<PAGE>
RULE NO. 424(b)(5)
REGISTRATION NO. 333-59997
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JULY 30, 1998)
[LOGO]
$1,500,000,000
MERRILL LYNCH & CO., INC.
$500,000,000 6% NOTES DUE NOVEMBER 15, 2004
$1,000,000,000 6 7/8% NOTES DUE NOVEMBER 15, 2018
---------------
The notes are offered for sale in the United States, Europe and Asia.
The notes due November 15, 2004 bear interest at the rate of 6% each
year. The notes due November 15, 2018 bear interest at the rate of 6 7/8% each
year. Interest on each series of notes is payable semiannually on May 15 and
November 15 of each year, beginning May 15, 1999. The notes are not redeemable
prior to maturity.
The notes are unsecured and rank equally with all of our other unsecured
senior indebtedness. The notes will be issued only in registered form in
denominations of $1,000.
Application has been made to list the notes on the Luxembourg Stock
Exchange.
---------------
<TABLE>
<CAPTION>
PROCEEDS, BEFORE
PUBLIC UNDERWRITING EXPENSES, TO
OFFERING PRICE (1) DISCOUNT COMPANY (1)
------------------ ------------ ----------------
<S> <C> <C> <C>
Per note due 2004............ 99.804% .375% 99.429%
Total for notes due 2004..... $499,020,000 $1,875,000 $497,145,000
Per note due 2018............ 99.509% .875% 98.634%
Total for notes due 2018..... $995,090,000 $8,750,000 $986,340,000
</TABLE>
(1) Purchasers will also be required to pay accrued interest from November 24,
1998, if settlement occurs after that date.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus supplement or the accompanying prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
We expect that the notes will be ready for delivery in book-entry form
only through The Depository Trust Company, Cedel Bank and Euroclear on or
about November 24, 1998.
---------------
6% NOTES DUE NOVEMBER 15, 2004
MERRILL LYNCH & CO.
BAYERISCHE HYPO- UND VEREINSBANK AG BNP
CREDIT LYONNAIS SECURITIES (USA) INC. FIRST CHICAGO CAPITAL MARKETS, INC.
HSBC MARKETS ING BARINGS/BBL
J.P. MORGAN & CO. PARIBAS
SCOTIA CAPITAL MARKETS TOKYO-MITSUBISHI INTERNATIONAL PLC
6 7/8% NOTES DUE NOVEMBER 15, 2018
MERRILL LYNCH & CO.
ABN AMRO CHASE SECURITIES INC.
NATIONSBANC MONTGOMERY SECURITIES LLC SALOMON SMITH BARNEY
---------------
The date of this prospectus supplement is November 17, 1998.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Merrill Lynch & Co., Inc.................................................. S-3
Incorporation of Certain Documents by Reference........................... S-3
Capitalization of the Company............................................. S-4
Summary Financial Information............................................. S-5
Management................................................................ S-6
Description of Notes...................................................... S-7
Certain United States Tax Documentation Requirements...................... S-14
United States Taxation of Non-United States Persons....................... S-15
Underwriting.............................................................. S-17
Validity of Notes......................................................... S-19
General Information....................................................... S-19
PROSPECTUS
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 2
Merrill Lynch & Co., Inc.................................................. 3
Use of Proceeds........................................................... 3
Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.................................... 4
Description of Debt Securities............................................ 4
Description of Debt Warrants.............................................. 9
Description of Currency Warrants.......................................... 11
Description of Index Warrants............................................. 12
Description of Preferred Stock............................................ 17
Description of Depositary Shares.......................................... 21
Description of Preferred Stock Warrants................................... 25
Description of Common Stock............................................... 27
Description of Common Stock Warrants...................................... 30
Plan of Distribution...................................................... 32
Experts................................................................... 33
</TABLE>
----------------
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We
have not, and the underwriters have not, authorized any other person to provide
you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and the
underwriters are not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted.
You should assume that the information appearing in this prospectus
supplement and the accompanying prospectus is accurate as of the date on the
front cover of this prospectus supplement only. Our business, financial
condition, results of operations and prospects may have changed since that
date.
This prospectus supplement and the accompanying prospectus include
particulars given in compliance with the rules governing the listing of
securities on the Luxembourg Stock Exchange for the purpose of giving
information with regard to the Company. The Company accepts full responsibility
for the accuracy of the information contained in this prospectus supplement and
the accompanying prospectus and confirms, having made all reasonable inquiries,
that to the best of its knowledge and belief there are no other facts the
omission of which would make any statement herein or in the prospectus
misleading in any material respect.
The distribution of this prospectus supplement and prospectus and the
offering of the Notes in certain jurisdictions may be restricted by law.
Persons into whose possession this prospectus supplement and the prospectus
come should inform themselves about and observe any such restrictions. This
prospectus supplement and the prospectus do not constitute, and may not be used
in connection with, an offer or solicitation by anyone in any jurisdiction in
which such offer or solicitation is not authorized or in which the person
making such offer or solicitation is not qualified to do so or to any person to
whom it is unlawful to make such offer or solicitation. See "Underwriting".
References herein to "U.S.$", "$" and "dollars" are to the currency of
the United States.
S-2
<PAGE>
MERRILL LYNCH & CO., INC.
The Company was incorporated under the laws of the State of Delaware,
U.S.A., in 1973. The principal executive office of the Company is located at
World Financial Center, North Tower, 250 Vesey Street, New York, New York
10281, U.S.A.; its telephone number is (212) 449-1000. The Company's registered
office in the State of Delaware is c/o The Corporation Trust Company,
Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801,
U.S.A. A more complete description of the Company may be found on page 3 of the
Prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 26,
1997, Quarterly Reports on Form 10-Q for the periods ended March 27, 1998, June
26, 1998 and September 25, 1998, and Current Reports on Form 8-K dated January
20, 1998, January 30, 1998, February 4, 1998, February 12, 1998, February 23,
1998, March 19, 1998, April 13, 1998, April 29, 1998, May 19, 1998, June 2,
1998, June 3, 1998, June 15, 1998, June 24, 1998, June 26, 1998, July 2, 1998,
July 14, 1998, July 15, 1998, July 29, 1998, September 3, 1998, September 8,
1998, September 29, 1998, October 13, 1998, October 21, 1998, October 28, 1998
and November 3, 1998 filed pursuant to Section 13 of the United States
Securities Exchange Act of 1934 (the "Exchange Act"), are hereby incorporated
by reference into this Prospectus Supplement and the accompanying Prospectus.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date hereof and prior to the
termination of the offering of the Notes shall be deemed to be incorporated by
reference into this Prospectus Supplement and the accompanying Prospectus and
to be a part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus Supplement and the accompanying Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus Supplement and the accompanying Prospectus.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM THIS
PROSPECTUS SUPPLEMENT AND ATTACHED PROSPECTUS ARE DELIVERED, ON WRITTEN OR ORAL
REQUEST OF SUCH PERSON, A COPY (WITHOUT EXHIBITS OTHER THAN EXHIBITS
SPECIFICALLY INCORPORATED BY REFERENCE) OF ANY OR ALL DOCUMENTS INCORPORATED BY
REFERENCE INTO THIS PROSPECTUS SUPPLEMENT AND ATTACHED PROSPECTUS. REQUESTS FOR
SUCH COPIES SHOULD BE DIRECTED TO LAWRENCE M. EGAN, JR., CORPORATE SECRETARY'S
OFFICE, MERRILL LYNCH & CO., INC., 100 CHURCH STREET, 12TH FLOOR, NEW YORK, NEW
YORK 10080-6512; TELEPHONE NUMBER (212) 602-8439. THE PROSPECTUS SUPPLEMENT AND
THE ACCOMPANYING PROSPECTUS, TOGETHER WITH THE DOCUMENTS INCORPORATED BY
REFERENCE HEREIN, ARE ALSO AVAILABLE FREE OF CHARGE AT THE OFFICE OF BANKERS
TRUST LUXEMBOURG S.A., 14 BOULEVARD F.D. ROOSEVELT, L-2450 LUXEMBOURG.
S-3
<PAGE>
CAPITALIZATION OF THE COMPANY
The following table sets forth, in millions of dollars (except the per
share amount), the consolidated capitalization of the Company at September 25,
1998.
<TABLE>
<CAPTION>
SEPTEMBER 25,
1998
-------------
<S> <C>
Short-Term Debt:
Notes payable.................................................. $ 92
Drafts payable, bank loans, and other short-term borrowings.... 6,116
Commercial paper............................................... 27,247
Payables under repurchase agreements and securities loaned
transactions.................................................. 100,174
Current portion of long-term debt.............................. 13,590
--------
Total........................................................ 147,219
--------
Long-Term Debt, less current portion: (1)(2)
Long-term debt................................................. 15,633
Medium-term notes.............................................. 26,559
--------
Total........................................................ 42,192
--------
Preferred Securities Issued by Subsidiaries (3)................. 1,777
--------
Stockholders' Equity:
Preferred Stockholders' Equity................................. 425
--------
Common Stockholders' Equity
Exchangeable Shares issued; 4,831,224.......................... 71
Common stock, par value $1.33 1/3 per share;
1,000,000,000 shares authorized;
472,660,324 shares issued..................................... 630
Paid-in capital................................................ 1,405
Accumulated other comprehensive income (net of tax)............ (59)
Retained earnings.............................................. 10,227
--------
12,274
Less: Treasury stock, at cost: 119,242,755 shares.............. 2,190
Employee stock transactions.................................. 714
--------
Total Common Stockholders' Equity.............................. 9,370
--------
Total Stockholders' Equity..................................... 9,795
--------
TOTAL CAPITALIZATION........................................... $200,983
========
</TABLE>
- --------
(1) From September 26, 1998 to November 18, 1998, long-term borrowings, net of
repayments and repurchases, decreased in the amount of approximately $817
million.
(2) Long-term borrowings at September 25, 1998 include $718 million held in
inventory by subsidiaries for purposes of resale. This amount is eliminated
for purposes of the consolidated financial statements.
(3) Subsequent to September 25, 1998, Merrill Lynch Preferred Capital Trust V
(the "Trust") issued $850 million of Trust Originated Preferred
Securities (Service Mark). The Trust holds preferred securities of a
partnership which is also a subsidiary of the Company. The assets of the
partnership consist primarily of debt securities of the Company and one of
its eligible controlled affiliates. The Company has guaranteed, on a
subordinated basis, certain payments by the Trust and the partnership.
There has been no material change in the consolidated capitalization of
the Company since September 25, 1998 except as otherwise described in the
footnotes above.
S-4
<PAGE>
SUMMARY FINANCIAL INFORMATION
The following summary of consolidated financial information was derived
from, and is qualified in its entirety by reference to, the financial
statements and other information and data contained in the Company's Annual
Report on Form 10-K for the year ended December 26, 1997 and Quarterly Report
on Form 10-Q (the "Quarterly Report") for the period ended September 25, 1998.
See "Incorporation of Certain Documents By Reference". The condensed
consolidated financial statements contained in the Quarterly Report are
unaudited; however, in the opinion of management of the Company, all
adjustments (consisting only of normal recurring accruals and a provision for
costs related to staff reductions) necessary for a fair statement of the
results of operations have been included. The year-end results include 52
weeks for 1994, 1995, 1996, and 1997 and 53 weeks for 1993.
The Company conducts its business in highly volatile markets.
Consequently, the Company's results can be affected by many factors, including
general market conditions, the liquidity of secondary markets, the level and
volatility of interest rates and currency values, the valuation of securities
positions, competitive conditions, and the size, number, and timing of
transactions. In periods of unfavorable market activity, profitability can be
adversely affected because certain expenses remain relatively fixed. As a
result, net earnings and revenues can vary significantly from period to
period. Thus, interim results may not necessarily be representative of the
full year results of operations.
<TABLE>
<CAPTION>
YEAR ENDED LAST FRIDAY IN DECEMBER
--------------------------------------------- SEPTEMBER 26, SEPTEMBER 25,
1993(1) 1994(1) 1995(1) 1996(1) 1997(1) 1997(2) 1998(2)
-------- -------- -------- -------- -------- ------------- -------------
(IN MILLIONS, EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues................ $ 16,588 $ 18,573 $ 22,060 $ 25,713 $ 32,499 $ 24,188 $ 27,681
Net revenues(3)......... $ 10,558 $ 9,959 $ 10,615 $ 13,621 $ 16,256 $ 12,246 $ 13,466
Earnings before income
taxes and cumulative
effect of changes in
accounting
principles(4).......... $ 2,425 $ 1,747 $ 1,836 $ 2,628 $ 3,111 $ 2,376 $ 1,602
Cumulative effect of
changes in accounting
principles (net of
applicable income
taxes)(4).............. $ (35) -- -- -- -- -- --
Net earnings(4)......... $ 1,359 $ 1,030 $ 1,126 $ 1,648 $ 1,935 $ 1,466 $ 915
Ratio of earnings to
fixed charges(5)....... 1.4 1.2 1.2 1.2 1.2 1.2 1.1
Total assets(6)......... $152,910 $165,920 $179,452 $217,266 $296,980 $293,602 $353,419
Long-term
borrowings(7).......... $ 13,469 $ 14,911 $ 17,389 $ 26,206 $ 43,143 $ 40,052 $ 55,064
Preferred securities
issued by
subsidiaries(8)........ $ 51 $ 51 $ 51 $ 327 $ 627 $ 627 $ 1,777
Stockholders'
equity(9).............. $ 5,486 $ 5,951 $ 6,288 $ 7,067 $ 8,539 $ 8,012 $ 9,795
</TABLE>
- -------
(1) Information in the table above, with the exception of the 1993 amounts,
have been restated for the Midland Walwyn Inc. ("Midland Walwyn") merger.
On August 26, 1998, the Company, through a Canadian subsidiary, acquired
the outstanding shares of Midland Walwyn, a Canadian broker-dealer, in a
transaction accounted for as a pooling-of-interests. The effect of
combining Midland Walwyn into the results of operations and financial
positions was not material.
(2) Information for the 1998 third quarter is derived from the Quarterly
Report for the period ended September 25, 1998. Information for the 1997
third quarter is derived from the Quarterly Report for the period ended
September 26, 1997, restated for the Midland Walwyn merger.
(3) Net revenues are revenues net of interest expense.
(4) Net earnings for 1993 were reduced by $35 million to reflect the adoption
of SFAS No. 112, Employers' Accounting for Postemployment Benefits.
(5) For the purpose of calculating the ratio of earnings to fixed charges,
"earnings" consist of earnings from continuing operations before income
taxes and fixed charges. "Fixed charges" consist of interest costs,
amortization of debt expense, preferred stock dividend requirements of
majority-owned subsidiaries, and that portion of rentals estimated to be
representative of the interest factor.
(6) In 1994, the Company adopted Financial Accounting Standards Board ("FASB")
Interpretation No. 39, Offsetting of Amounts Related to Certain Contracts,
and FASB Interpretation No. 41, Offsetting of Amounts Related to Certain
Repurchase and Reverse Repurchase Agreements, which increased assets and
liabilities at December 30, 1994 by approximately $8,500 million.
(7) To finance its diverse activities, the Company and certain of its
subsidiaries borrow substantial amounts of short-term funds on a regular
basis. Although the amount of short-term borrowings varies significantly
with the level of general business activity, on September 25, 1998, $806
million of bank loans and $27,247 million of commercial paper were
outstanding. In addition, certain of the Company's subsidiaries lend
securities and enter into repurchase agreements to obtain financing. At
September 25, 1998, cash deposits for securities loaned and securities
sold under agreements to repurchase amounted to $11,434 million and
$88,740 million, respectively. For more information with respect to long-
term borrowings, see information included under the caption
"Capitalization of the Company".
(8) In January and June 1998, Merrill Lynch Preferred Capital Trust III and IV
(the "Trusts") issued $750 million and $400 million of Trust Originated
Preferred Securities (Service Mark), respectively. Subsequent to the 1998
third quarter end, Merrill Lynch Preferred Capital Trust V issued $850
million of Trust Originated Preferred Securities (Service Mark). The Trusts
hold preferred securities of partnerships which are also subsidiaries of the
Company. The assets of the partnerships consist primarily of debt securities
of the Company and certain of its eligible controlled affiliates. The
Company has guaranteed, on a subordinated basis, certain payments by the
Trusts and the partnerships.
(9) In April 1998, stockholders approved the proposal to amend the Company's
Certificate of Incorporation to increase the authorized number of shares
of common stock from 500 million to 1 billion.
S-5
<PAGE>
MANAGEMENT
DIRECTORS
The directors of the Company and their principal occupations as of the
date hereof are set forth in the following table.
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION
---- --------------------
<C> <S>
David H. Komansky................ Chairman of the Board and Chief Executive
Officer of the Company
Herbert M. Allison, Jr........... President and Chief Operating Officer of
the Company
W.H. Clark....................... Corporate Director; former Chairman of the
Board and Chief Executive Officer of Nalco
Chemical Company
Jill K. Conway................... Visiting Scholar, Massachusetts Institute
of Technology
Stephen L. Hammerman............. Vice Chairman of the Board and General
Counsel of the Company
Earle H. Harbison, Jr............ Chairman of the Board of Harbison
Corporation
George B. Harvey................. Corporate Director; former Chairman of the
Board, President and Chief Executive
Officer of Pitney Bowes Inc.
William R. Hoover................ Chairman of the Executive Committee of,
Consultant to, and former Chairman of the
Board, Chief Executive Officer and
President of, Computer Sciences Corporation
Robert P. Luciano................ Corporate Director; former Chairman of the
Board and Chief Executive Officer of
Schering-Plough Corporation
David K. Newbigging.............. Chairman of the Board of Equitas Holdings
Limited
Aulana L. Peters................. Partner in the law firm of Gibson, Dunn &
Crutcher
John J. Phelan, Jr............... Senior Advisor, Boston Consulting Group;
former Chairman of the Board and Chief
Executive Officer of the New York Stock
Exchange, Inc.
John L. Steffens................. Vice Chairman of the Board and Head of the
U.S. Private Client Group of the Company
William L. Weiss................. Corporate Director; Chairman Emeritus and
former Chairman of the Board and Chief
Executive Officer of Ameritech Corporation
</TABLE>
The business address of the directors of the Company is World Financial
Center, North Tower, 250 Vesey Street, New York, New York 10281.
OFFICERS
In addition to the directors named above, the following persons, all of
whom are full-time employees of the Company, hold the offices indicated in the
following table as of the date hereof.
<TABLE>
<CAPTION>
NAME OFFICE
---- ------
<S> <C>
Thomas W. Davis......... Executive Vice President
Barry S. Friedberg...... Executive Vice President
Edward L. Goldberg...... Executive Vice President
Jerome P. Kenney........ Executive Vice President
E. Stanley O'Neal....... Executive Vice President and Chief Financial Officer
Thomas H. Patrick....... Executive Vice President
Jeffrey M. Peek......... Executive Vice President
Winthrop H. Smith, Jr... Executive Vice President
Arthur Zeikel........... Executive Vice President
Theresa Lang............ Senior Vice President and Treasurer
Michael J. Castellano... Senior Vice President and Controller
Andrea L. Dulberg....... Secretary
</TABLE>
The business address of the officers of the Company is World Financial
Center, North Tower, 250 Vesey Street, New York, New York 10281.
S-6
<PAGE>
DESCRIPTION OF NOTES
GENERAL
The following description of the terms of the Notes (as defined below)
offered hereby supplements, and to the extent inconsistent therewith replaces,
the description of the general terms and provisions of Debt Securities set
forth in the accompanying Prospectus. The Notes are part of the Debt Securities
registered by the Company with the Securities and Exchange Commission in July,
1998 to be issued on terms to be determined at the time of sale. The Notes are
to be issued as separate series of Senior Debt Securities under the 1983
Indenture, which is more fully described in the accompanying Prospectus. The 6%
Notes due November 15, 2004 (the "Notes due 2004") will mature at par on
November 15, 2004, and the 6 7/8% Notes due November 15, 2018 (the "Notes due
2018" and, together with the Notes due 2004, the "Notes") will mature at par on
November 15, 2018 (each such date referred to respectively for such series as
the "Stated Maturity"). The Notes due 2004 will bear interest at the rate of 6%
per annum, and the Notes due 2018 will bear interest at the rate of 6 7/8% per
annum, in each case from November 24, 1998, payable semiannually on May 15 and
November 15 of each year (each an "Interest Payment Date"), commencing May 15,
1999, and at maturity, to the persons in whose names the Notes are registered
on the preceding May 1 and November 1, respectively. If any Interest Payment
Date or maturity date falls on a day that is not a Business Day (as defined
below), the related payment of principal or interest will be made on the next
succeeding Business Day as if made on the date such payment was due, and no
interest will accrue on the amount so payable for the period from and after
such Interest Payment Date or maturity date, as the case may be. "Business Day"
with respect to any place of payment means each Monday, Tuesday, Wednesday,
Thursday and Friday which is neither a legal holiday nor a day on which banking
institutions in such place of payment are authorized or obligated by law,
regulation or executive order to close. The amount of interest payable for
either the Notes due 2004 or the Notes due 2018 for any period will be computed
on the basis of a 360-day year of twelve 30-day months.
The Notes are not subject to redemption by the Company prior to maturity
unless certain events occur involving U.S. taxation. See "Description of
Notes--Redemption for Tax Reasons".
The Notes will be issued in denominations of $1,000 and integral
multiples thereof.
Any Notes issued in definitive form will be issued only in fully
registered form, without coupons, in denominations of $1,000 and in integral
multiples thereof, in the amount of each holder's registered holdings. Any
Notes so issued will be registered in such names, and in such denominations, as
the Depositary shall request. Such Notes may be presented for registration of
transfer or exchange at the office of the Trustee in The City of New York and
principal thereof and interest thereon will be payable at such office of the
Trustee, provided that interest thereon may be paid by check mailed to the
registered holders of the definitive Notes. In the event definitive Notes are
issued, the holders thereof will be able to receive payments thereon and effect
transfers thereof at the offices of Chase Manhattan Bank Luxembourg S.A. or its
successor as paying agent in Luxembourg with respect to the Notes.
The Company has appointed Chase Manhattan Bank Luxembourg S.A. as paying
agent and transfer agent in Luxembourg with respect to the Notes in definitive
form, and as long as the Notes are listed on the Luxembourg Stock Exchange, the
Company will maintain a paying and transfer agent in Luxembourg and any change
in the Luxembourg paying agent and transfer agent will be published in
Luxembourg. See "Description of Notes--Notices".
DEPOSITARY
Upon issuance, all Notes of each series will be represented by one or
more fully registered global notes (the "Global Notes"). Each such Global Note
will be deposited with, or on behalf of, The Depository Trust Company or any
successor thereto ("DTC" or the "Depositary"), as Depositary, and registered in
the name of Cede & Co. (DTC's partnership nominee). Unless and until it is
exchanged in whole or in part for Notes in definitive form, no Global Note may
be transferred except as a whole by the Depositary to a nominee of such
Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such
S-7
<PAGE>
Depositary or by such Depositary or any such nominee to a successor of such
Depositary or a nominee of such successor. Investors may elect to hold
interests in the Global Notes through either the Depositary (in the United
States) or Cedel Bank, societe anonyme ("Cedel Bank"), and Morgan Guaranty
Trust Company of New York, Brussels Office, as operator of the Euroclear System
("Euroclear"), if they are participants in such systems, or indirectly through
organizations which are participants in such systems. Cedel Bank and Euroclear
will hold interests on behalf of their participants through customers'
securities accounts in Cedel Bank's and Euroclear's names on the books of their
respective depositaries, which in turn will hold such interests in customers'
securities accounts in the depositaries' names on the books of the Depositary.
Citibank, N.A. will act as depositary for Cedel Bank and The Chase Manhattan
Bank will act as depositary for Euroclear (in such capacities, the "U.S.
Depositaries").
So long as the Depositary, or its nominee, is a registered owner of a
Global Note, the Depositary or its nominee, as the case may be, will be
considered the sole owner or Holder of the Notes represented by such Global
Note for all purposes under the 1983 Indenture. Except as provided below, the
actual owners of the Notes represented by a Global Note (the "Beneficial
Owners") will not be entitled to have the Notes represented by such Global Note
registered in their names, will not receive or be entitled to receive physical
delivery of the Notes in definitive form and will not be considered the owners
or Holders thereof under the 1983 Indenture, including for purposes of
receiving any reports delivered by the Company or the Trustee pursuant to the
1983 Indenture. Accordingly, each person owning a beneficial interest in a
Global Note must rely on the procedures of the Depositary and, if such person
is not a participant of the Depositary (a "Participant"), on the procedures of
the Participant through which such person owns its interest, to exercise any
rights of a Holder under the 1983 Indenture. The Company understands that under
existing industry practices, in the event that the Company requests any action
of Holders or that an owner of a beneficial interest which a Holder is entitled
to give or take under the 1983 Indenture, the Depositary would authorize the
Participants holding the relevant beneficial interests to give or take such
action, and such Participants would authorize Beneficial Owners owning through
such Participants to give or take such action or would otherwise act upon the
instructions of Beneficial Owners. Conveyance of notices and other
communications by the Depositary to Participants, by Participants to Indirect
Participants, as defined below, and by Participants and Indirect Participants
to Beneficial Owners will be governed by arrangements among them, subject to
any statutory or regulatory requirements as may be in effect from time to time.
If (x) the Depositary is at any time unwilling or unable to continue as
Depositary and a successor depositary is not appointed by the Company within 60
days, (y) the Company executes and delivers to the Trustee a Company Order to
the effect that the Global Notes of a series shall be exchangeable for
certificated Notes or (z) an Event of Default has occurred and is continuing
with respect to the Notes of a series, the Global Notes of such series will be
exchangeable for Notes in definitive form of like tenor and of an equal
aggregate principal amount, in denominations of $1,000 and integral multiples
thereof. Such definitive Notes shall be registered in such name or names as the
Depositary shall instruct the Trustee. It is expected that such instructions
may be based upon directions received by the Depositary from Participants with
respect to ownership of beneficial interests in such Global Notes.
The following is based on information furnished by DTC:
DTC will act as securities depositary for the Notes. The Notes will be
issued as fully registered notes registered in the name of Cede & Co. (DTC's
partnership nominee). One or more fully registered Global Notes will be issued
for each series of Notes in the aggregate principal amount of such series, and
will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a
S-8
<PAGE>
"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 Securities Exchange Act of 1934, as amended. DTC holds securities
that its Participants deposit with DTC. DTC also facilitates the settlement
among Participants of securities transactions, such as transfers and pledges,
in deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants of DTC ("Direct Participants")
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. DTC is owned by a number of its
Direct Participants and by The New York Stock Exchange, Inc., the American
Stock Exchange, Inc., and the National Association of Securities Dealers, Inc.
Access to DTC's system is also available to others such as securities brokers
and dealers, banks and trust companies that clear through or maintain a
custodial relationship with a Direct Participant, either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its Participants are
on file with the Securities and Exchange Commission.
Purchases of Notes under DTC's system must be made by or through Direct
Participants, which will receive a credit for the Notes on DTC's records. The
ownership interest of each Beneficial Owner is in turn to be recorded on the
records of Direct Participants and Indirect Participants. Beneficial Owners
will not receive written confirmation from DTC of their purchase, but
Beneficial Owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their holdings,
from the Direct Participants or Indirect Participants through which such
Beneficial Owner entered into the transaction. Transfers of ownership interests
in the Notes are to be accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners. Beneficial Owners will not
receive certificates representing their ownership interests in Notes, except as
provided above.
To facilitate subsequent transfers, all Notes deposited with DTC are
registered in the name of DTC's partnership nominee, Cede & Co. The deposit of
Notes with DTC and their registration in the name of Cede & Co. effect no
change in beneficial ownership. DTC has no knowledge of the actual Beneficial
Owners of the Notes; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Notes are credited, which may or may not be
the Beneficial Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to the
Notes. Under its usual procedures, DTC mails an Omnibus Proxy to the Company as
soon as possible after the applicable record date. The Omnibus Proxy assigns
Cede & Co.'s consenting or voting rights to those Direct Participants to whose
accounts the Notes are credited on the record date (identified in a listing
attached to the Omnibus Proxy).
Principal, additional amounts, if any, and/or interest payments on the
Notes will be made in immediately available funds to DTC. DTC's practice is to
credit Direct Participants' accounts on the applicable payment date in
accordance with their respective holdings shown on the Depositary's records
unless DTC has reason to believe that it will not receive payment on such date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is the case with securities held for
the accounts of customers in bearer form or registered in "street name", and
will be the responsibility of such Participant and not of DTC, the Trustee or
the Company, subject to any statutory or regulatory requirements as may be in
effect from time to time. Payment of principal, additional amounts, if any,
and/or interest to DTC is the responsibility of the Company or the Trustee,
disbursement of such payments to Direct Participants shall be the
responsibility of DTC, and disbursement of such payments to the Beneficial
Owners shall be the responsibility of Direct Participants and Indirect
Participants.
S-9
<PAGE>
DTC may discontinue providing its services as securities depositary with
respect to the Notes at any time by giving reasonable notice to the Company or
Trustee. Under such circumstances, in the event that a successor securities
depositary is not obtained, Note certificates are required to be printed and
delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depositary). In that event,
Note certificates will be printed and delivered.
Cedel Bank advises that it is incorporated under the laws of Luxembourg
as a professional depositary. Cedel Bank holds securities for its participating
organizations ("Cedel Participants") and facilitates the clearance and
settlement of securities transactions between Cedel Participants through
electronic book-entry changes in accounts of Cedel Participants, thereby
eliminating the need for physical movement of certificates. Cedel Bank provides
to Cedel Participants, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. Cedel Bank interfaces with domestic
markets in several countries. As a professional depositary, Cedel Bank is
subject to regulation by the Luxembourg Monetary Institute. Cedel Participants
are recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations and may include the Underwriters. Indirect
access to Cedel Bank is also available to others, such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Cedel Participant either directly or indirectly.
Distributions with respect to the Notes held beneficially through Cedel
Bank will be credited to cash accounts of Cedel Participants in accordance with
its rules and procedures, to the extent received by the U.S. Depositary for
Cedel Bank.
Euroclear advises that it was created in 1968 to hold securities for
participants of Euroclear ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Euroclear includes various other services, including
securities lending and borrowing and interfaces with domestic markets in
several countries. Euroclear is operated by the Brussels, Belgium office of
Morgan Guaranty Trust Company of New York (the "Euroclear Operator"), under
contract with Euro-clear Clearance Systems S.C., a Belgian cooperative
corporation (the "Cooperative"). All operations are conducted by the Euroclear
Operator, and all Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear Operator, not the Cooperative. The
Cooperative establishes policy for Euroclear on behalf of Euroclear
Participants. Euroclear Participants include banks (including central banks),
securities brokers and dealers and other professional financial intermediaries
and may include the Underwriters. Indirect access to Euroclear is also
available to other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it
is regulated and examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian
Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear
and the related Operating Procedures of the Euroclear System, and applicable
Belgian law (collectively, the "Terms and Conditions"). The Terms and
Conditions govern transfers of securities and cash within Euroclear,
withdrawals of securities and cash from Euroclear, and receipts of payments
with respect to securities in Euroclear. All securities in Euroclear are held
on a fungible basis without attribution of specific certificates to specific
securities clearance accounts. The Euroclear Operator acts under the Terms and
Conditions only on behalf of Euroclear Participants, and has no record of or
relationship with persons holding through Euroclear Participants.
Distributions with respect to Notes held beneficially through Euroclear
will be credited to the cash accounts of Euroclear Participants in accordance
with the Terms and Conditions, to the extent received by the U.S. Depositary
for Euroclear.
S-10
<PAGE>
GLOBAL CLEARANCE AND SETTLEMENT PROCEDURES
Initial settlement for the Notes will be made in immediately available
funds. Secondary market trading between DTC Participants will occur in the
ordinary way in accordance with the Depositary's rules and will be settled in
immediately available funds using the Depositary's Same-Day Funds Settlement
System. Secondary market trading between Cedel Participants and/or Euroclear
Participants will occur in the ordinary way in accordance with the applicable
rules and operating procedures of Cedel Bank and Euroclear and will be settled
using the procedures applicable to conventional eurobonds in immediately
available funds.
Cross-market transfers between persons holding directly or indirectly
through the Depositary on the one hand, and directly or indirectly through
Cedel or Euroclear Participants, on the other, will be effected in the
Depositary in accordance with the Depositary's rules on behalf of the relevant
European international clearing system by its U.S. Depositary; however, such
cross-market transactions will require delivery of instructions to the relevant
European international clearing system by the counterparty in such system in
accordance with its rules and procedures and within its established deadlines
(European time). The relevant European international clearing system will, if
the transaction meets its settlement requirements, deliver instructions to its
U.S. Depositary to take action to effect final settlement on its behalf by
delivering or receiving Notes in the Depositary, and making or receiving
payment in accordance with normal procedures for same-day funds settlement
applicable to the Depositary. Cedel Participants and Euroclear Participants may
not deliver instructions directly to the Depositary.
Because of time-zone differences, credits of Notes received in Cedel Bank
or Euroclear as a result of a transaction with a DTC Participant will be made
during subsequent securities settlement processing and will be credited the
business day following the Depositary settlement date. Such credits or any
transactions in such Notes settled during such processing will be reported to
the relevant Euroclear or Cedel Participants on such business day. Cash
received in Cedel Bank or Euroclear as a result of sales of Notes by or through
a Cedel Participant or a Euroclear Participant to a DTC Participant will be
received with value on the Depositary settlement date but will be available in
the relevant Cedel Bank or Euroclear cash account only as of the business day
following settlement in the Depositary.
DTC has advised the Company that management of DTC is aware that some
computer applications, systems, and the like for processing data ("Systems")
that are dependent upon calendar dates, including dates before, on, and after
January 1, 2000, may encounter "Year 2000 problems". DTC has informed Direct
and Indirect Participants and other members of the financial community (the
"Industry") that it has developed and is implementing a program so that its
Systems, as the same relate to the timely payment of distributions (including
principal and interest payments) to securityholders, book-entry deliveries, and
settlement of trades within DTC ("Depositary Services"), continue to function
appropriately. This program includes a technical assessment and a remediation
plan, each of which is complete. Additionally, DTC's plan includes a testing
phase, which is expected to be completed within appropriate time frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including, but not limited to, issuers and their agents, as
well as DTC's Direct Participants and Indirect Participants, third party
vendors from whom DTC licenses software and hardware, and third party vendors
on whom DTC relies for information or the provision of services, including
telecommunication and electrical utility service providers, among others. DTC
has informed the Industry that it is contacting (and will continue to contact)
third party vendors from whom DTC acquires services to: (i) impress upon them
the importance of such services being Year 2000 compliant; and (ii) determine
the extent of their efforts for Year 2000 remediation (and, as appropriate,
testing) of their services. In addition, DTC is in the process of developing
such contingency plans as it deems appropriate.
According to DTC, the information in the preceding two paragraphs with
respect to DTC has been provided to the Industry for informational purposes
only and is not intended to serve as a representation, warranty, or contract
modification of any kind.
S-11
<PAGE>
Although the Depositary, Cedel Bank and Euroclear have agreed to the
foregoing procedures in order to facilitate transfers of Notes among
participants of the Depositary, Cedel Bank and Euroclear, they are under no
obligation to perform or continue to perform such procedures and such
procedures may be discontinued at any time.
NOTICES
Notices to holders of the Notes will be sent by mail to the registered
holders and will be published, whether the Notes are in global or definitive
form, and so long as the Notes are listed on the Luxembourg Stock Exchange, in
a daily newspaper of general circulation in Luxembourg. It is expected that
publication will be made in Luxembourg in the Luxemburger Wort. Any such notice
shall be deemed to have been given on the date of such publication or, if
published more than once, on the date of the first such publication. So long as
the Notes are listed on the Luxembourg Stock Exchange, any change in the
Luxembourg paying agent and transfer agent will be published in Luxembourg in
the manner set forth above.
FURTHER ISSUES
The Company may from time to time, without notice to or the consent of
the registered holders of the Notes, create and issue further notes ranking
pari passu with either series of Notes in all respects (or in all respects
except for the payment of interest accruing prior to the issue date of such
further notes or except for the first payment of interest following the issue
date of such further notes) and so that such further notes may be consolidated
and form a single series with such series of Notes and have the same terms as
to status, redemption or otherwise as the Notes of such series.
PAYMENT OF ADDITIONAL AMOUNTS
The Company will, subject to the exceptions and limitations set forth
below, pay as additional interest on the Notes, such additional amounts as are
necessary in order that the net payment by the Company or a paying agent of the
principal of and interest on the Notes to a holder who is a non-United States
person (as defined below), after deduction for any present or future tax,
assessment or other governmental charge of the United States or a political
subdivision or taxing authority thereof or therein, imposed by withholding with
respect to the payment, will not be less than the amount provided in the Notes
to be then due and payable; provided, however, that the foregoing obligation to
pay additional amounts shall not apply:
(1) to any tax, assessment or other governmental charge that is imposed
or withheld solely by reason of the holder, or a fiduciary, settlor,
beneficiary, member or shareholder of the holder if the holder is an
estate, trust, partnership or corporation, or a person holding a power over
an estate or trust administered by a fiduciary holder, being considered as:
(a) being or having been present or engaged in a trade or business in
the United States or having had a permanent establishment in the United
States;
(b) having a current or former relationship with the United States,
including a relationship as a citizen or resident thereof;
(c) being or having been a foreign or domestic personal holding
company, a passive foreign investment company or a controlled foreign
corporation with respect to the United States or a corporation that has
accumulated earnings to avoid United States federal income tax;
(d) being or having been a "10-percent shareholder" of the Company as
defined in section 871 (h) (3) of the United States Internal Revenue
Code or any successor provision; or
(e) being a bank receiving payments on an extension of credit made
pursuant to a loan agreement entered into in the ordinary course of its
trade or business;
(2) to any holder that is not the sole beneficial owner of the Note, or a
portion thereof, or that is a fiduciary or partnership, but only to the
extent that a beneficiary or settlor with respect to the fiduciary, a
beneficial owner or member of the partnership would not have been entitled
to the payment of an additional amount had the beneficiary, settlor,
beneficial owner or member received directly its beneficial or distributive
share of the payment;
S-12
<PAGE>
(3) to any tax, assessment or other governmental charge that is imposed
or withheld solely by reason of the failure of the holder or any other
person to comply with certification, identification or information
reporting requirements concerning the nationality, residence, identity or
connection with the United States of the holder or beneficial owner of such
Note, if compliance is required by statute, by regulation of the United
States Treasury Department or by an applicable income tax treaty to which
the United States is a party as a precondition to exemption from such tax,
assessment or other governmental charge;
(4) to any tax, assessment or other governmental charge that is imposed
otherwise than by withholding by the Company or a paying agent from the
payment;
(5) to any tax, assessment or other governmental charge that is imposed
or withheld solely by reason of a change in law, regulation, or
administrative or judicial interpretation that becomes effective more than
15 days after the payment becomes due or is duly provided for, whichever
occurs later;
(6) to any estate, inheritance, gift, sales, excise, transfer, wealth or
personal property tax or similar tax, assessment or other governmental
charge;
(7) to any tax, assessment or other governmental charge required to be
withheld by any paying agent from any payment of principal of or interest
on any Note, if such payment can be made without such withholding by any
other paying agent; or
(8) in the case of any combination of items (1), (2), (3), (4), (5), (6)
and (7).
The Notes are subject in all cases to any tax, fiscal or other law or
regulation or administrative or judicial interpretation applicable thereto.
Except as specifically provided under this heading "Payment of Additional
Amounts" and under the heading "Description of Notes--Redemption for Tax
Reasons", the Company shall not be required to make any payment with respect to
any tax, assessment or other governmental charge imposed by any government or a
political subdivision or taxing authority thereof or therein.
As used under this heading "Payment of Additional Amounts" and under the
headings "Description of Notes--Redemption for Tax Reasons", "Certain United
States Tax Documentation Requirements" and "United States Taxation of Non-
United States Persons" the term "United States" means the United States of
America (including the States and the District of Columbia) and its
territories, its possessions and other areas subject to its jurisdiction,
"United States person" means any individual who is a citizen or resident of the
United States, a corporation, partnership or other entity created or organized
in or under the laws of the United States, any state thereof or the District of
Columbia (other than a partnership that is not treated as a United States
person under any applicable Treasury regulations), any estate the income of
which is subject to United States federal income taxation regardless of its
source, or any trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or more United
States persons have the authority to control all substantial decisions of the
trust. Notwithstanding the preceding sentence, to the extent provided in the
Treasury regulations, certain trusts in existence on August 20, 1996, and
treated as United States persons prior to such date that elect to continue to
be treated as United States persons will also be a United States person. "Non-
United States person" means a person who is not a United States person.
REDEMPTION FOR TAX REASONS
If, as a result of any change in, or amendment to, the laws (or any
regulations or rulings promulgated thereunder) of the United States (or any
political subdivision or taxing authority thereof or therein ), or any change
in, or amendments to, an official position regarding the application or
interpretation of such laws, regulations or rulings, which change or amendment
is announced or becomes effective on or after the date of this Prospectus
Supplement, the Company becomes or, based upon a written opinion of independent
counsel selected by the Company, will become obligated to pay additional
amounts as described herein under the heading "Description of Notes--Payment of
Additional Amounts" with respect to a series of Notes offered hereby, then the
Company may, at its option redeem, as a whole, but not in part, the Notes of
such series on not less than 30 nor more than 60 days prior notice, at a
redemption price equal to 100% of their principal amount, together with
interest accrued but unpaid thereon to the date fixed for redemption.
S-13
<PAGE>
CERTAIN UNITED STATES TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of a Note will generally be subject to the 30% United
States federal withholding tax that generally applies to payments of interest
on a registered form debt obligation issued by a United States person, unless
one of the following steps is taken to obtain an exemption from or reduction of
the tax:
Exemption for Non-United States persons (IRS Form W-8). A beneficial
owner of a Note that is a non-United States person (other than certain persons
that are related to the Company through stock ownership as described in clauses
(x) (a) and (b) of Paragraph (i) under "United States Taxation of Non-United
States Persons--Income and Withholding Tax" ) can obtain an exemption from the
withholding tax by providing a properly completed IRS Form W-8 (Certificate of
Foreign Status). Copies of IRS Form W-8 may be obtained from the Luxembourg
listing agent.
Exemption for Non-United States persons with effectively connected income
(IRS Form 4224). A beneficial owner of a Note that is a non-United States
person, including a non-United States corporation or bank with a United States
branch, that conducts a trade or business in the United States with which
interest income on a Note is effectively connected, can obtain an exemption
from the withholding tax by providing a properly completed IRS Form 4224
(Exemption from Withholding of Tax on Income Effectively Connected with the
Conduct of a Trade or Business in the United States).
Exemption or reduced rate for Non-United States persons entitled to the
benefits of a treaty (IRS Form 1001). A beneficial owner of a Note that is a
non-United States person entitled to the benefits of an income tax treaty to
which the United States is a party can obtain an exemption from or reduction of
the withholding tax (depending on the terms of the treaty) by providing a
properly completed IRS Form 1001 (Ownership, Exemption or Reduced Rate
Certificate).
Exemption for United States Persons (IRS Form W-9). A beneficial owner of
a Note that is a United States person can obtain a complete exemption from the
withholding tax by providing a properly completed IRS Form W-9 (Request for
Taxpayer Identification Number and Certification).
United States federal income tax reporting procedure. A beneficial owner
of a Note, or, in the case of IRS Forms 1001 and 4224, its agent, is required
to submit the appropriate IRS Form under applicable procedures to the person
through which the owner directly holds the Note. For example, if the beneficial
owner is listed directly on the books of Euroclear or Cedel Bank as the holder
of the Note, the IRS Form must be provided to Euroclear or Cedel Bank, as the
case may be. Each other person through which a Note is held must submit, on
behalf of the beneficial owner, the IRS Form (or in certain cases a copy
thereof) under applicable procedures to the person through which it holds the
Note, until the IRS Form is received by the United States person who would
otherwise be required to withhold United States federal income tax from
interest on the Note. For example, in the case of Notes held through Euroclear
or Cedel Bank, the IRS Form (or a copy thereof) must be received by the U.S.
Depositary of such clearing agency. Applicable procedures include additional
certification requirements, described in clause (x) (c) (B) of paragraph (i)
under "United States Taxation of Non-United States Persons--Income and
Withholding Tax", if a beneficial owner of the Note provides an IRS Form W-8 to
a securities clearing organization, bank or other financial institution that
holds the Note on its behalf.
Regulations recently issued by the IRS, which will be effective for
payments made after December 31, 1999, make certain modifications to the
certification procedures applicable to non-United States persons. Prospective
investors should consult their tax advisors regarding the certification
requirements for non-United States persons.
EACH HOLDER OF A NOTE SHOULD BE AWARE THAT IF IT DOES NOT PROPERLY
PROVIDE THE REQUIRED IRS FORM, OR IF THE IRS FORM (OR, IF PERMISSIBLE, A COPY
OF SUCH FORM) IS NOT PROPERLY TRANSMITTED TO AND RECEIVED BY THE UNITED STATES
PERSON OTHERWISE REQUIRED TO WITHHOLD UNITED STATES FEDERAL INCOME TAX,
INTEREST ON THE NOTE MAY BE SUBJECT TO UNITED STATES WITHHOLDING TAX AT A 30%
RATE AND THE HOLDER (INCLUDING THE BENEFICIAL OWNER) WILL NOT BE ENTITLED TO
S-14
<PAGE>
ANY ADDITIONAL AMOUNTS FROM THE COMPANY DESCRIBED UNDER THE HEADING
"DESCRIPTION OF NOTES--PAYMENT OF ADDITIONAL AMOUNTS" WITH RESPECT TO SUCH
TAX. SUCH TAX, HOWEVER, MAY IN CERTAIN CIRCUMSTANCES BE ALLOWED AS A REFUND OR
AS A CREDIT AGAINST SUCH HOLDER'S UNITED STATES FEDERAL INCOME TAX. THE
FOREGOING DOES NOT DEAL WITH ALL ASPECTS OF FEDERAL INCOME TAX WITHHOLDING
THAT MAY BE RELEVANT TO NON-UNITED STATES HOLDERS OF THE NOTES. INVESTORS ARE
ADVISED TO CONSULT THEIR OWN TAX ADVISORS FOR SPECIFIC ADVICE CONCERNING THE
OWNERSHIP AND DISPOSITION OF NOTES.
UNITED STATES TAXATION OF NON-UNITED STATES PERSONS
INCOME AND WITHHOLDING TAX
In the opinion of Brown & Wood LLP, counsel to the Company, under United
States federal tax law as of the date of this Prospectus Supplement, and
subject to the discussion of backup withholding below:
(i) payments of principal and interest on a Note that is beneficially
owned by a non-United States person will not be subject to United States
federal withholding tax; provided, that in the case of interest, (x) (a)
the beneficial owner does not actually or constructively own 10% or more
of the total combined voting power of all classes of stock of the
Company entitled to vote, (b) the beneficial owner is not a controlled
foreign corporation that is related to the Company through stock
ownership, and (c) either (A) the beneficial owner of the Note certifies
to the person otherwise required to withhold United States federal
income tax from such interest, under penalties of perjury, that it is
not a United States person and provides its name and address or (B) a
securities clearing organization, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or
business (a "financial institution") and holds the Note certifies to the
person otherwise required to withhold United States federal income tax
from such interest, under penalties of perjury, that such statement has
been received from the beneficial owner by it or by a financial
institution between it and the beneficial owner and furnishes the payor
with a copy thereof; (y) the beneficial owner is entitled to the
benefits of an income tax treaty under which the interest is exempt from
United States federal withholding tax and the beneficial owner of the
Note or such owner's agent provides an IRS Form 1001 claiming the
exemption; or (z) the beneficial owner conducts a trade or business in
the United States to which the interest is effectively connected and the
beneficial owner of the Note or such owner's agent provides an IRS Form
4224; provided that in each such case, the relevant certification or IRS
Form is delivered pursuant to applicable procedures and is properly
transmitted to the person otherwise required to withhold United States
federal income tax, and none of the persons receiving the relevant
certification or IRS Form has actual knowledge that the certification or
any statement on the IRS Form is false;
(ii) a non-United States person will not be subject to United States
federal income tax on any gain realized on the sale, exchange or
redemption of a Note unless the gain is effectively connected with the
beneficial owner's trade or business in the United States or, in the
case of an individual, the holder is present in the United States for
183 days or more in the taxable year in which the sale, exchange or
redemption occurs and certain other conditions are met; and
(iii) a Note owned by an individual who at the time of death is not a
citizen or resident of the United States will not be subject to United
States federal estate tax as a result of such individual's death if the
individual does not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of the Company
entitled to vote and the income on the Note would not have been
effectively connected with a U.S. trade or business of the individual.
Interest on a Note that is effectively connected with the conduct of a
trade or business in the United States by a holder of a Note who is a non-
United States person, although exempt from United States withholding tax, may
be subject to United States income tax as if such interest was earned by a
United States person.
S-15
<PAGE>
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to payments of
principal and interest made on a Note and the proceeds of the sale of a Note
within the United States to non-corporate holders of the Notes, and "backup
withholding" at a rate of 31% will apply to such payments if the holder fails
to provide an accurate taxpayer identification number in the manner required or
to report all interest and dividends required to be shown on its federal income
tax returns.
Information reporting on IRS Form 1099 and backup withholding will not
apply to payments made by the Company or a paying agent to a non-United States
person on a Note if, in the case of interest, the IRS Form described in clause
(y) or (z) in paragraph (i) under "Income and Withholding Tax" has been
provided under applicable procedures, or, in the case of interest or principal,
the certification described in clause (x)(c) in paragraph (i) under "Income and
Withholding Tax" and a certification that the beneficial owner satisfies
certain other conditions have been supplied under applicable procedures,
provided that the payor does not have actual knowledge that the certifications
are incorrect.
Payments of the proceeds from the sale of a Note made to or through a
foreign office of a broker will not be subject to information reporting or
backup withholding, except that if the broker is a United States person, a
controlled foreign corporation for United States tax purposes or a foreign
person 50% or more of whose gross income is effectively connected with a United
States trade or business for a specified three-year period, information
reporting may apply to such payments. Payments of the proceeds from the sale of
a Note to or through the United States office of a broker are subject to
information reporting and backup withholding unless the holder or beneficial
owner certifies that it is a non-United States person and that it satisfies
certain other conditions or otherwise establishes an exemption from information
reporting and backup withholding.
Regulations recently issued by the IRS, which will be effective for
payments made after December 31, 1999, make certain modifications to the
certification procedures applicable to non-United States persons. Prospective
investors should consult their tax advisors regarding the certification
requirements for non-United States persons.
Backup withholding is not a separate tax, but is allowed as a refund or
credit against the holder's United States federal income tax, provided the
necessary information is furnished to the Internal Revenue Service.
Interest on a Note that is beneficially owned by a non-United States
person will be reported annually on IRS Form 1042S, which must be filed with
the Internal Revenue Service and furnished to such beneficial owner.
S-16
<PAGE>
UNDERWRITING
The underwriters named below (the "underwriters") have each severally
agreed, subject to the terms and conditions of the Underwriting Agreement dated
August 5, 1998 and two Terms Agreements each dated as of November 17, 1998, to
purchase from the Company the principal amount of notes set forth opposite
their respective names. The underwriters for the Notes due 2004 are committed
to purchase all of the Notes due 2004, if any of such notes are purchased, and
the underwriters for the Notes due 2018 are committed to purchase all of the
Notes due 2018, if any of such notes are purchased.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
UNDERWRITERS NOTES DUE 2004
------------ --------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated ....................................... $ 400,000,000
Banque Bruxelles Lambert S.A. ............................... 10,000,000
Banque Nationale de Paris London Branch...................... 10,000,000
Bayerische Hypo- und Vereinsbank AG.......................... 10,000,000
Credit Lyonnais Securities (USA) Inc......................... 10,000,000
First Chicago Capital Markets, Inc........................... 10,000,000
Midland Bank plc............................................. 10,000,000
J.P. Morgan Securities Inc. ................................. 10,000,000
Paribas...................................................... 10,000,000
ScotiaMcLeod Inc............................................. 10,000,000
Tokyo-Mitsubishi International plc........................... 10,000,000
--------------
Total................................................... $ 500,000,000
==============
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
UNDERWRITERS NOTES DUE 2018
------------ --------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated ....................................... $ 800,000,000
ABN AMRO Bank N.V............................................ 50,000,000
Chase Securities Inc. ....................................... 50,000,000
NationsBanc Montgomery Securities LLC........................ 50,000,000
Salomon Smith Barney Inc. ................................... 50,000,000
--------------
Total................................................... $1,000,000,000
==============
</TABLE>
The underwriters have advised the Company that they propose initially to
offer all or part of the Notes due 2004 and the Notes due 2018 directly to the
public at the respective offering prices set forth on the cover page of this
prospectus supplement and to certain dealers at such prices less a concession
not in excess of .25% of the principal amount of the Notes due 2004 and .5% of
the principal amount of the Notes due 2018. After the initial public offering,
the public offering price and concession may be changed for either or both
series of notes.
Certain of the underwriters and their affiliates engage in transactions
with, and perform services for, the Company in the ordinary course of business
and have engaged, and may in the future engage, in commercial banking and
investment banking transactions with the Company.
The underwriting of the notes will conform to the requirements set forth
in the applicable sections of Rule 2720 of the Conduct Rules of the National
Association of Securities Dealers, Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S") and Merrill
Lynch International are permitted to engage in certain transactions that
stabilize the price of each series of the notes. Such transactions consist of
bids or purchases for the purpose of pegging, fixing or maintaining the market
price of each series of the notes.
S-17
<PAGE>
If the underwriters create a short position in the notes of either series
in connection with the offering, i.e., if they sell more notes of such series
than are set forth on the cover page of this prospectus supplement, the
underwriters may reduce that short position by purchasing the notes of such
series in the open market.
In general, purchases of a security for the purpose of stabilization or
to reduce a short position could cause the market price of the security to be
higher than it might be in the absence of such purchases. Neither the Company
nor the underwriters makes any representation or prediction as to the
direction or magnitude of any effect that the transactions described above may
have on the market price of the notes of either series. In addition, neither
the Company nor the underwriters makes any representation that the
underwriters will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
MLPF&S may use this prospectus supplement and the accompanying prospectus
for offers and sales related to market-making transactions in the notes.
MLPF&S may act as principal or agent in these transactions, and the sales will
be made at prices related to prevailing market prices at the time of sale.
The notes are offered for sale in those jurisdictions in the United
States, Europe and Asia where it is legal to make such offers.
Each of the underwriters has represented and agreed that it has not and
will not offer, sell or deliver any of the notes directly or indirectly, or
distribute this prospectus supplement or the prospectus or any other offering
material relating to the notes, in or from any jurisdiction except under
circumstances that will result in compliance with the applicable laws and
regulations thereof and that will not impose any obligations on the Company
except as set forth in the Underwriting Agreement.
In particular, each underwriter has represented and agreed that:
(i) it has not offered or sold and will not offer or sell any notes to
persons in the United Kingdom prior to the expiry of the period of six
months from the issue date of the notes except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purpose of their businesses
or otherwise in circumstances which have not resulted and will not result
in an offer to the public in the United Kingdom within the meaning of the
Public Offers of Securities Regulations 1995;
(ii) it has only issued or passed on and will only issue or pass on in
the United Kingdom any document received by it in connection with the
issue of the notes to a person who is of a kind described in Article
11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996 (as amended) or is a person to whom such document
may otherwise lawfully be issued or passed on; and
(iii) it has complied and will comply with all applicable provisions of
the Financial Services Act 1986 with respect to anything done by it in
relation to any notes in, from or otherwise involving the United Kingdom.
Although application has been made to list the notes on the Luxembourg
Stock Exchange, the notes are new issues of securities with no established
trading market. No assurance can be given as to the liquidity of, or the
trading markets for, the notes. Purchasers of the notes may be required to pay
stamp taxes and other charges in accordance with the laws and practices of the
country of purchase in addition to the issue price set forth on the cover page
hereof. The Company has been advised by MLPF&S that it intends to make a
market in the notes of each series, but they are not obligated to do so and
may discontinue such market-making at any time without notice.
It is expected that delivery of the notes will be made against payment
therefor on or about November 24, 1998, which is the fifth business day
following the date of this prospectus supplement (such settlement cycle being
herein referred to as "T+5"). Purchasers of notes should note that the ability
to settle secondary market trades of the notes effected on the date of pricing
and the succeeding business days may be affected by the T+5 settlement.
S-18
<PAGE>
VALIDITY OF NOTES
The validity of the notes will be passed upon for the Company by Brown &
Wood LLP, New York, New York, and for the underwriters by Sullivan & Cromwell,
New York, New York.
GENERAL INFORMATION
LISTING
Application has been made to list the Notes on the Luxembourg Stock
Exchange. In connection with the listing application, the Restated Certificate
of Incorporation and the By-Laws of the Company and a legal notice relating to
the issuance of the Notes have been deposited prior to listing with Greffier en
Chef du Tribunal d'Arrondissement de et a Luxembourg, where copies thereof may
be obtained upon request. Copies of the above documents together with this
Prospectus Supplement, the accompanying Prospectus, the 1983 Indenture and the
Company's Annual Report on Form 10-K for the year ended December 26, 1997 (the
"1997 Form 10-K") and Quarterly Reports on Form 10-Q for the periods ended
March 27, 1998, June 26, 1998 and September 25, 1998 (the "1998 Form 10-Qs"),
as well as all future Annual Reports, Quarterly Reports and financial Current
Reports on Form 8-K, so long as any of the Notes are outstanding and listed on
the Luxembourg Stock Exchange, will be made available at the main office of
Bankers Trust Luxembourg S.A. The Underwriting Agreement and Terms Agreement
will be available for inspection at Bankers Trust Luxembourg S.A. Bankers Trust
Luxembourg S.A. will act as intermediary between the Luxembourg Stock Exchange
and the Company and the holders of the Notes so long as the Notes are in global
form.
The consolidated financial statements contained in the Company's 1997
Form 10-K have been audited by Deloitte & Touche LLP.
AUTHORIZATION
The Notes will be issued pursuant to authority granted by the Board of
Directors of the Company on February 24, 1986, October 23, 1995 and July 27,
1998, by the Executive Committee of the Company on September 16, 1991 and by
the Audit and Finance Committee of the Company on July 27, 1998, as each such
authority may be supplemented from time to time.
SIGNIFICANT CHANGE
There has been no significant adverse change in the financial position or
operations of the Company and its subsidiaries on a consolidated basis since
December 26, 1997, except as disclosed herein or in the documents incorporated
by reference.
LITIGATION
Neither the Company nor any subsidiary is involved in any legal or
arbitration proceedings, nor, to the Company's knowledge, are any legal or
arbitration proceedings pending or threatened involving the Company or any
subsidiary, which may have or have had during the 12 months prior to the date
of this Prospectus Supplement a material effect on the financial position of
the Company and its subsidiaries on a consolidated basis.
There are numerous civil actions, arbitration proceedings and claims
pending against the Company, some of which involve claims for substantial
amounts as described under the caption "Legal Proceedings" in the Company's
1997 Form 10-K and in the Company's 1998 Form 10-Qs which are incorporated by
reference herein. The Company believes it has strong defenses to and will
vigorously contest these civil actions, arbitration proceedings and claims.
Although the ultimate outcome of such civil actions, arbitration proceedings
and claims described therein and other civil actions, arbitration proceedings
and claims pending against the Company or its subsidiaries as of November 9,
1998 cannot be ascertained at this time, and the results of legal proceedings
cannot be predicted with certainty, it is the opinion of the management of the
Company that the resolution of these actions will not have a material adverse
effect on the financial position of the Company and its subsidiaries on a
consolidated basis.
S-19
<PAGE>
GOVERNING LAW
The Notes, the 1983 Indenture, the Terms Agreement and the Underwriting
Agreement are governed by, and shall be construed in accordance with, the laws
of the State of New York, United States of America, applicable to agreements
made and to be performed wholly within such jurisdiction.
IDENTIFICATION NUMBERS
The Notes due 2004 have been accepted for clearance through Euroclear and
Cedel Bank (Common Code: 9266003; ISIN: US590188JM17; CUSIP: 590188JM1). The
Notes due 2018 have been accepted for clearance through Euroclear and Cedel
Bank (Common Code: 9265988; ISIN: US590188JN99; CUSIP: 590188JN9).
S-20
<PAGE>
PRINCIPAL OFFICE OF THE COMPANY
World Financial Tower
North Tower
250 Vesey Street
New York, New York 10281
TRUSTEE AND REGISTRAR
The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
LUXEMBOURG PAYING AGENT/TRANSFER AGENT
Chase Manhattan Bank Luxembourg S.A.
5 Rue Plaetis
L-2338
Luxembourg
LISTING AGENT
Bankers Trust Luxembourg S.A.
14 Boulevard F.D. Roosevelt
L-2450
Luxembourg
LEGAL ADVISERS TO THE COMPANY LEGAL ADVISERS TO THE UNDERWRITERS
As to United States Law: As to United States Law:
Brown & Wood LLP Sullivan & Cromwell
One World Trade Center 125 Broad Street
New York, New York 10048-0557 New York, New York 10004
AUDITORS TO THE COMPANY
Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281
<PAGE>
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[LOGO]
$1,500,000,000
MERRILL LYNCH & CO., INC.
$500,000,000 6% NOTES DUE NOVEMBER 15, 2004
$1,000,000,000 6 7/8% NOTES DUE NOVEMBER 15, 2018
-----------------------------
PROSPECTUS SUPPLEMENT
-----------------------------
MERRILL LYNCH & CO.
NOVEMBER 17, 1998
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