also provides that the holders of a majority in principal
amount of the Outstanding Securities of a particular series issued under the
Indenture and affected (each series voting as a separate class) may direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee, with
respect to the Debt Securities of such series. (Section 5.12 of the Indenture).
The Indenture contains a covenant that McCormick will file annually with the
Trustee a certificate as to the absence of any default or specifying any default
that exists. (Section 10.9 of the Indenture).
SATISFACTION AND DISCHARGE
The Indenture will cease to be of further effect (except as to surviving
rights of registration of transfer or exchange of Debt Securities, as expressly
provided for in the Indenture) as to all Debt Securities when:
- either:
- all Debt Securities authenticated and delivered (except lost, stolen
or destroyed Debt Securities that have been replaced or paid) have
been delivered to the Trustee for cancellation or
- with respect to all Debt Securities not delivered to the Trustee for
cancellation, McCormick has deposited or caused to be deposited with
the Trustee funds or Government Obligations (as defined in the
Indenture), or any combination of Trustee funds and Government
Obligations, in an amount sufficient to pay and discharge the entire
indebtedness on the Debt Securities not delivered to the Trustee for
cancellation, for unpaid principal and interest to maturity;
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- McCormick has paid all other sums payable by it under the Indenture;
- McCormick has delivered to the Trustee an officers' certificate and an
opinion of counsel each stating that all conditions precedent under
the Indenture to the satisfaction and discharge of the Indenture have
been complied with; and
- if the Debt Securities are not due and payable within one year of the
date of such deposit, McCormick has delivered to the Trustee an
opinion of counsel to the effect that the holders of the Debt
Securities will not recognize income, gain or loss for federal income
tax purposes as a result of such deposit, defeasance and discharge and
will be subject to federal income tax on the same amount and in the
same manner and at the same times, as would have been the case if such
deposit, defeasance and discharge had not occurred. (Article IV of the
Indenture).
COVENANT DEFEASANCE
The terms of the Debt Securities provide that McCormick need not comply with
certain restrictive covenants of the Indenture (including those described under
"-- Certain of our Covenants" above) if:
- McCormick deposits in trust with the Trustee money or Government
Obligations, which through the payment of interest on and principal of
such Government Obligations in accordance with their terms will provide
money, in an amount sufficient to pay all the principal of and interest on
the Debt Securities when due; and
- McCormick delivers to the Trustee an opinion of counsel to the effect that
the holders of Debt Securities will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit and defeasance and
will be subject to federal income tax on the same amount and in the same
manner and at the same times, as would have been the case if such deposit
and defeasance had not occurred. (Section 10.11 of the Indenture).
MODIFICATION AND WAIVER
Without the consent of any holder of the Debt Securities, McCormick and the
Trustee may modify or amend the Indenture to clarify or to make certain other
changes that would not adversely affect the legal rights of any holder.
(Section 9.1 of the Indenture).
With the consent of the holders of not less than a majority in aggregate
principal amount of the outstanding Debt Securities of the particular series
affected, McCormick and the Trustee may modify or amend the Indenture; PROVIDED,
HOWEVER, that no such modification or amendment may, without the consent of the
holder of each Debt Security:
- change the stated maturity of the principal of, or any installment of
interest on, any Debt Security or reduce the principal amount of any Debt
Security or the rate of interest on any Debt Security, or change the coin
or currency in which any Debt Security or the interest on any Debt
Security is payable, or impair the right to institute suit for the
enforcement of any such payment after the stated maturity of any Debt
Security;
- reduce the percentage in principal amount of outstanding Debt Securities
necessary to waive compliance with certain provisions of the Indenture or
to waive certain defaults; or
- modify any of the provisions relating to supplemental indentures requiring
the consent of holders or relating to the waiver of past defaults or
relating to the waiver of certain covenants, except to increase the
percentage of outstanding Debt Securities required for such actions or to
provide that certain other provisions of the Indenture cannot be modified
or waived without the consent of the holder of each Debt Security.
(Section 9.2 of the Indenture).
14
<PAGE>
PLAN OF DISTRIBUTION
We may sell Debt Securities to or through underwriters and also may sell
Debt Securities directly to other purchasers or through agents. Goldman,
Sachs & Co. may be one of the underwriters or may be one of the firms
representing a group of underwriters. Goldman, Sachs & Co. may also act as
agent.
The distribution of the Debt Securities offered under the prospectus may
occur from time to time in one or more transactions at a fixed price or prices,
which may be changed, or at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices.
In connection with the sale of Debt Securities, underwriters may receive
compensation from us or from purchasers of Debt Securities for whom they may act
as agents in the form of discounts, concessions or commissions. Underwriters may
sell Debt Securities to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters and/or commissions from the purchasers for whom they may act as
agents. Underwriters, dealers and agents that participate in the distribution of
Debt Securities offered under the prospectus may be "underwriters" as defined in
the Securities Act. Any underwriters or agents will be identified and their
compensation (including underwriting discount) will be described in the
applicable prospectus supplement. The prospectus supplement will also describe
the other terms of the offering, including any discounts or concessions allowed
or reallowed or paid to dealers and any securities exchanges on which the
offered securities may be listed.
We may have agreements with the underwriters, dealers and agents to
indemnify them against certain liabilities, including liabilities under the
Securities Act, or to contribute with respect to payments which the
underwriters, dealers or agents may be required to make as a result of those
certain liabilities.
If the applicable prospectus supplement indicates, we may authorize dealers
or agents to solicit offers by certain institutions to purchase Debt Securities
from us pursuant to contracts that provide for payment and delivery on a future
date. We must approve all institutions, but they may include, among others:
- commercial and savings banks;
- insurance companies;
- pension funds;
- investment companies; and
- educational and charitable institutions.
The institutional purchaser's obligation under the contract is subject to
the condition that the purchase of the offered Debt Securities at the time of
delivery is allowed by the laws that govern the purchaser. The dealers and the
agents will not be responsible for the validity or performance of the contracts.
EXPERTS
The consolidated financial statements of McCormick & Company, Incorporated
and subsidiaries incorporated by reference in McCormick & Company, Incorporated
and subsidiaries' Annual Report on Form 10-K for the year ended November 30,
1999 have been audited by Ernst & Young LLP, independent auditors, as set forth
in their report included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
15
<PAGE>
LEGAL MATTERS
Certain legal matters in connection with the Debt Securities will be passed
upon for McCormick by Hogan & Hartson L.L.P., Columbia Square, 555 Thirteenth
Street, N.W., Washington, D.C. 20004, and for the underwriters, dealers and
agents by Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York
10017.
16
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
No dealer, salesperson or other person is authorized to give any information
or to represent anything not contained in this prospectus. You must not rely on
any unauthorized information or representations. This prospectus is an offer to
sell only the Notes offered hereby, but only under circumstances and in
jurisdictions where it is lawful to do so. The information contained in this
prospectus is current only as of its date.
------------------
TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
--------
<S> <C>
Risk Factors............................ S-2
About this Prospectus and the Pricing
Supplement............................ S-4
Description of Notes.................... S-5
Special Provisions Relating to Foreign
Currency Notes........................ S-18
United States Taxation.................. S-21
Supplemental Plan of Distribution....... S-31
Experts................................. S-32
Legal Matters........................... S-33
Prospectus
Where You Can Find More Information..... 2
McCormick & Company, Incorporated....... 5
Recent Developments..................... 5
Ratio of Earnings to Fixed Charges...... 6
Use of Proceeds......................... 6
Prospectus.............................. 6
Prospectus Supplement................... 6
Description of Debt Securities.......... 7
Plan of Distribution.................... 15
Experts................................. 15
Legal Matters........................... 16
</TABLE>
$375,000,000
MCCORMICK & COMPANY,
INCORPORATED
Medium-Term Notes
-------------
PROSPECTUS SUPPLEMENT
----------------
GOLDMAN, SACHS & CO.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table is an estimate, subject to future contingencies, of the
expenses to be incurred by the registrant in connection with the issuance and
distribution of securities being registered.
<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 99,000
Legal Fees and Expenses..................................... 200,000
Blue Sky Fees and Expenses.................................. 5,000
Accounting Fees and Expenses................................ 60,000
Printing and Engraving Expenses............................. 50,000
Trustee's Fees.............................................. 10,000
Rating Agency Fees.......................................... 15,000
Miscellaneous............................................... 11,000
--------
Total................................................... $450,000
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under the registrant's by-laws and the Maryland General Corporation Law, the
directors and officers of the registrant may be entitled to indemnification in
respect of threatened, pending or completed actions, suits or proceedings,
whether civil, criminal, administrative or investigative ("proceedings"), to
which they are made a party by reason of their position as a director or officer
of the registrant. In the case of conduct in their official capacity with the
registrant, directors and officers will be entitled to indemnification unless
the act or omission of the director or officer was material to the matter giving
rise to the proceeding and was committed in bad faith or was the result of
active and deliberate dishonesty or the director or officer actually received an
improper personal benefit in money, property or services. In the case of
criminal proceedings the director or the officer also must have had no
reasonable cause to believe that the conduct was unlawful.
If the director or officer is successful on the merits or otherwise in the
defense of any proceeding, the director or officer will be entitled to
indemnification against reasonable expenses incurred in connection with the
proceedings regardless of whether the foregoing standards are met. In addition,
a court of competent jurisdiction may order indemnification if it determines
that the director or officer has met the foregoing standards, or if it
determines that the director or officer is entitled to indemnification in view
of all the relevant circumstances.
Any indemnification required or permitted by the registrant's by-laws and
the Maryland General Corporation Law may be against judgments, penalties, fines,
settlements and reasonable expenses actually incurred by the director or officer
in connection with the proceeding. However, if the proceeding is by or in the
right of the registrant, indemnification may be made only against expenses and
may not be made in respect of any proceeding in which the director or officer is
adjudged to be liable to the registrant.
Under the registrant's charter, the monetary liability of directors and
officers to the registrant of its stockholders is eliminated except for, and to
the extent of, actual receipt of any improper benefit in money, property or
services, or in respect of an adjudication based upon a finding of active and
deliberate dishonesty material to the cause of action adjudicated.
The registrant also maintains for the benefit of its directors and officers
insurance covering certain liabilities asserted against or incurred by such
persons in their capacity as, or as a result of their position as, director or
officer of the registrant. This insurance may afford protection for
II-1
<PAGE>
liabilities not subject to indemnification under the registrant's by-laws and
the Maryland General Corporation Law.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following exhibits are filed as part of this Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
--------------------- ------------------------------------------------------------
<S> <C>
*1 Form of Distribution Agreement.
*4.1 Form of Indenture between McCormick & Company, Incorporated
and Sun Trust Bank, as trustee.
*4.2 Form of Medium-Term Note (Fixed Rate).
*4.3 Form of Medium-Term Note (Floating Rate).
*4.4 Form of Medium-Term Note (Single Indexed Note -- Fixed
Rate).
*4.5 Form of Medium-Term Note (Single Indexed Note -- Floating
Rate).
*5 Opinion of Hogan & Hartson L.L.P.
*12 Computation of ratio of earnings to fixed charges.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
*23.2 Consent of Hogan & Hartson L.L.P. (included in Exhibit 5).
*24 Powers of attorney.
*25 Statement on Form T-1 of eligibility of trustee.
* Previously filed.
</TABLE>
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the
II-2
<PAGE>
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned registrant hereby undertakes that, for the purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 15 above or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of each issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1993, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Sparks, State of Maryland on November 20, 2000.
<TABLE>
<S> <C> <C>
MCCORMICK & COMPANY, INCORPORATED
By: /s/ ROBERT J. LAWLESS
-----------------------------------------
Robert J. Lawless
CHAIRMAN, PRESIDENT & CHIEF EXECUTIVE
OFFICER
</TABLE>
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons, in the capacities
indicated below, on this 20th day of November, 2000.
<TABLE>
<S> <C>
PRINCIPAL EXECUTIVE OFFICER
*
-------------------------------------------
Robert J. Lawless November 20, 2000
CHAIRMAN, PRESIDENT & CHIEF EXECUTIVE OFFICER
PRINCIPAL FINANCIAL OFFICER
*
-------------------------------------------
Francis A. Contino November 20, 2000
EXECUTIVE VICE PRESIDENT &
CHIEF FINANCIAL OFFICER
PRINCIPAL ACCOUNTING OFFICER
*
-------------------------------------------
Kenneth A. Kelly, Jr. November 20, 2000
VICE PRESIDENT AND CONTROLLER
THE BOARD OF DIRECTORS:*
Barry H. Beracha, James T. Brady, Francis A.
Contino, Robert G. Davey, Edwards S. Dunn, Jr.,
Freeman A. Hrabowski, III, Robert J. Lawless,
John C. Molan, Carroll D. Nordhoff, Robert W.
Schroeder, William E. Stevens, Karen D. Weatherholtz
</TABLE>
<TABLE>
<S> <C> <C>
*By: /s/ ROBERT J. LAWLESS
--------------------------------------
Robert J. Lawless
ATTORNEY-IN-FACT
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
--------------------- ------------------------------------------------------------
<S> <C>
*1 Form of Distribution Agreement.
*4.1 Form of Indenture between McCormick & Company, Incorporated
and Sun Trust Bank, as trustee.
*4.2 Form of Medium-Term Note (Fixed Rate).
*4.3 Form of Medium-Term Note (Floating Rate).
*4.4 Form of Medium-Term Note (Single Indexed Note -- Fixed
Rate).
*4.5 Form of Medium-Term Note (Single Indexed Note -- Floating
Rate).
*5 Opinion of Hogan & Hartson L.L.P.
*12 Computation of ratio of earnings to fixed charges.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
*23.2 Consent of Hogan & Hartson L.L.P. (included in Exhibit 5).
*24 Powers of attorney.
*25 Statement on Form T-1 of eligibility of trustee.
* Previously filed.
</TABLE>
