PROSPECTUS SUPPLEMENT
(To Prospectus dated July 23, 1997)
$100,000,000
ANHEUSER-BUSCH COMPANIES, INC.
[GRAPHIC OMITTED]
MEDIUM-TERM NOTES
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Due Nine Months or More from Date of Issue
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The Company may offer from time to time up to $100,000,000 aggregate
principal amount of its Medium-Term Notes (the "Notes") or its equivalent in a
specified currency or composite currency. The Notes will mature on any business
day nine months or more from the date of issue, as selected by the purchaser and
agreed to by the Company.
The Notes may be denominated in United States dollars or in such foreign
currencies or composite currencies as may be specified by the Company at the
time of offering. The specific currency or composite currency, interest rate or
manner of calculating the interest rate, issue price and maturity date of any
Note will be set forth in the related pricing supplement to this Prospectus
Supplement. See "Description of Notes".
Unless otherwise specified in the related pricing supplement, interest on
Fixed Rate Notes will be payable on each March 1 and September 1 and at
maturity. Interest on Floating Rate Notes will be payable on the dates specified
thereon and in the related pricing supplement.
Unless otherwise specified in the related pricing supplement, the Notes
will not be redeemable or repayable prior to their stated maturity. If so
specified in the pricing supplement, the Notes will be redeemable at the option
of the Company and/or repayable at the option of the Holder at the times and the
redemption or repayment prices specified in the pricing supplement.
The Notes will be issued as Book-Entry Notes or in definitive form in
denominations of $1,000 and integral multiples thereof, unless otherwise
specified in the related pricing supplement, or, in the case of Notes
denominated in a specified currency or composite currency, in denominations as
specified in the related pricing supplement. For Book-Entry Notes, a global Note
will be registered in the name of the nominee of The Depository Trust Company,
which will act as Depositary, or in the name of the Depositary. Beneficial
interests in Book-Entry Notes will be shown on, and transfers thereof will be
effected only through, records maintained by the Depositary and its
participants. Except as described under "Book-Entry Securities", owners of
beneficial interests in a global Note will not be considered the Holders thereof
and will not be entitled to receive physical delivery of Notes in definitive
form.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT, THE PROSPECTUS OR ANY
SUPPLEMENT HERETO. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
Price to Agents' Proceeds to
Public* Commission+ Company++
------- ----------- ---------
Per Note . . . 100% .125%--.750% 99.875%--99.250%
Total** . . . $100,000,000 $125,000--$750,000 $99,875,000--$99,250,000
* The Notes will be sold at 100% of the principal amount thereof
unless otherwise agreed to by the Company and specified in the
pricing supplement attached hereto.
+ The Company will pay a commission to each Agent of from .125% to
.750% of the principal amount of any Note sold to the purchaser
solicited by such Agent, depending upon the maturity of the Note,
or, with respect to Notes having a term in excess of 30 years, such
other commission as shall be agreed upon by the Company and Agent
at the time of sale.
++ Assuming Notes are issued at 100% of their principal amount and
before deducting expenses payable by the Company estimated at
$100,000.
** Or the equivalent thereof in a specified currency or composite currency.
No termination date for the offering has been established. Offers to
purchase Notes are being solicited, on a reasonable best efforts basis, from
time to time by the Agents on behalf of the Company as set forth under "Plan of
Distribution". Notes may be sold to one or more of the Agents on their own
behalf at negotiated discounts. The Company reserves the right to sell Notes
directly on its own behalf or through other agents or underwriters. The Company
or the Agents may reject any order in whole or in part. The Agents are: Goldman,
Sachs & Co.
Merrill Lynch & Co.
J.P. Morgan & Co.
Morgan Stanley Dean Witter
SBC Warburg Dillon Read Inc.
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The date of this Prospectus Supplement is November 15, 1997.
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IN CONNECTION WITH FIXED PRICE OFFERINGS OF THE NOTES, CERTAIN PERSONS
PARTICIPATING IN ANY SUCH OFFERING MAY ENGAGE IN TRANSACTIONS THAT STABILIZE,
MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES. SPECIFICALLY, THE AGENTS
MAY OVER-ALLOT IN CONNECTION WITH ANY SUCH OFFERING, AND MAY BID FOR, AND
PURCHASE, THE NOTES IN THE OPEN MARKET. SEE "PLAN OF DISTRIBUTION."
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No dealer, salesman or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus Supplement (including the related pricing supplement) and the
accompanying Prospectus in connection with the offer contained in this
Prospectus Supplement and the accompanying Prospectus, and, if given or made,
such other information or representations must not be relied upon as having been
authorized by the Company or the Agents. This Prospectus Supplement and the
accompanying Prospectus do not constitute an offer by the Company or by the
Agents to sell securities in any state to any person to whom it is unlawful for
the Company or the Agents to make such offer in such state. Neither the delivery
of this Prospectus Supplement and the accompanying Prospectus nor any sale made
hereunder shall, under any circumstances, create an implication that there has
been no change in the affairs of the Company since the date hereof.
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DESCRIPTION OF NOTES
General
The Notes offered hereby by Anheuser-Busch Companies, Inc. (the "Company")
are to be issued under an Indenture dated as of August 1, 1995 (the "Indenture")
between the Company and The Chase Manhattan Bank, as trustee (the "Trustee"),
which is more fully described in the accompanying Prospectus under "Description
of Debt Securities." In accordance with the Indenture, the Company has adopted
and delivered to the Trustee an Authorizing Resolution providing for the
issuance of Notes from time to time, having such terms as are specified in
respect of each issuance of Notes (an "Issue") in accordance with the procedures
set forth in such Authorizing Resolution. Under such Authorizing Resolution, an
aggregate of $100,000,000 principal amount of Notes may be offered from time to
time under this Prospectus Supplement.
The provisions set forth below will apply to each Note unless otherwise
indicated in the related pricing supplement which will be attached to the cover
of this Prospectus Supplement. Certain capitalized terms used herein are defined
below under "Definitions of Terms". Other capitalized terms used herein, not
otherwise defined, have the meanings given in the Indenture.
The Notes will be issued in fully registered, definitive form or in the
form of a single Note representing an entire Issue, in which ownership interests
will be held in book-entry form (see "Book-Entry Securities" in the accompanying
Prospectus). Unless otherwise indicated in the related pricing supplement, the
Notes of each Issue will be denominated in United States dollars, and Notes
denominated in United States dollars will be issued in denominations of $1,000
and integral multiples thereof. The Notes may also be issued in other Specified
Currencies (including composite currencies) and in other Authorized
Denominations, as may be specified in the related pricing supplement.
The Notes will mature on any Market Day nine months or more from the date
of issue, as selected by the purchaser and agreed to by the Company. The Notes
will bear interest from the date of issue to maturity or, if applicable, until
redemption or repayment, at the rate specified in or calculated as indicated in
the related pricing supplement. See "Interest on the Notes" below.
Interest rates offered by the Company on the Notes may differ depending on,
among other things, the aggregate principal amount of Notes being purchased in
any single transaction.
Repayment at the Option of the Holder. If so specified in the related
pricing supplement, a Note will be subject to repayment at the option of the
Holder in accordance with the terms of the Note on the Optional Repayment Dates
set forth in the related pricing supplement and in the Note. If no Optional
Repayment Date is
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indicated for a Note, it will not be repayable at the option of the Holder
prior to maturity. On any Optional Repayment Date, it will be repayable in whole
or in part in increments of $1,000 (provided that, if redeemed in part, any
remaining principal amount will be at least $1,000), unless otherwise indicated
in the related pricing supplement, at the option of the Holder at 100% of the
principal amount to be repaid plus accrued interest to the date of repayment, on
notice of not more than 60 nor less than 30 days prior to the Optional Repayment
Date. For Notes denominated in currencies other than United States dollars,
increments for such optional repayment will be specified in the related pricing
supplement.
Sinking Fund; Redemption at the Option of the Company. Unless otherwise
indicated in the related pricing supplement, the Notes will not have a sinking
fund. If so specified in the related pricing supplement, a Note will be subject
to redemption by the Company on and after the Initial Redemption Date set forth
therein and in the Note. Unless otherwise indicated in the related pricing
supplement, the Notes will not be redeemable prior to maturity. On and after the
Initial Redemption Date, if any, Notes will be redeemable in whole or in part in
increments of $1,000 (provided that, if redeemed in part, any remaining
principal amount will be at least $1,000), unless otherwise indicated in the
related pricing supplement, at the option of the Company at a Redemption Price
determined as described in the following paragraph, plus accrued interest to the
date of redemption, on notice of not more than 60 nor less than 30 days prior to
the date of redemption. For Notes denominated in currencies other than United
States dollars, increments for such optional redemption will be specified in the
related pricing supplement.
Optional Redemption Prices. The Redemption Price for each Note subject to
redemption at the option of the Company will initially be a percentage (the
"Initial Redemption Percentage") of the principal amount to be redeemed and may
decline at each anniversary of the Initial Redemption Date for such Note by a
percentage (the "Annual Redemption Percentage Reduction") of the principal
amount to be redeemed until the Redemption Price is 100% of the principal
amount. The Initial Redemption Percentage and any Annual Redemption Percentage
Reduction applicable to a Note will be set forth in the related pricing
supplement and in the Note.
Transfers of Notes. Transfers of Notes, other than Book-Entry Notes, will
be registrable, and such Notes will be exchangeable, at the office of the
Trustee in New York, New York designated for such purpose. For information
concerning transfers of interests in Book-Entry Notes, see "Book-Entry
Securities" in the accompanying Prospectus.
Interest on the Notes
Unless otherwise indicated in the related pricing supplement, the Notes
will be issued as Fixed Rate Notes. Notes may also be issued, as indicated in
the related pricing supplement, as Floating Rate Notes, which may be Commercial
Paper Rate Notes, Prime Rate Notes, LIBOR Notes, Treasury Rate Notes, CD Rate
Notes, CMT Rate Notes or Federal Funds Rate Notes or which may bear interest on
any other variable rate basis specified in the related pricing supplement, or as
Indexed Notes or Amortizing Notes. Each Note will bear interest from its date of
issue or from the most recent Interest Payment Date to which interest on such
Note has been paid or duly provided for until the principal thereof is paid or
made available for payment. Interest will be payable on each Interest Payment
Date and at maturity as specified below under "Payment of Principal and
Interest".
The related pricing supplement for each Issue of Notes will set forth the
fixed interest rate for a Fixed Rate Note, will specify the index pursuant to
which the interest on an Indexed Note will be computed or will specify the
manner of calculating the rate of interest on a Floating Rate Note, which will
include, as applicable, the Interest Rate Basis, the Spread, the Spread
Multiplier, the maximum and/or minimum interest rates, the Regular Record Dates,
the Interest Payment Dates, the Initial Interest Rate, the Index Maturity, the
Interest Reset Dates, the Interest Determination Dates and the Calculation
Dates, as well as any other provisions relating to the calculation of interest
which may differ from the provisions set forth in this Prospectus Supplement.
The rate of interest on each Floating Rate Note will be reset periodically.
Generally, interest rates applicable to Floating Rate Notes are determined by
the Calculation Agent on the Calculation Date, and are based on the applicable
Interest Rate Basis as of the Interest Determination Date. The new interest rate
becomes effective as of the Interest Reset Date (although the actual Calculation
Date may be later than the Interest Reset Date).
Upon the request of the Holder of any Floating Rate Note, the Calculation
Agent will provide the interest rate then in effect, and, if determined, the
interest rate which will become effective on the next Interest Reset Date for
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such Holder's Note. The Calculation Agent's determination of any interest rate
will be final and binding in the absence of manifest error.
Payment of Principal and Interest
Unless otherwise specified in the related pricing supplement, payments of
principal of (and premium, if any) and interest on all Notes will be made in the
applicable Specified Currency, provided, however, that payments of principal of
(and premium, if any) and interest on Notes denominated in other than United
States dollars will nevertheless be made in United States dollars (i) at the
option of the Holders thereof under the procedures described in the two
following paragraphs and (ii) at the option of the Company in the case of
imposition of exchange controls or other circumstances beyond the control of the
Company as described in the next to last paragraph under this heading.
If so specified in the related pricing supplement, and except as provided
in the next paragraph, payments of principal of (and premium, if any) and
interest on the Notes denominated in a Specified Currency other than United
States dollars will be made in United States dollars if the registered Holder
has transmitted a written request for such payment to the Trustee at its
Corporate Trust Office in New York, New York on or prior to the applicable
Regular Record Date or the date 15 calendar days prior to maturity. Such request
may be in writing (mailed or hand delivered) or by cable or telex or by other
form of facsimile transmission acceptable to the Trustee. Any such request by a
Holder will remain in effect with respect to any further payments on such Note
payable to such Holder, unless revoked on or prior to the relevant Regular
Record Date or the date 15 calendar days prior to maturity. Holders of Notes
denominated in Specified Currencies other than United States dollars whose Notes
are registered in the name of a broker or nominee should contact such broker or
nominee to determine whether and how an election to receive payments in United
States dollars may be made.
The United States dollar amount to be received by a Holder of a Note
denominated in other than United States dollars who elects to receive payment in
United States dollars will be based on the Exchange Rate determined by the
Exchange Rate Agent on the second Business Day preceding the payment date for
the aggregate amount of the Specified Currency payable to all Holders of Notes
electing to receive United States dollar payments. If the Exchange Rate is not
determinable on such second Business Day, the payment in question will be made
in the Specified Currency. All currency exchange costs associated with any
payment in United States dollars on any such Note will be borne by the Holder by
deductions from such payment.
Interest will be payable to the person in whose name a Note is registered
at the close of business on the Regular Record Date next preceding each Interest
Payment Date, except that interest payable at maturity will be payable to the
person to whom principal is payable. The first payment of interest on any Note
originally issued between a Regular Record Date and an Interest Payment Date
will be made on the Interest Payment Date following the next succeeding Regular
Record Date to the registered owner on such next succeeding Regular Record Date.
Payments of interest on any Note will include interest accrued to but
excluding the Interest Payment Date. For a Floating Rate Note, accrued interest
from the date of issue or from the last date to which interest has been paid is
calculated by multiplying the face amount by an accrued interest factor. Such
accrued interest factor is computed by adding the interest factor calculated for
each day from the date of issue, or from the last date to which interest has
been paid, to but excluding the date for which accrued interest is being
calculated. The interest factor for each day is computed by dividing the
interest rate for such date by 360, in the case of Commercial Paper Rate Notes,
Prime Rate Notes, LIBOR Notes, CD Rate Notes, CMT Rate Notes and Federal Funds
Rate Notes, or by the actual number of days in the year in the case of Treasury
Rate Notes. Interest on Fixed Rate Notes will be computed on the basis of a
360-day year of twelve 30-day months.
Any payment on any Note due on any day which is not a Business Day in New
York, New York (or in the case of any Note denominated in a Specified Currency
other than United States dollars, which is not a Business Day in the country
issuing the Specified Currency (or, in the case of ECUs, Brussels)), need not be
made on such day, but may be made on the next Business Day with the same force
and effect as if made on the due date, and no interest will accrue for the
period from and after such date (except that, for LIBOR Notes, if such Business
Day is in the next month, interest will be paid on the preceding Business Day).
Payment of the principal of (and premium, if any) and interest on any Note
at maturity to be made in United States dollars will be made in immediately
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available funds upon surrender of such Note at the Corporate Trust Office of the
Trustee in New York, New York. Payments of interest to be made in United States
dollars other than at maturity will be made by check mailed to the address of
the Person entitled thereto as it appears in the Security Register or by wire
transfer to such account as may have been appropriately designated by such
Person. A Holder of $10 million in aggregate principal amount of Notes in
definitive form shall be entitled to receive payment of interest by wire
transfer if appropriate wire transfer instructions from such Holder have been
received in writing by the Trustee no less than 15 calendar days prior to the
applicable Interest Payment Date.
Unless otherwise specified in the related pricing supplement, payments on
any Note to be made in a Specified Currency other than United States dollars
will be made by wire transfer to such account with a bank located in the country
issuing the Specified Currency (or, with respect to Notes denominated in ECUs,
Brussels) or other jurisdiction acceptable to the Company and the Trustee as has
been designated at least five Business Days prior to the Interest Payment Date
or stated maturity by the registered Holder, provided, that, in the case of
payment of principal of (and premium, if any) and interest due at maturity, the
Note is presented to the Trustee in time for the Trustee to make such payments
in such funds in accordance with its normal procedures. Such designation will be
made by filing the appropriate information with the Trustee at its Corporate
Trust Office in New York, New York, and, unless revoked, any such designation
made with respect to any Note by a registered Holder will remain in effect with
respect to any further payments with respect to such Note payable to such
Holder. If a payment with respect to any such Note cannot be made by wire
transfer because the required designation has not been received by the Trustee
on or before the requisite date or for any other reason, a notice will be mailed
to the Holder at its registered address requesting a designation pursuant to
which such wire transfer can be made and, upon the Trustee's receipt of such a
designation, payment will be made within five Business Days. The Company will
pay any administrative costs imposed by banks in connection with making payments
by wire transfer, but any tax, assessment or governmental charge imposed upon
payments will be borne by the Holders of the Notes in respect of which payments
are made.
If the principal of (and premium, if any) or interest on any Note is
payable in other than United States dollars and such Specified Currency is not
available due to the imposition of exchange controls or other circumstances
beyond the control of the Company, the Company, at its expense, will be entitled
to satisfy its obligations to Holders of the Notes by making such payment in
United States dollars on the basis of the most recently available Exchange Rate.
Notes may be issued from time to time as Indexed Notes or Amortizing Notes.
Indexed Notes are Notes for which the principal amount payable at the stated
maturity thereof or upon redemption or repayment, or the amount of interest
payable on an Interest Payment Date, or both, is determined by reference to a
currency exchange rate, composite currency or currencies, commodity price or
other financial or non-financial index as set forth in the related pricing
supplement. Amortizing Notes are Notes as to which all or a portion of the
principal amount is payable prior to the maturity date in accordance with a
schedule, by application of a formula or by reference to an index as set forth
in the related pricing supplement.
Definitions of Terms
Unless otherwise indicated in the related pricing supplement, the following
terms will have the following meanings for purposes of this Prospectus
Supplement:
"Amortizing Note" means a Note all or a portion of the principal amount of
which, as set forth in the related pricing supplement and the Note, is payable
prior to the maturity date in accordance with a schedule, by application of a
formula or by reference to an index.
"Authorized Denomination" means, for any Note denominated in United States
dollars, $1,000 and integral multiples thereof, unless otherwise specified in
the related pricing supplement, and, for Notes denominated in another Specified
Currency, as set forth in the related pricing supplement.
"Book-Entry Notes" means Notes which are represented by a single global
certificate which is deposited with the Depositary as described under
"Book-Entry Securities" in the accompanying Prospectus
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in the city in which the
principal corporate trust office of the Trustee is located are authorized or
obligated by law or executive order to be closed; provided, that, with respect
to Notes the payment of which is to
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be made in a currency other than United States dollars, such day is also
not a day on which banking institutions are authorized or obligated by law or
executive order to be closed in the Principal Financial Center of the country
issuing such currency or composite currency (or, in the case of ECUs, is not a
day that appears as an ECU non-settlement day on the display designated as
"ISDE" on the Reuter Monitor Money Rates Service (or a day so designated by the
ECU Banking Association) or, if ECU non-settlement days do not appear on that
display (or are not so designated), is not a day on which payments in ECU cannot
be settled in the international interbank market); provided, further, that, with
respect to Notes as to which interest is determined on the basis of LIBOR, such
day is also a London Business Day. "London Business Day" means (i) if the
Specified Currency is other than ECU, any day on which dealings in such
Specified Currency are transacted in the London interbank market or (ii) if the
Specified Currency is ECU, any day that does not appear as an ECU non-settlement
day on the display designated as "ISDE" on the Reuter Monitor Money Rates
Service (or a day so designated by the ECU Banking Association) or, if ECU
non-settlement days do not appear on that display (or are not so designated), is
not a day on which payments in ECU cannot be settled in the international
interbank market.
"Calculation Agent" means The Chase Manhattan Bank.
"Calculation Date" means the date on which the Calculation Agent makes the
determination of the interest rate for a Floating Rate Note, which date will be,
for any Interest Determination Date, the tenth day after such Interest
Determination Date or, if such day is not a Market Day, the next Market Day.
"CD Rate" means, for any Interest Reset Date, the applicable Interest
Determination Date for negotiable certificates of deposit having the specified
Index Maturity as published in H.15(519) under the heading "CDs (Secondary
Market)". If such rate is not published prior to 9:00 A.M., New York, New York
time, on the applicable Calculation Date, then the CD Rate for such Interest
Reset Date will be the rate on such Interest Determination Date for negotiable
certificates of deposit having the specified Index Maturity as published in
Composite Quotations under the heading "Certificates of Deposit". If by 3:00
P.M., New York, New York time, on such Calculation Date such rate is not
published in either H.15(519) or Composite Quotations, the CD Rate for such
Interest Reset Date will be calculated by the Calculation Agent and will be the
arithmetic mean of the secondary market offered rates, as of 10:00 A.M., New
York, New York time, on such Interest Determination Date, of three leading New
York nonbank dealers of negotiable United States dollar certificates of deposit
selected by the Calculation Agent for negotiable certificates of deposit of
major United States money market banks with a remaining maturity closest to the
specified Index Maturity in a denomination of $5,000,000; provided, that if
fewer than three dealers so selected by the Calculation Agent are providing such
quotations, the then effective CD Rate will remain in effect for such Interest
Reset Date.
"CD Rate Note" means a Floating Rate Note which bears interest calculated
on the basis of the CD Rate.
"CMT Rate Note" means a Floating Rate Note which bears interest calculated
on the basis of the CMT Rate.
"CMT Rate" means, with respect to any Interest Determination Date relating
to a CMT Rate Note or any Floating Rate Note for which the interest rate is
determined with reference to the CMT Rate (a "CMT Rate Interest Determination
Date"), the rate displayed on the Designated CMT Telerate Page 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 for (i) if the Designated CMT Telerate Page is 7055, the rate on
such CMT Rate Interest Determination Date and (ii) if the Designated CMT
Telerate Page is 7052, the week, or the month, as applicable, ended immediately
preceding the week in which the related CMT Rate Interest Determination Date
occurs. If such rate is no longer displayed on the relevant page, or if not
displayed by 3:00 P.M., New York City time, on the related Calculation Date,
then the CMT Rate for such CMT Rate Interest Determination Date will be such
Treasury Constant Maturity rate for the Designated CMT Maturity Index as
published in H.15(519). If such rate is no longer published, or is not published
by 3:00 P.M., New York City time, on the related Calculation Date, then the CMT
Rate for such CMT Rate Interest Determination Date will be such Treasury
Constant Maturity rate for the Designated CMT Maturity Index (or other United
States Treasury rate for the Designated CMT Maturity Index) for the CMT Rate
Interest Determination Date with respect to such Interest Reset 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 to be comparable to the rate formerly displayed on the Designated CMT
Telerate Page and published in the relevant H.15(519). If such information is
not provided by 3:00 P.M., New York City time, on the related Calculation Date,
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then the CMT Rate for the CMT Rate Interest Determination Date will be
calculated by the Calculation Agent and will be a yield to maturity, based on
the arithmetic mean of the secondary market closing offer side prices as of
approximately 3:30 P.M. (New York City time) on the CMT Rate 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 selected by the Calculation Agent (from five
such Reference Dealers selected by the Calculation Agent and eliminating the
highest quotation (or, in the event of equality, one of the highest) and the
lowest quotation (or, in the event of equality, one of the lowest)), for the
most recently issued direct noncallable fixed rate obligations of the United
States ("Treasury Note") with an original maturity of approximately the
Designated CMT Maturity Index and a remaining term to maturity of not less than
such Designated CMT Maturity Index minus one year. If the Calculation Agent
cannot obtain three such Treasury Note quotations, the CMT Rate for such CMT
Rate Interest Determination Date will be calculated by the Calculation Agent and
will be a yield to maturity based on the arithmetic mean of the secondary market
offer side prices as of approximately 3:30 P.M. (New York City time) on the CMT
Rate Interest Determination Date of three Reference Dealers in The City of New
York (from five such Reference Dealers selected by the Calculation Agent and
eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation, (or, in the event of equality, one of the
lowest)), for Treasury Notes with an original maturity of the number of years
that is the next highest to the Designated CMT Maturity Index and a remaining
term to maturity closest to the Designated CMT Maturity Index and in an amount
of at least $100 million. If three or four (and not five) of such Reference
Dealers are quoting as described above, then the CMT Rate will be based on the
arithmetic mean of the offer prices obtained and neither the highest nor lowest
of such quotes will be eliminated; provided, however, that if fewer than three
Reference Dealers selected by the Calculation Agent are quoting as described
herein, the CMT Rate will be the CMT Rate in effect on such CMT Rate Interest
Determination Date. If two Treasury Notes with an original maturity as described
in the third preceding sentence have remaining terms to maturity equally close
to the Designated CMT Maturity Index, the quotes for the CMT Rate Note with the
shorter remaining term to maturity will be used.
"Commercial Paper Rate" means, for an Interest Reset Date, the Money Market
Yield (calculated as described below) of the per annum rate (quoted on a bank
discount basis) for the applicable Interest Determination Date for commercial
paper having the specified Index Maturity as published in H.15(519) under the
heading "Commercial Paper". If such rate is not published prior to 9:00 A.M.,
New York, New York time, on the applicable Calculation Date, then the Commercial
Paper Rate for such Interest Reset Date will be the Money Market Yield of such
rate on such Interest Determination Date for commercial paper having the
specified Index Maturity as published in Composite Quotations under the heading
"Commercial Paper". If by 3:00 P.M., New York, New York time, on such
Calculation Date such rate is not yet published in either H.15(519) or Composite
Quotations, the Commercial Paper Rate for such Interest Reset Date will be
calculated by the Calculation Agent and will be the Money Market Yield of the
arithmetic mean of the offered per annum rates (quoted on a bank discount
basis), as of 11:00 A.M., New York, New York time, on such Interest
Determination Date, of three leading New York dealers of commercial paper
selected by the Calculation Agent for commercial paper of the specified Index
Maturity placed for an industrial issuer whose bond rating is "AA", or the
equivalent, from a nationally recognized rating agency; provided, that if fewer
than three dealers so selected by the Calculation Agent are providing such
quotations, the then effective Commercial Paper Rate will remain in effect for
such Interest Determination Date. For this purpose, "Money Market Yield" means a
yield (expressed as a percentage) calculated in accordance with the following
formula:
360 x D
Money Market Yield = 100 x --------------
360 - (DxM)
where "D" is the per annum rate for commercial paper quoted on a bank discount
basis and expressed as a decimal; and "M" is the actual number of days in the
period from the Interest Reset Date to but excluding the day that numerically
corresponds to such Interest Reset Date (or, if there is no such numerically
corresponding day, the last day) in the calendar month that is the number of
months corresponding to the specified Index Maturity after the month in which
the Interest Reset Date falls.
"Commercial Paper Rate Note" means a Floating Rate Note which bears
interest calculated on the basis of the Commercial Paper Rate.
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"Composite Quotations" means the applicable quotations published by the
Federal Reserve Bank of New York in its daily statistical release, "Composite
3:30 P.M. Quotations for U.S. Government Securities," or any successor
publication published by the Federal Reserve Bank of New York.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page designated in the applicable pricing supplement (or any
other page as may replace such page on that service for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519)) for the
purpose of displaying Treasury Constant Maturities as reported in H.15(519). If
no such page is specified in the applicable pricing supplement, the Designated
CMT Telerate Page shall be 7052, for the most recent week.
"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. If no such maturity is specified in the applicable
pricing supplement, the Designated CMT Maturity Index shall be 2 years.
"ECU" means European Currency Unit.
"Exchange Rate" means, in respect of any obligation denominated in a
Specified Currency (other than United States dollars) which is to be paid in
respect of any Note in United States dollars, an amount of United States dollars
determined by the Exchange Rate Agent on the basis of the highest bid quotation
in the City of New York received by the Exchange Rate Agent as of 11:00 a.m.,
New York, New York time, on the Business Day as of which the Exchange Rate is to
be determined, from three recognized foreign exchange dealers (one of which may
be the Exchange Rate Agent) for the purchase by the quoting dealer of the
Specified Currency for United States dollars for settlement on such payment date
in the aggregate amount of the Specified Currency in respect of which the
Exchange Rate is being determined, and at which rate the applicable dealer
commits to execute an exchange contract.
"Exchange Rate Agent" means The Chase Manhattan Bank.
"Federal Funds Rate" means, for any Interest Reset Date, the rate on the
applicable Interest Determination Date for Federal Funds as published in
H.15(519) under the heading "Federal Funds (Effective)". If such rate is not
published prior to 9:00 A.M., New York, New York time, on the applicable
Calculation Date, then the Federal Funds Rate for such Interest Reset Date will
be the rate on such Interest Determination Date as published in Composite
Quotations under the heading "Federal Funds/Effective Rate". If by 3:00 P.M.,
New York, New York time, on such Calculation Date such rate is not published in
either H.15(519) or Composite Quotations, the Federal Funds Rate with respect to
such Interest Reset Date will be calculated by the Calculation Agent and will be
the arithmetic mean of the rates, as of 9:00 A.M., New York, New York time, on
such Interest Determination Date, for the last transaction in overnight Federal
Funds arranged by three leading New York brokers of Federal Funds transactions
selected by the Calculation Agent; provided, that if fewer than three brokers so
selected by the Calculation Agent are providing such quotations, the then
effective Federal Funds Rate will remain in effect for such Interest Reset Date.
"Federal Funds Rate Note" means a Floating Rate Note which bears interest
calculated on the basis of the Federal Funds Rate.
"Fixed Rate Note" means a Note which, as set forth in the related pricing
supplement and the Note, bears interest at a fixed rate of interest per annum.
"Floating Rate Note" means a Note which, as set forth in the related
pricing supplement and the Note, bears interest at a variable rate.
"H.15(519)" means Statistical Release H.15(519) as published by the Board
of Governors of the Federal Reserve System or any successor publication of such
Board of Governors.
"Index Maturity" means the period to maturity of the instrument or
obligation on which the related interest rate formula is based, as specified in
the related pricing supplement.
"Indexed Note" means a Note which, as set forth in the related pricing
supplement and the Note, bears interest at a rate determined by reference to a
currency exchange rate, composite currency or currencies, commodity price or
other financial or non-financial index.
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"Initial Redemption Date" means the date, if any, on and after which a Note
will be subject to redemption at the option of the Company, as specified in the
related pricing supplement.
"Interest Determination Date" means the date as of which the Calculation
Agent looks to the applicable Interest Rate Basis for purposes of resetting the
interest rate on Floating Rate Notes, which, with respect to any Interest Reset
Date: (a) for Commercial Paper Rate Notes, Prime Rate Notes, LIBOR Notes, CD
Rate Notes, CMT Rate Notes and Federal Funds Rate Notes, will be the second
Market Day preceding the Interest Reset Date; and (b) for Treasury Rate Notes,
will be the day of the week in which such Interest Reset Date falls on which
Treasury bills would normally be auctioned. Treasury bills are usually sold at
auction on the Monday of each week, unless that day is a legal holiday, in which
case the auction is usually held on the following Tuesday, except that such
auction may be held on the preceding Friday. If, as the result of a legal
holiday, an auction is so held on the preceding Friday, such Friday will be the
Interest Determination Date for the Interest Reset Date occurring in the next
week.
"Interest Payment Date" means the date on which interest is payable in
respect of a Note. Unless otherwise indicated in the related pricing supplement,
the Interest Payment Dates will be: for Fixed Rate Notes, March 1 and September
1; for Floating Rate Notes on which the interest rate is reset weekly or
monthly, the third Wednesday of each month or on the third Wednesday of March,
June, September and December of each year, as indicated in the related pricing
supplement; for Floating Rate Notes on which the interest rate is reset
quarterly, the third Wednesday of March, June, September and December; for
Floating Rate Notes on which the interest is reset semi-annually, the third
Wednesday of the two months specified in the related pricing supplement; for
Floating Rate Notes on which the interest rate is reset annually, the third
Wednesday of the month specified in the related pricing supplement; and, in each
case, at maturity. If an Interest Payment Date would otherwise fall on a day
that is not a Market Day, it will be the next succeeding Market Day (or, in case
of a LIBOR Note, if such date falls in the next calendar month, the preceding
Market Day).
"Interest Rate Basis" means the basis on which the interest on a Floating
Rate Note is to be calculated. The Interest Rate Basis may be the Commercial
Paper Rate, the Prime Rate, LIBOR, the Treasury Rate, the CD Rate, the CMT Rate,
the Federal Funds Rate or other rate specified in the related pricing
supplement, as adjusted by the Spread or the Spread Multiplier, or otherwise as
indicated in the pricing supplement.
"Interest Reset Date" means the date on which a change in the interest rate
on a Floating Rate Note will become effective, which changes may occur weekly,
monthly, quarterly, semiannually or annually. The Interest Reset Dates will be:
for Notes on which the interest rate is reset weekly (except Treasury Rate
Notes), Wednesday of each week; for Treasury Rate Notes on which the interest
rate is reset weekly, Tuesday of each week (except as otherwise indicated
below); for Notes on which the interest rate is reset monthly, the third
Wednesday of each month; for Notes on which the interest rate is reset
quarterly, the third Wednesday of March, June, September and December; for Notes
on which the interest rate is reset semi-annually, the third Wednesday of the
two months specified in the related pricing supplement; and for Notes on which
the interest rate is reset annually, the third Wednesday of the month specified
in the related pricing supplement. If any Interest Reset Date would otherwise be
a day that is not a Market Day with respect to a Note, it will be postponed to
the next such Market Day, except that in the case of a LIBOR Note, if the next
Market Day is in the next calendar month, the Interest Reset Date will be the
immediately preceding such Market Day. For Treasury Rate Notes, if the
applicable auction date referred to in the definition of "Treasury Rate" will
occur on the date otherwise scheduled to be the Interest Reset Date for such
Note, then the Interest Reset Date will be the next following Business Day.
"LIBOR" means, for any Interest Reset Date, an interest rate determined by
the Calculation Agent as follows:
(a) On the applicable Interest Determination Date, LIBOR will be
determined on the basis of the offered rates for deposits in the Index Currency
(as defined below) having the specified Index Maturity, commencing on the second
Market Day immediately following such Interest Determination Date, which appear
on the Designated LIBOR Page specified in the applicable pricing supplement as
of 11:00 A.M., London time, on such Interest Determination Date. "Index
Currency" means the currency (including composite currencies) specified in the
applicable pricing supplement as the currency for which LIBOR shall be
calculated. If no such currency is specified in the applicable pricing
supplement, the Index Currency shall be United States dollars. "Designated LIBOR
Page" means either (a) if "LIBOR Reuters" is designated in the applicable
pricing supplement, the display on the Reuters Monitor Money Rates Service on
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the page designated in the applicable pricing supplement (or such other page as
may replace such designated page on that service for the purpose of displaying
London interbank offered rates of major banks) for the related Index Currency
for the purpose of displaying the London interbank rates of major banks for the
applicable Index Currency, or (b) if "LIBOR Telerate" is designated in the
applicable pricing supplement, the display on the Dow Jones Telerate Service on
the page designated in the applicable pricing supplement (or such other page as
may replace such designated page on that service or such other service or
services as may be nominated by the British Bankers' Association for the purpose
of displaying London interbank offered rates for the related Index Currency) for
the purpose of displaying the London interbank rates of major banks for the
applicable Index Currency. If neither LIBOR Reuters nor LIBOR Telerate is
specified in the applicable pricing supplement, LIBOR for the applicable Index
Currency will be determined as if LIBOR Telerate (and, if the United States
dollar is the Index Currency, page 3750) has been specified. If "LIBOR Reuters"
is specified in the applicable pricing supplement and at least two such offered
rates appear on the Designated LIBOR Page, LIBOR for such Interest Reset Date
will be the arithmetic mean of such offered rates as determined by the
Calculation Agent (unless the Designated LIBOR Page by its terms provides for
only a single rate, in which case such single rate shall be used). If fewer than
two offered rates appear, or no rate appears, as applicable, LIBOR will be
determined as described in (b) below.
(b) With respect to a LIBOR Interest Determination Date on which fewer
than two offered rates appear, or no rate appears, as the case may be, for the
applicable Index Maturity on the Designated LIBOR Page as described in (a)
above, LIBOR will be determined on the basis of the rates at approximately 11:00
A.M., London time, on such Interest Determination Date at which deposits in the
Index Currency having the specified Index Maturity are offered to prime banks in
the London interbank market by four major banks in the London interbank market
selected by the Calculation Agent commencing on the second Market Day
immediately following such LIBOR Interest Determination Date and in a principal
amount equal to an amount that in the Calculation Agent's judgment is
representative for a single transaction in such Index Currency in such market at
such time (a "Representative Amount"). The Calculation Agent will request the
principal London office of each of such banks to provide a quotation of its
rate. If at least two such quotations are provided, LIBOR for such Interest
Reset Date will be the arithmetic mean of such quotations. If fewer than two
quotations are provided, LIBOR for such Interest Reset Date will be the
arithmetic mean of the rates quoted at approximately 11:00 A.M., (or such other
time as may be specified in the applicable pricing supplement), in the
applicable Principal Financial Center (as defined below), on such Interest
Determination Date by three major banks in such Principal Financial Center,
selected by the Calculation Agent, for loans in the Index Currency to leading
European banks having the specified Index Maturity commencing on the second
Market Day immediately following such LIBOR Interest Determination Date and in a
Representative Amount; provided, that if fewer than three banks so selected by
the Calculation Agent are providing such quotations, the then effective LIBOR
rate will remain in effect for such Interest Reset Date. "Principal Financial
Center" will generally be the capital city of the country of the specified Index
Currency, except that with respect to United States dollars, Deutschemarks,
Italian lira, Swiss francs, Dutch guilders and ECUs, the Principal Financial
Center shall be The City of New York, Frankfurt, Milan, Zurich, Amsterdam and
Luxembourg, respectively.
"LIBOR Note" means a Floating Rate Note which bears interest calculated on
the basis of LIBOR.
"Market Day" means any Business Day in New York, New York or, for a LIBOR
Note, any such Business Day on which dealings in deposits in the Index Currency
are transacted in the London interbank market.
"Optional Repayment Date" means a date, if any, on which a Note will be
subject to repayment at the option of the Holder, as indicated in the related
pricing supplement.
"Principal Financial Center" means the capital city of the country issuing
the Specified Currency, except that with respect to United States dollars,
Australian dollars, Deutschemarks, Dutch guilders, Italian lire, Swiss francs
and ECUs, the Principal Financial Center shall be the City of New York, Sydney,
Frankfurt, Amsterdam, Milan, Zurich and Luxembourg, respectively.
"Prime Rate" means, with respect to any Interest Reset Date, the rate set
forth for the relevant Interest Determination Date in H.15(519) under the
heading "Bank Prime Loan". If such rate is not published prior to 9:00 A.M. New
York, New York time, on the applicable Calculation Date, then the Prime Rate for
such Interest Reset Date will be the arithmetic mean of the rates of interest
publicly announced by each bank that appears on the display designated as
Reuters Screen USPRIME1 (or such other page as may replace the USPRIME1 page on
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that service for the purpose of displaying prime rates or base lending rates of
major United States banks) ("Reuters Screen USPRIME1 Page") as such bank's prime
rate or base lending rate as in effect for such Interest Determination Date as
quoted on the Reuters Screen USPRIME1 Page on such date. If fewer than four such
rates appear on the Reuters Screen USPRIME1 Page on such date, the Prime Rate
for such Interest Reset Date will be the arithmetic mean of the prime rates or
base lending rates (quoted on the basis of the actual number of days in a
360-day year) as of the close of business on such Interest Determination Date by
three major New York banks selected by the Calculation Agent; provided, that if
fewer than three banks so selected by the Calculation Agent are providing such
quotations, the then effective Prime Rate will remain in effect for such
Interest Reset Date.
"Prime Rate Note" means a Floating Rate Note which bears interest on the
basis of the Prime Rate.
"Regular Record Date" means, unless otherwise indicated in the related
pricing supplement: for Fixed Rate Notes, February 15 and August 15; and, for
Floating Rate Notes, the date 15 calendar days prior to each Interest Payment
Date.
"Specified Currency" means the currency or composite currency in which a
Note is denominated, and in which principal (and premium, if any) and/or
interest on a Note will be payable.
"Spread" means the number of basis points applicable to the Interest Rate
Basis for purposes of calculating interest on a Floating Rate Note, as specified
in the related pricing supplement.
"Spread Multiplier" means the percentage applicable to the Interest Rate
Basis for purposes of calculating the interest on a Floating Rate Note, as
specified in the related pricing supplement.
"Treasury Rate" means, for any Interest Reset Date, the rate for the
auction on the applicable Interest Determination Date of direct obligations of
the United States ("Treasury Bills") having the specified Index Maturity as
published in H.15(519) under the heading "U.S. Government Securities/Treasury
Bills/Auction Average (Investment)" or, if not so published by 9:00 A.M., New
York, New York time, on the applicable Calculation Date, the auction average
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) for such auction as otherwise
announced by the United States Department of the Treasury. If the results of
such auction of Treasury Bills having the specified Index Maturity are not
published or reported as provided above by 3:00 P.M., New York, New York time,
on such Calculation Date, or if no such auction is held during such week, then
the Treasury Rate will be the rate set forth in H.15(519) for the applicable
Interest Determination Date for the specified Index Maturity under the heading
"U.S. Government Securities/Treasury Bills/Secondary Market". If such rate is
not so published by 3:00 P.M., New York, New York time, on the applicable
Calculation Date, the Treasury Rate with respect to such Interest Reset Date
will be calculated by the Calculation Agent and will be a yield to maturity
(expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) of the arithmetic mean of the
secondary market bid rates as of approximately 3:30 P.M., New York, New York
time, on such Interest Determination Date, of three primary United States
government securities dealers in the City of New York selected by the
Calculation Agent for the issue of Treasury Bills with a remaining maturity
closest to the specified Index Maturity; provided, that if fewer than three
dealers so selected by the Calculation Agent are providing such quotations, the
then effective Treasury Rate will remain in effect for such Interest Reset Date.
"Treasury Rate Note" means a Floating Rate Note which bears interest
calculated on the basis of the Treasury Rate.
FOREIGN CURRENCY RISKS
General
This Prospectus Supplement does not describe all the risks of an investment
in the Notes denominated in other than United States dollars. Prospective
investors should consult their own financial and legal advisors as to the risks
entailed by an investment in the Notes denominated in other than United States
dollars. Notes denominated in other than United States dollars are not an
appropriate investment for investors who are unsophisticated with respect to
foreign currency transactions.
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Exchange Rates and Exchange Controls. An investment in Notes that are
denominated in other than United States dollars entails significant risks that
are not associated with a similar investment in a security denominated in United
States dollars. Such risks include the possibility of significant changes in
rates of exchange between the United States dollar and the various foreign
currencies or composite currencies and the possibility of the imposition or
modification of foreign exchange controls by either the United States or foreign
governments. Such risks depend on economic and political events over which the
Company has no control. In recent years, rates of exchange between the United
States dollar and certain foreign currencies have been highly volatile and such
volatility may be expected in the future. Fluctuations in any particular
exchange rate that have occurred in the past are not necessarily indicative of
fluctuations that may occur during the term of any Note. Depreciation of the
Specified Currency against the United States dollar would result in a decrease
in the effective yield of such Note below its coupon rate, and in certain
circumstances could result in a loss to the investor on a United States dollar
basis.
Governments have imposed from time to time and may in the future impose
exchange controls which could affect exchange rates as well as the availability
of a specified foreign currency at a Note's maturity. Even if there are no
actual exchange controls, it is possible that the Specified Currency for any
particular Note would not be available at such Note's maturity. In that event,
the Company will repay in United States dollars on the basis of the most
recently available Exchange Rate. See "Description of Notes " Payment of
Principal and Interest".
Currently, there are limited facilities in the United States for conversion
of United States dollars into foreign currencies, and vice versa. In addition,
banks do not offer non-United States dollar denominated checking or savings
account facilities in the United States. Accordingly, payments on Notes made in
a Specified Currency other than United States dollars will be made from an
account with a bank located in the country issuing the Specified Currency (or,
with respect to Notes denominated in ECUs, Brussels). See "Description of Notes
" Payment of Principal and Interest".
The information set forth in the Prospectus Supplement is directed to
prospective purchasers who are United States residents, and the Company does not
undertake any responsibility to advise prospective purchasers who are residents
of countries other than the United States with respect to any matters that may
affect the purchase, holding or receipt of payments of principal of and interest
on the Notes. Such persons should consult their own financial and legal advisors
with regard to such matters.
Governing Law and Judgments. The Notes will be governed by and construed in
accordance with the laws of the State of New York. If an action based on the
Notes were commenced in a court in the United States, it is likely that such
court would grant judgment relating to the Notes only in United States dollars.
It is not clear, however, whether, in granting such judgment, the rate of
conversion into United States dollars would be determined with reference to the
date of default, the date judgment is rendered or some other date.
Exchange Rate and Controls for Specified Currencies
With respect to any Note denominated in other than United States dollars, a
Currency Supplement with respect to the applicable Specified Currency (which
supplement will include information with respect to applicable current foreign
exchange controls, if any) is attached to this Prospectus Supplement. The
information therein concerning exchange rates is furnished as a matter of
information only and should not be regarded as indicative of the range of or
trends in fluctuations in currency exchange rates that may occur in the future.
UNITED STATES TAXATION
The following summary of the principal United States federal income tax
consequences of the purchase, ownership and disposition of a Note is based on
the advice of Bryan Cave LLP, counsel for the Company. This summary is based on
the Internal Revenue Code of 1986, as amended (the "Code"), final, temporary and
proposed Treasury Regulations, Revenue Rulings and judicial decisions in
existence on the date of this Prospectus Supplement. It deals only with Notes
held as capital assets and does not deal with special classes of holders, such
as dealers in securities or currencies, life insurance companies, persons
holding Notes as a hedge against currency risk, persons who enter into certain
hedging transactions in connection with Notes, persons holding Notes as part of
a straddle (as defined in Section 1092 of the Code) or as part of a conversion
transaction (as defined in Section 1258 of the Code), United States holders
whose functional currency (as defined in Section 985 of the Code) is other than
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the United States dollar or holders other than United States persons. The tax
consequences of holding a particular Note will depend, in part, on the
particular terms of such Note as set forth in the related pricing supplement and
whether the Notes are issued with original issue discount. Potential purchasers
of Notes should also understand that future legislative, administrative and
judicial changes could modify the tax consequences described in this summary. As
used in this section, "holder" refers to the person who is considered the owner
of a Note for federal income tax purposes, whether or not such person is the
registered holder of a Note.
United States Persons
"United States person" means an individual who is a citizen or resident of
the United States for United States federal income tax purposes, an estate or
trust subject to United States federal income taxation without regard to the
source of its income, or a corporation, partnership or other entity created or
organized in or under the laws of the United States, any State or the District
of Columbia.
Payments of Interest on Notes
Except as set forth below, interest on a Note (whether or not denominated
in United States dollars) 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 accounting for tax purposes. If interest on a Note is payable in a
currency other than the United States dollar ("Foreign Currency"), the amount of
income will be the United States dollar value of the Foreign Currency received,
based on the exchange rate in effect on the date of receipt, or in the case of
an accrual basis holder, the United States dollar value of the Foreign Currency
accrued, based on the average exchange rate in effect during the interest
accrual period (or with respect to an interest accrual period that spans two
taxable years, at the average rate for the portion of the period within the
taxable year). Upon receipt by an accrual basis holder of an interest payment
paid in Foreign Currency, the holder will recognize foreign currency gain or
loss measured by the difference between the interest received translated into
United States dollars at the exchange rate in effect on the date of receipt and
the interest previously accrued, and such gain or loss will be treated as
ordinary income or loss. An accrual basis holder may elect to accrue interest
income (including original issue discount) payable in a Foreign Currency at the
exchange rate in effect on the last day of the interest accrual period (and in
the case of the first portion of an interest accrual period that spans two
taxable years, at the exchange rate in effect on the last day of the first
taxable year for the portion of the interest accrual period within such taxable
year). If such election is made and the last day of the interest accrual period
(or in the case of the first portion of an interest accrual period that spans
two taxable years, the last day of the first taxable year) is within five
business days of the date of receipt, the accrual basis holder may translate
interest income at the exchange rate in effect on the date of receipt. Such
election must be consistently applied to all debt instruments owned by such
holder from year to year and cannot be changed without the consent of the
Internal Revenue Service.
Original Issue Discount Notes
The following is a general discussion of the United States federal income
tax consequences to holders of Notes, if any, which are issued with original
issue discount ("OID Notes"), as indicated in the applicable pricing supplement.
Original issue discount is the excess of the stated redemption price at
maturity of a Note over its issue price if such excess is more than a de minimis
amount (generally 1/4 of 1% of the Note's stated redemption price at maturity
multiplied by the number of complete years to maturity). The issue price of an
issue of Notes will be equal to the first price at which a substantial amount of
such Notes are sold to the public. The stated redemption price at maturity of a
Note is the total of all payments required to be made under the Note other than
"qualified stated interest" payments. The term "qualified stated interest"
means, in general, stated interest that is unconditionally payable at least
annually either at a single fixed rate or at a qualified floating rate
established by a Floating Rate Note. Interest is payable at a single fixed rate
only if the rate takes into account the length of the intervals between
payments. A Floating Rate Note with a qualified floating rate means a Note which
(a) has an issue price that does not exceed the sum of the noncontingent
principal payments to be made on the Note by more than a specified amount, (b)
provides for stated interest (compounded or paid at least annually) at a single
qualified floating rate or a single objective rate, and (c) provides that each
qualified floating or objective rate in effect during an accrual period is set
at the current value of that rate (which is the rate on any day during the
period beginning three months prior to the first day on which the value is in
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effect under the Note and ending one year following that day). A "qualified
floating rate" is any floating rate where variations in such rate can reasonably
be expected to measure contemporaneous variations in the cost of newly borrowed
funds in the same currency as the Note (e.g., the Prime Rate or LIBOR). A fixed
multiple of not more than 1.35 times a qualified floating rate, whether or not
this rate is increased or decreased by a fixed rate, is a qualified floating
rate. Restrictions on the maximum or minimum stated interest rate ("cap" or
"floor"), restrictions on the amount of increase or decrease in the stated
interest rate ("governor") or other similar restrictions generally will cause
the rate not to be treated as a qualified floating rate. However, the following
restrictions will not cause a variable rate to fail to be a qualified floating
rate - (i) a cap, floor or governor that is fixed throughout the term of the
Note, (ii) a cap or similar restriction that is not reasonably expected as of
the issue date to cause the yield on the Note to be significantly less than the
expected yield determined without the cap, (iii) a floor or similar restriction
that is not reasonably expected as of the date of issue to cause the yield on
the Note to be significantly more than the expected yield determined without the
floor, or (iv) a governor or similar restriction that is not reasonably expected
as of the issue date to cause the yield on the Note to be significantly more or
significantly less than the expected yield determined without the governor. An
"objective rate" includes a rate other than a qualified floating rate based on
the change in price of actively traded personal property or on changes in the
value of an index of the prices of such property. An objective rate must be
determined using a single formula that is fixed throughout the term of the Note.
A multiple of a qualified floating rate is also an objective rate. Under these
rules, Commercial Paper Rate Notes, Prime Rate Notes, LIBOR Notes, Treasury Rate
Notes, CD Rate Notes, CMT Rate Notes and Federal Funds Rate Notes, other than
certain Notes subject to caps or floors, should generally be treated as Floating
Rate Notes. Special rules apply to Notes which are not Floating Rate Notes with
a qualified floating rate as defined above, e.g. (i) bear interest at a floating
rate subject to a maximum numerical interest rate limitation or a minimum
numerical interest rate limitation, (ii) bear interest for one or more accrual
periods at a rate below the rate applicable for the remaining term of such Note
(e.g., Notes with interest holidays), (iii) bear interest at one or more
variable rates that are not qualified floating rates or objective rates or (iv)
bear interest at the lesser of two or more variable rates. Such Notes may be
treated as issued with original issue discount; their stated interest may be
treated as original issue discount; or such Notes may be treated as contingent
payment obligations. The applicable pricing supplement will contain a discussion
of any special provisions of the income tax regulations which may be relevant to
such Notes.
Long-Term OID Notes. A holder of OID Notes having maturities in excess of
one year ("Long-Term OID Notes") is required to include original issue discount
in income as it accrues, in accordance with a constant yield method, before the
receipt of cash attributable to such income. The amount of original issue
discount includible in income by the holder of a Long-Term OID Note during the
taxable year 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"). The daily portion of
original issue discount on any Long-Term OID Note is determined by allocating to
each day in any "accrual period" a ratable portion of the original issue
discount allocable to that period. As discussed below, the daily portion is
reduced in the case of a holder who pays an acquisition premium for a Long-Term
OID Note. The amount of original issue discount on a Long-Term OID Note
allocable to each accrual period is determined by (i) multiplying the "adjusted
issue price" of the Long-Term OID Note at the beginning of such accrual period
by its "yield to maturity" (adjusted for the length of the accrual period) and
(ii) subtracting from that product the amount of qualified stated interest, if
any, allocable to such accrual period. If the interval between payments of
qualified stated interest contains more than one accrual period, the amount of
qualified stated interest payable at the end of the interval is allocated pro
rata (on the basis of their relative lengths) to each accrual period in the
interval. The term "accrual period" means, in the case of a Long-Term OID Note,
a period of any length up to one year which the holder elects to use to compute
original issue discount, provided that each scheduled payment of principal or
interest occurs either on the final day of an accrual period or on the first day
of an accrual period. The holder may vary the length of the accrual period over
the term of the Long-Term Note so long as the holder also adjusts the Long-Term
Note's yield to maturity to reflect the length of the period. The term "yield to
maturity" means the discount rate which, when used to compute the present value
of all principal and interest payments to be made under the Note, will produce
an amount equal to the issue price of the Note. The "adjusted issue price" of a
Long-Term OID Note at the beginning of any accrual period is the sum of the
issue price of the Long-Term OID Note plus the accrued original issue discount
for each prior accrual period (without regard to any reduction for amortized
acquisition premium) plus any qualified stated interest applicable to the prior
accrual periods not yet payable less any prior payments on the Long-Term OID
Note that were not qualified stated interest payments. In computing the amount
of original issue discount allocable to each accrual period for a Floating Rate
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Note which is a Long-Term OID Note, the Floating Rate Note is "converted" to an
equivalent fixed rate debt instrument by substituting an appropriate fixed rate
(as specified by the OID Regulations) for the variable rate. The rules
applicable to fixed rate instruments, described above, are then applied to
determine OID accruals. Floating Rate Notes with original issue discount may be
subject to certain special rules and any special tax considerations with respect
to such Notes will be set forth in the related pricing supplement. With respect
to an initial accrual period which is shorter than other accrual periods, the
original issue discount allocable to such period may be computed using any
reasonable method. With respect to the final accrual period, the original issue
discount allocable to such period is the difference between the amount payable
at maturity other than qualified stated interest and the adjusted issue price at
the beginning of the final accrual period.
Under the foregoing rules, holders may have to include in income
increasingly greater amounts of original issue discount in successive accrual
periods.
Short-Term OID Notes. In the case of Notes having maturities of one year or
less ("Short-Term OID Notes"), a special rule provides that payments of stated
interest will not be considered to be qualified stated interest. A cash basis
holder of a Short-Term OID Note will not be required to accrue original issue
discount on a current basis, but may elect to do so. Such an election will apply
to all obligations acquired by the holder on or after the first day of the first
taxable year for which the election is made and will be irrevocable without the
consent of the Internal Revenue Service. A cash basis holder of a Short-Term OID
Note will, nevertheless, be required to take stated interest into income as it
is received. Accrual basis holders and certain other holders, including banks
and dealers in securities, are required to accrue the original issue discount on
Short-Term OID Notes currently. Such holders will accrue original issue discount
on a straight-line basis, but may make an irrevocable election to accrue it
under the constant yield method. In the case of a holder who is not required and
who does not elect to include the original issue discount in income currently,
(a) any gain realized on the disposition of a Short-Term OID Note will be
ordinary income to the extent of the original issue discount accrued on a
straight-line basis (or, if elected, according to a constant yield method based
on daily compounding) through the date of disposition reduced by any payments of
stated interest or other original issue discount received and (b) such holder
may be required to defer net deductions for interest on borrowing allocable to
these Short-Term OID Notes in an amount not exceeding the deferred income until
the deferred income is realized.
Any holder (whether cash or accrual basis) who otherwise is required or has
elected to accrue original issue discount on a Short-Term OID Note can elect to
accrue the "acquisition discount," if any, with respect to the Short-Term OID
Note on a current basis in lieu of original issue discount. Acquisition discount
is the excess of the sum of all remaining payments to be made under the
Short-Term Note, including stated interest, over the holder's tax basis in the
Note at the time of acquisition. Acquisition discount will be treated as
accruing on a straight-line basis, unless the holder makes an irrevocable
election to use the constant yield method.
Currency Gain or Loss on Receipt of OID. Original issue discount for any
period that is denominated in a Foreign Currency will be determined in the
Foreign Currency and then translated into United States dollars based on the
average exchange rate in effect during the accrual period or based on the
exchange rate in effect on the last day of the accrual period if the holder has
elected as described above to use such exchange rate for interest income
(including original issue discount) on all debt instruments. Except as provided
below with respect to the disposition of a Note, upon receipt of an amount
attributable to original issue discount, a holder will recognize ordinary income
or loss measured by the difference between the original issue discount received
translated into United States dollars at the exchange rate in effect on the date
of receipt and the amount of original issue discount accrued.
Dual Currency Notes. Under proposed regulations issued March 17, 1992 (the
"Proposed Foreign Currency Regulations"), which are proposed to become effective
for Notes issued on or after the date such regulations are published in final
form in the Federal Register, dual currency notes held by a holder which provide
for qualified stated interest payments to be paid in, or determined by reference
to, one currency and for the stated redemption price at maturity to be paid in,
or determined by reference to, another currency will be treated as two separate
hypothetical debt instruments. One debt instrument will be a zero coupon bond
denominated in the currency of the stated redemption price at maturity. The
second hypothetical debt instrument will be an amortizing installment bond
denominated in the currency of the qualified stated interest payments. It does
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not appear that a holder may rely on the Proposed Foreign Currency Regulations
in the case of dual currency Notes issued before such regulations become
effective.
Other Features and Reporting of OID. Certain of the OID Notes may be
redeemed prior to maturity either at the option of the holder or the Company.
OID Notes containing such feature may be subject to rules that differ from the
general rules discussed above. Persons intending to purchase OID Notes with any
such feature should carefully examine the related pricing supplement and should
consult with their own tax advisors with respect to such features since the tax
consequences with respect to original issue discount will depend, in part, on
the particular terms and the particular features of the purchased Note.
The Company is required to report to the Internal Revenue Service the
amount of original issue discount accrued on OID Notes held of record by United
States persons other than corporations and other exempt holders. The amount
required to be reported by the Company may not be equal to the amount of
original issue discount required to be reported as taxable income by a holder of
such OID Notes where the holder and the Company use different accrual periods to
determine the amount of original issue discount or where the holder is not an
original purchaser.
Tax Basis and Disposition of Notes
A holder's tax basis in a Note, other than an OID Note, will generally be
the United States dollar cost of the Note to such holder (which in the case of a
Note purchased with Foreign Currency will be the United States dollar value of
the purchase price on the date of purchase) increased by any amounts of market
discount previously included in income by the holder with respect to such Note
and reduced by any amortized bond premium and by principal payments received by
the holder. A holder's tax basis in an OID Note will generally be the cost of
the Note to such holder increased by any original issue discount and market
discount previously included in income and decreased by the amount of any
payment on the OID Note, other than a payment of qualified stated interest, and
by any amortized acquisition premium.
Except as discussed above with respect to Short-Term OID Notes, upon the
disposition of a Note, a holder will recognize gain or loss equal to the
difference between the amount realized on the disposition (or the United States
dollar value of the amount, if it is realized in a Foreign Currency) and the
holder's tax basis in the Note. Gain or loss recognized by a holder on the
disposition of a Foreign Currency Note which is attributable to changes in
exchange rates will be treated as ordinary income or loss, but such income or
loss will be taken into account only to the extent of the total gain or loss on
the disposition. Except as provided below with respect to market discount, any
remaining 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 disposition, the Note was
held for more than one year.
Exchange of Foreign Currency
The tax basis of a Foreign Currency will be the United States dollar cost
of the Foreign Currency on the date such Foreign Currency is purchased. Foreign
Currency received as interest on a Foreign Currency Note will have a tax basis
equal to its United States dollar value at the time such interest is received.
The amount of gain or loss recognized on a sale or exchange of the Foreign
Currency will be equal to the difference between (i) the amount of United States
dollars, or the fair market value in United States dollars of the other currency
or property, received in the sale or exchange and (ii) the tax basis of the
Foreign Currency. Generally, any such gain or loss will be ordinary income or
loss.
A purchaser of a Foreign Currency Note for Foreign Currency would recognize
gain or loss on the disposition of Foreign Currency in an amount equal to the
difference, if any, between such holder's tax basis in the Foreign Currency and
its United States dollar fair market value on the date it is used to purchase a
Foreign Currency Note. Generally, any such gain or loss will be ordinary income
or loss.
Notes Denominated in Hyperinflationary Currencies
Under the Proposed Foreign Currency Regulations, which, as indicated above,
are proposed to become effective for Notes issued on or after the date such
regulations are published in final form in the Federal Register, if a holder
acquires a Note denominated in a Foreign Currency which is a hyperinflationary
currency, the holder will realize exchange gain or loss for each taxable year
determined by reference to the change in exchange rates between (i) the later of
the first day of the taxable year or the date the Note was acquired and (ii) the
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earlier of the last day of the taxable year or the date the Note is disposed of.
Generally, any such gain or loss will increase or decrease interest income (and
to the extent it exceeds interest income will be treated as ordinary loss) and
will be an adjustment to the functional currency basis of the holder for
purposes of subsequent computations of exchange gain or loss.
Premium and Market Discount
If a holder purchases a Note with a maturity date more than one year from
the date of issue for an amount that is less than its stated redemption price at
maturity, or less than its revised issue price if the Note is an OID Note, the
amount of the difference will be treated as "market discount" for federal income
tax purposes, unless such difference is less than a specified de minimis amount
(generally 1/4 of 1% of the Note's stated redemption price at maturity, or its
revised issue price, if the Note is an OID Note, multiplied by the number of
complete years to maturity from the date of acquisition by the holder). The
revised issue price of an OID Note is the sum of the issue price of the Note and
the aggregate amount of the original issue discount includible, without regard
to the rules for acquisition premium discussed below, in the gross income of all
previous holders of the Note. While not entirely clear, any payments to prior
holders of amounts other than qualified stated interest should be subtracted in
determining the revised issue price. Under the market discount rules, a holder
will be required to treat any principal payment on, or any gain on the
disposition of, a Note as ordinary income to the extent of the market discount
which has not previously been included in income and which is treated as having
accrued on such Note at the time of such payment or disposition. If such Note is
disposed of in certain nontaxable transactions (including a gift), accrued
market discount will be includible as ordinary income to the holder as if such
holder had sold the Note at its then fair market value. In addition, the holder
may be required to defer until the maturity of the Note, or its earlier
disposition in a taxable transaction, the deduction of all or a portion of the
interest expense on any indebtedness incurred or continued to purchase or carry
such Note.
Any market discount will be considered to accrue on a straight-line basis
during the period from the date of acquisition to the maturity date of the Note,
unless the holder makes an irrevocable election to compute the accrual on a
constant yield basis. A holder of a Note may elect to include market discount in
income currently as it accrues (on either a straight-line or a constant yield
basis), in which case the rule described above regarding deferral of interest
deductions will not apply. This election to include market discount in income
currently, once made, applies to all market discount obligations of a holder
acquired on or after the first day of the first taxable year to which the
election applies, and may not be revoked without the consent of the Internal
Revenue Service.
In the case of a Foreign Currency Note, market discount will be determined
in the Foreign Currency. The amount of accrued market discount (other than
market discount currently included in income pursuant to an election by the
holder) which is required to be recognized on the disposition of the Note will
be translated into United States dollars based on the exchange rate on the
disposition date. No part of such accrued market discount will be treated as
exchange gain or loss. Accrued market discount which a holder elects to accrue
into income currently is translated into United States dollars using the average
exchange rate during the accrual period. In such case, movement in the exchange
rate between the accrual date and disposition date will result in exchange gain
or loss at the time of the disposition with respect to the amount of the market
discount accrued.
A person who purchases an OID Note for an amount that is greater than its
adjusted issue price will be considered to have purchased such Note at an
"acquisition premium", unless the holder will be considered to have purchased
the Note at a premium as described below. Under the acquisition premium rules,
the daily portion of original issue discount which such holder must include in
its gross income with respect to such Note for any accrual period will be
reduced by the daily portion of such acquisition premium properly allocable to
such period.
If a person acquires a Note for an amount that is greater than the sum of
all amounts payable under the Note after the purchase date other than payments
of qualified stated interest, such holder will be considered to have purchased
such Note at a premium ("bond premium") and the Note will not be an OID Note in
the case of such holder. Such holder may make an irrevocable election to
amortize such premium generally over the remaining term of the Note. The
election applies to all bonds held by the holder at the beginning of the first
taxable year to which the election applies. Premium will be amortized using a
constant yield method. The amount amortized in any year will be treated as a
reduction of the holder's interest income from the Note. Bond premium on a Note
held by a holder that does not make such an election will decrease the gain or
increase the loss otherwise recognized on disposition of the Note.
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In the case of a Foreign Currency Note, bond premium which a holder elects
to amortize or acquisition premium will be computed in the relevant Foreign
Currency and will reduce interest income or original issue discount determined
in such Foreign Currency. At the time amortizable bond premium offsets interest
income, a holder may realize exchange gain or loss (taxable as ordinary income
or loss, but generally not as interest income or expense), measured by the
difference between exchange rates at that time and at the time of the
acquisition of the Note. If a holder does not elect to amortize bond premium,
the amount of the bond premium will constitute a market loss when the bond
matures.
Election by Holder
A holder of a Note may elect to include in gross income all interest that
accrues on a Note using the constant yield method. For purposes of the election,
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. If the holder makes the election with respect to any
obligation with amortizable bond premium or market discount, the election will
be deemed made for all of the holder's other obligations with amortizable bond
premium or market discount. In applying the constant yield method, the Note is
treated as if (i) it is issued for the holder's adjusted basis immediately after
its acquisition by the holder, (ii) it is issued on the holder's acquisition
date, and (iii) no payments provided for in the Note are qualified stated
interest payments. The election may not be revoked without the approval of the
Internal Revenue Service.
Backup Withholding
A 31% "backup" withholding tax may apply to payments of principal, premium
and interest (including original issue discount, if any) made to, and the
proceeds of disposition of a Note by, certain noncorporate holders. Backup
withholding will apply if a United States holder (i) fails to furnish a Taxpayer
Identification Number ("TIN") (social security number or employer identification
number) or (ii) under certain circumstances, fails to certify that the TIN
furnished by the holder is correct and that the holder has not been notified by
the Internal Revenue Service that the holder is subject to backup withholding
for failure to report interest and dividend payments. Backup withholding will
also apply if the payor is notified by the Internal Revenue Service that the
payee has failed to report properly a correct TIN or interest and dividends
earned by such payee.
Any amounts withheld from a payment to a holder under the backup
withholding rules will be allowed as a credit against such holder's United
States federal income tax liability and may entitle such holder to a refund,
provided the required information is furnished to the Internal Revenue Service.
THE FEDERAL INCOME TAX SUMMARY SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR
SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE ACQUISITION, 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.
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PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis by the Company through
Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith, Incorporated, J.P.
Morgan Securities Inc., Morgan Stanley & Co. Incorporated and SBC Warburg Dillon
Read Inc. (the "Agents"), which have agreed to use their reasonable best efforts
to solicit offers to purchase the Notes. The Company will have the sole right to
accept offers to purchase Notes and may reject any proposed purchase of Notes in
whole or in part. Each Agent will have the right, in its discretion, to reject
any offer to purchase Notes, in whole or in part, that it considers to be
unacceptable. Payment of the purchase price of Notes will be required to be made
in immediately available funds. The Company will pay to each Agent a commission,
in connection with sales of Notes to purchasers solicited by such Agent, ranging
from .125% to .750% of the principal amount of Notes so sold, depending upon the
maturity of the Notes, or, with respect to Notes having a term in excess of 30
years, such other commission as shall be agreed upon by the Company and Agent at
the time of sale. The Company reserves the right to sell Notes through agents
other than those named herein or directly on its own behalf, in which case no
commission will be payable to the Agents on any Notes sold directly by the
Company, depending upon the maturity of the Note, or, with respect to Notes
having a term in excess of 30 years, such other commission as shall be agreed
upon by the Company and Agent at the time of sale.
The Company may also sell Notes to one or more of the Agents as principals
for their own accounts at a discount to be agreed upon at the time of sale. Such
Notes may be resold to investors and other purchasers at prevailing market
prices, or prices related thereto at the time of such resale or otherwise, as
determined by the applicable Agent. In addition, the Agents may offer the Notes
they have purchased as principal to other dealers. The Agents may sell Notes to
any dealer at a discount and in connection with fixed price offerings, unless
otherwise specified in the applicable pricing supplement, such discount allowed
to any dealer may include part or all of the discount to be received by such
Agent from the Company. Unless otherwise indicated in the applicable pricing
supplement, any Note sold to an Agent as principal will be purchased by such
Agent at a price equal to 100% of the principal amount thereof less a percentage
equal to the commission applicable to any agency sale of a Note of identical
maturity, and may be resold by the Agent to investors and other purchasers from
time to time in one or more transactions, including negotiated transactions, at
a fixed public offering price or at varying prices determined at the time of
sale or may be resold to certain dealers as described above. After the initial
public offering of Notes to be resold to investors and other purchasers on a
fixed public offering price basis, the public offering price, concession and
discount may be changed.
In connection with fixed price offerings of the Notes, the Agents may
engage in transactions that stabilize, maintain or otherwise affect the price of
the Notes. Specifically, the Agents may over-allot any such offering, creating a
short position for the account of one or more Agents. In addition, the Agents
may bid for, and purchase, the Notes in the open market to cover short positions
or to stabilize the price of the Notes. Any of these activities may stabilize or
maintain the market price of the Notes above independent market levels. The
Agents are not required to engage in these activities, and may end any of these
activities at any time.
The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended, in respect of the Notes. The Company and the
Agents have agreed to indemnify each other against certain liabilities,
including liabilities under the Securities Act, or to contribute to payments
made in respect thereof. The Company has also agreed to reimburse the Agents for
certain expenses.
The Company does not intend to apply for the listing of the Notes on a
national securities exchange. The Agents may from time to time purchase and sell
Notes in the secondary market, but are not obligated to do so, and there can be
no assurance that there will be a secondary market for the Notes nor as to their
liquidity in a secondary market if one develops. From time to time, the Agents
may make a market in the Notes.
The Agents in the ordinary course of their business engage from time to
time in securities transactions with and perform investment banking services for
the Company.
Mr. Peter M. Flanigan, a director of the Company, is a Director of SBC
Warburg Dillon Read Inc. SBC Warburg Dillon Read Inc. has provided from time to
time, and expects in the future to provide, investment banking services to the
Company, for which it has received and will receive customary fees and
commissions.
Mr. Douglas A. Warner III, a director of the Company, is the President,
Chief Executive Officer and Chairman of the Board of Directors of J.P. Morgan &
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Co. Incorporated, the parent corporation of J.P. Morgan Securities Inc. In the
ordinary course of their respective businesses, J.P. Morgan Securities Inc. and
certain of its affiliates have engaged, and expect in the future to engage, in
investment banking or commercial banking transactions with the Company.
EXPERTS
The consolidated financial statements of the Company incorporated in the
accompanying Prospectus by reference to the Company's annual report on Form 10-K
for the year ended December 31, 1996 have been so incorporated in reliance on
the report of Price Waterhouse, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
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[GRAPHIC OMITTED]
Anheuser-Busch Companies, Inc.
$750,000,000
Debt Securities
Anheuser-Busch Companies, Inc. (the "Company") intends to issue from time
to time its debt securities (the "Debt Securities") at an aggregate initial
offering price not to exceed $750,000,000 (or, if the principal of the Debt
Securities is payable in a foreign currency, the equivalent thereof at the time
of offering), which will be offered on terms to be determined at the time of
sale. The accompanying Prospectus Supplement (the "Prospectus Supplement") sets
forth the specific terms of the Series of Debt Securities (the "Series") in
respect of which this Prospectus is being delivered, including the designation
of the Debt Securities, the aggregate principal amount offered, the rate or
rates of interest or the provisions for determining such rate or rates and the
time of payment thereof, maturity, currency of payment, offering price, terms
relating to redemption (whether mandatory or at the option of the Company or the
holder) and information as to listing on any securities exchange.
Anheuser-Busch, Incorporated, a wholly-owned subsidiary of the Company,
will be jointly and severally liable with the Company for payment of the Debt
Securities, subject to termination of such co-obligation under certain
circumstances as described under "Description of Debt Securities--ABI
Co-Obligation".
-----------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------------------------------------
The Debt Securities will be sold directly, through agents designated by the
Company from time to time or through underwriters or dealers designated by the
Company. If any agents of the Company or any dealers or underwriters are
involved in the sale of the Series of Debt Securities in respect of which this
Prospectus is being delivered, the names of such agents, dealers or underwriters
and any applicable agent's commission, dealer's purchase price or underwriter's
discount are set forth in or may be calculated from the Prospectus Supplement.
The net proceeds to the Company from such sale will be the purchase price of
such Series of Debt Securities less such commission in the case of an agent, the
purchase price of such Series of Debt Securities in the case of a dealer or the
public offering price less such discount in the case of an underwriter and less,
in each case, other attributable issuance expenses. See "Plan of Distribution"
for possible indemnification arrangements for the agents, dealers and
underwriters.
-----------------------------------------
The date of this Prospectus is July 23, 1997.
1
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TABLE OF CONTENTS
Available Information ............................ 2
Incorporation of Documents by Reference........... 2
The Company ...................................... 3
Use of Proceeds .................................. 3
Description of Debt Securities.................... 3
Book-Entry Securities ............................ 9
Plan of Distribution.............................. 10
Legal Opinion .................................... 11
Experts ......................................... 11
-----------------------------------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 and in accordance therewith files reports and other
information with the Securities and Exchange Commission (the "Commission").
Reports, proxy statements and other information filed by the Company with the
Commission can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549;
and at the following Regional Offices of the Commission: 500 West Madison
Street, Suite 1400, Chicago, Illinois, 60661; and Seven World Trade Center,
Suite 1300, New York, New York 10048; and copies of such material can be
obtained from the public reference facilities of the Commission, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, at prescribed rates. Such
material can also be inspected and copied at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, N.Y. 10005, on which certain of the
Company's securities are listed.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Securities and
Exchange Commission (File No. 1-7823) are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, filed pursuant to Section 13 of the Securities Exchange Act
of 1934.
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997, filed pursuant to Section 13 of the Securities Exchange Act of
1934.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 prior to the
termination of the offering of the Debt Securities shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents.
The Company will provide without charge to each person to whom a copy of
this Prospectus has been delivered, on request, a copy of any of the documents
referred to above which have been or may be incorporated in this document by
reference, other than exhibits to such documents. Requests for such copies
should be directed to the Corporate Secretary, Anheuser-Busch Companies, Inc.,
One Busch Place, St. Louis, Missouri 63118, telephone 314-577-2000.
2
<PAGE>
THE COMPANY
The Company is a Delaware corporation that was organized in 1979 as the
holding company parent of Anheuser-Busch, Incorporated ("ABI"), a Missouri
corporation whose origins date back to 1875. In addition to ABI, which is the
world's largest brewer of beer, the Company is also the parent corporation to a
number of subsidiaries that conduct various other business operations, including
those related to the production and acquisition of brewing raw materials, the
manufacture and recycling of aluminum beverage containers and the operation of
theme parks. The Company's principal office is at One Busch Place, St. Louis,
Missouri 63118, and its telephone number is (314) 577-2000.
The Company's principal product is beer, produced and distributed by its
subsidiary ABI in a variety of containers primarily under the brand names
Budweiser, Bud Light, Bud Dry, Bud Ice, Bud Ice Light, Michelob, Michelob Light,
Michelob Dry, Michelob Golden Draft, Michelob Golden Draft Light, Michelob
Classic Dark, Michelob Malt, Michelob Amber Bock, Michelob HefeWeizen, Busch,
Busch Light, Busch Ice, Natural Light, Natural Pilsner, Natural Ice, King Cobra
Malt Liquor, Red Wolf Lager, ZiegenBock Amber, American Originals (which include
three separate brands: Faust Golden Lager, Black & Tan Porter and American Hop
Ale) and Winter Brew (produced for the holiday season). ABI's products also
include two non-alcohol malt beverages, O'Doul's and Busch NA. ABI has recently
introduced the brands Hurricane Malt Liquor and Pacific Ridge Pale Ale. ABI
imports into the United States Carlsberg and Carlsberg Light beers, Elephant
Malt Liquor and Elephant Red Lager and Rio Cristal.
The Company's products are brewed and distributed in international markets
through its wholly-owned subsidiary, Anheuser-Busch International, Inc. ABI's
beer brands are distributed in twenty-three European countries and are being
sold under import distribution agreements in more than 80 countries and U.S.
territories and to the U.S. military and diplomatic corps outside the
continental United States. The Company's products are also brewed under license
or contract brewing arrangements in Argentina, Brazil, Canada, Ireland, Japan,
Korea, the Philippines and Spain. Since 1993, the Company has made equity
investments or formed joint ventures with brewers in Argentina, Brazil, China,
Mexico and the United Kingdom.
Busch Entertainment Corporation ("BEC"), a wholly-owned subsidiary of the
Company, owns, directly and through subsidiaries, nine theme parks. BEC operates
Busch Gardens theme parks in Tampa, Florida and Williamsburg, Virginia and Sea
World theme parks in Orlando, Florida, San Antonio, Texas, Aurora, Ohio and San
Diego, California. BEC also operates water park attractions in Tampa, Florida
(Adventure Island) and Williamsburg, Virginia (Water Country, U.S.A.), an
educational play park for children near Philadelphia, Pennsylvania (Sesame
Place) and the Baseball City Sports Complex near Orlando, Florida.
The Company's principal office is at One Busch Place, St. Louis, Missouri
63118 and its telephone number is 314-577-2000.
USE OF PROCEEDS
The Company intends to add the net proceeds from the sale of the Debt
Securities to the general funds of the Company to be used for general corporate
purposes. Prior to such application, such net proceeds may be invested in short
or intermediate term securities. Except as may be indicated in a Prospectus
Supplement delivered together with this Prospectus, no specific determination as
to the use of the proceeds of the Debt Securities in respect of which this
Prospectus is being delivered has been made.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued either under the Indenture dated as of
August 1, 1995 between the Company and The Chase Manhattan Bank (formerly
Chemical Bank), as trustee, or under a separate, substantially identical
indenture to be entered into between the Company and a new trustee. For each
issue of Debt Securities, the applicable indenture (the "Indenture") and the
trustee thereunder (the "Trustee") will be specified in the Prospectus
Supplement relating to such issue of Debt Securities or in an attachment
thereto. Each issue of Debt Securities will constitute a Series or Issue of
Securities (as described below) under, and will be governed by the provisions
of, the particular Indenture under which it is issued. The provisions of each of
the Indentures are substantially identical and the following description (other
than certain information pertaining only to The Chase Manhattan Bank, as
described below) is applicable to each Indenture.
A copy of each Indenture is filed as an exhibit to the Registration
Statement which has been filed with the Commission relating to the Debt
Securities. The following is a summary of certain provisions of the Indenture
and does not purport to be complete. Reference is made to the Indenture for a
complete statement of such
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provisions. Certain capitalized terms used below are
defined in the Indenture and have the meanings given to them in the Indenture.
Section references are to the Indenture.
General
The Indenture provides for the issuance by the Company from time to time of
its Securities in one or more Series which may consist of one or more Issues. An
Issue of Securities will consist of Securities having the same interest rate,
maturity and issue date. The Indenture does not limit the amount of Securities
which may be issued thereunder, and provides that the specific terms of any
Series of Securities shall be set forth in, or determined pursuant to, an
Authorizing Resolution of the Board of Directors of the Company or in a
supplemental indenture, if any, relating to such Series (Section 301).
The specific terms of the Series of Securities in respect of which this
Prospectus is being delivered are set forth in the accompanying Prospectus
Supplement relating thereto, including the following:
1. The title of the Series and whether it will consist of more than one
Issue.
2. The aggregate principal amount of the Securities of the Series.
3. The date or dates on which principal and premium, if any, on Securities
of the Series is payable, and, if applicable, the terms on which such maturity
may be extended.
4. The rate or rates of interest (if any) on the Securities of such Series
(whether floating or fixed), the provisions, if any, for determining such
interest rate or rates and adjustments thereto, the Interest Payment Dates and
the Regular Record Dates with respect thereto.
5. The currency(ies) in which principal, premium, if any, and interest are
payable by the Company, if other than United States dollars.
6. Provisions relating to redemption, at the option of the Company,
pursuant to a Sinking Fund or otherwise, or at the option of a Holder, and the
respective Redemption Dates and redemption prices and the terms and conditions
for such redemption.
7. Additional covenants or Events of Default, if any, with respect to the
Securities of such Series in addition to the covenants and Events of Default
specified in the Indenture.
8. If less than 100% of the principal amount of the Securities of such
Series is payable on acceleration or provable in bankruptcy (which may be the
case for Original Issue Discount Securities), a schedule of the amounts which
would be so payable or provable from time to time.
9. The form of the Securities of such Series, including whether the
Securities of the Series shall be issued in whole or in part in the form of one
or more Global Securities and, in such case, the Depositary or Depositaries for
such Global Security or Securities.
If not set forth in the accompanying Prospectus Supplement, the specific
terms of the Series or Issue of Debt Securities in respect of which this
Prospectus is being delivered are set forth in an attachment to the accompanying
Prospectus Supplement.
The Debt Securities will be direct and unconditional obligations of the
Company, which will be unsecured and will rank pari passu with all other
unsecured senior indebtedness of the Company outstanding at the time.
Except as otherwise specified in the Authorizing Resolution relating to the
Securities in respect of which this Prospectus is being delivered, principal and
interest on the Securities are to be payable, and the Securities are to be
transferable, at the office of the Trustee (in the case of The Chase Manhattan
Bank, at its Corporate Trust Office, 450 West 33rd Street, New York, New York,
or, in the case of any other Trustee, at the office and address specified in the
related Prospectus Supplement or in an attachment thereto), but payment of
interest, other than interest due on a Maturity Date, may be made at the option
of the Company by check mailed to the address of the person entitled thereto as
shown on the Security Register (Sections 202, 301, 305 and 1002). The Securities
are to be registered without coupons in the denomination of $1,000 or any
integral multiple thereof, or in such other currencies or denominations as may
be specified in, or pursuant to, the Authorizing Resolution relating to a Series
of Securities (Section 302). No service charge will be made for any transfer or
exchange of Securities, except any tax or other governmental charges that may be
imposed in connection therewith (Section 305).
Indebtedness; Dividends; Security Purchases; Other Terms
The Indenture does not limit the amount of unsecured indebtedness of the
Company or limit the payment of dividends or the acquisition of the Securities
or any other debt or equity security of the Company (but Funded Debt of
Restricted Subsidiaries is limited as described below under "Limitation on
Funded Debt of Restricted Subsidiaries").
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Neither the Indenture nor the Securities afford Holders of Securities
protection in the event of a change in control or similar event affecting the
Company. In addition, the Indenture does not afford protection to Holders in the
event that the Company enters into a highly leveraged or other transaction which
may adversely affect the Holders, except for the limitations set forth below
under "Creation of Secured Indebtedness," "Limitation on Funded Debt of
Restricted Subsidiaries" and "Sale-Leaseback Financings." The holders of the
Company's 8 3/4% Notes Due December 1, 1999 and 9% Debentures Due December 1,
2009 (currently outstanding in the aggregate principal amount of $600 million)
have the right to require the Company to repurchase such securities following
the occurrence of certain change in control events or other Risk Events (as
defined), if any such event results in the rating of such securities being
lowered below Investment Grade (as defined) or withdrawn. If any rights in
respect of such matters are granted to the Holders of any Series of Securities,
such rights will be described in the accompanying Prospectus Supplement. In the
event any change in control or other provision requiring the purchase of
Securities is applicable to the Debt Securities, the Company will comply with
Section 14(e) of the Securities Exchange Act of 1934 and Rule 14e-1 thereunder
in connection with such purchases.
Definitions
For purposes of the Indenture covenants described below:
"Funded Debt" means, generally, indebtedness for money borrowed maturing
more than 12 months from the date of determination or extendable beyond 12
months from such date at the option of the borrower, and direct guarantees of
such indebtedness of other Persons, subject to certain exceptions, including
exceptions for capitalized lease obligations and indirect guarantees and
contingent obligations in respect of indebtedness of other Persons, which
exception includes agreements to purchase or repurchase obligations of other
Persons, agreements to provide funds to or invest in other Persons, agreements
to pay for property, products or services of other Persons and any demand
charge, throughput, take-or-pay, keep-well, make-whole or maintenance of working
capital or earnings or similar agreements.
"Net Tangible Assets" means the total assets of the Company and its
Restricted Subsidiaries (including, with respect to the Company, its net
investment in Unrestricted Subsidiaries) after deducting therefrom (a) all
current liabilities (excluding any thereof constituting Funded Debt by reason of
being renewable or extendable) and (b) all goodwill, trade names, trademarks,
patents, unamortized debt discount and expense, organization and developmental
expenses and other like segregated intangibles, all as computed by the Company
in accordance with generally accepted accounting principles as of a date within
90 days of the date as of which the determination is being made; provided, that
any items constituting deferred income taxes, deferred investment tax credit or
other similar items shall not be taken into account as a liability or as a
deduction from or adjustment to total assets.
"Principal Plant" means any brewery, or any manufacturing, processing or
packaging plant, now owned or hereafter acquired by the Company or any
Subsidiary, but shall not include any (a) brewery or manufacturing, processing
or packaging plant which the Company shall by Board Resolution have determined
is not of material importance to the total business conducted by the Company and
its Subsidiaries or (b) any plant which the Company shall by Board Resolution
have determined is used primarily for transportation, marketing or warehousing.
Any such determination will be effective as of the date specified in the
applicable Board Resolution.
"Restricted Subsidiary" means (i) any Subsidiary which owns or operates a
Principal Plant, except any Subsidiary incorporated, or the principal place of
business of which is located, outside the United States and (ii) any other
subsidiary which the Company, by Board Resolution, shall elect to be treated as
a Restricted Subsidiary, until such time as the Company may, by further Board
Resolution, elect that such Subsidiary shall no longer be a Restricted
Subsidiary, successive such elections being permitted without restriction. Any
such election will be effective as of the date specified in the applicable Board
Resolution.
"Subsidiary" means any corporation of which more than 50% of the issued and
outstanding stock entitled to vote for the election of directors (otherwise than
by reason of default in dividends) is at the time owned directly or indirectly
by the Company or a Subsidiary or Subsidiaries or by the Company and a
Subsidiary or Subsidiaries (Section 101).
Creation of Secured Indebtedness
The Indenture provides that the Company will not, nor will it permit any
Restricted Subsidiary to, create, assume, guarantee or suffer to exist any
indebtedness for borrowed money secured by pledge of, or mortgage or lien on,
any of its Principal Plants or on any capital stock of any Restricted Subsidiary
(other than (a) purchase money liens, (b) liens existing at the time of
acquisition of property (including through merger or consolidation) or securing
indebtedness the proceeds of which are used to pay or reimburse the Company or a
Restricted
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Subsidiary for the cost of such property (provided such indebtedness is
incurred within 180 days after such acquisition), (c) liens on property of a
Restricted Subsidiary existing at the time it becomes a Restricted Subsidiary,
(d) liens to secure the cost of development or construction of property, or
improvements thereon, and which are released or satisfied within 120 days after
completion of the development or construction, (e) liens in connection with the
acquisition or construction of Principal Plants or additions thereto financed by
tax-exempt securities, (f) liens securing indebtedness owing to the Company or a
Restricted Subsidiary by a Restricted Subsidiary, (g) liens existing at the date
of the Indenture, (h) liens required in connection with state or local
governmental programs which provide financial or tax benefits, provided the
obligations secured are in lieu of or reduce an obligation that would have been
secured by a lien permitted under the Indenture, (i) extensions, renewals or
replacements of the liens referred to in clauses (a) through (h), (j) as
permitted under the provisions described in the following two paragraphs herein
and (k) in connection with sale-leaseback transactions permitted under the
Indenture), without effectively providing that the Securities (together with, if
the Company shall so determine, any other indebtedness of the Company then
existing or thereafter created ranking equally with the Securities and any other
indebtedness of such Restricted Subsidiary then existing or thereafter created)
shall be secured by the security for such secured indebtedness equally and
ratably therewith (Section 1006(a)).
Notwithstanding the provisions referred to in the immediately preceding
paragraph, the Company or any Restricted Subsidiary may, without ratably
securing the Securities, create, assume, guarantee or suffer to exist any
indebtedness which would otherwise be subject to such restrictions, and renew,
extend or replace such indebtedness, provided that the aggregate amount of such
indebtedness, when added to the fair market value of property transferred in
certain sale and leaseback transactions permitted by Section 1007(c) as
described below under "Sale-Leaseback Financings" and the aggregate amount of
certain Funded Debt of Restricted Subsidiaries permitted by Section 1008(b) as
described below under "Limitation on Funded Debt of Restricted Subsidiaries"
(computed without duplication of amounts), does not at the time exceed 10% of
Net Tangible Assets (Section 1006(d)).
If the Company or any Restricted Subsidiary shall merge or consolidate
with, or purchase all or substantially all of the assets of, another
corporation, or the Company shall sell all or substantially all of its assets to
another corporation, and if such other corporation has outstanding obligations
secured by a mortgage or other lien which, by reason of an after-acquired
property clause or similar provision, would extend to any Principal Plant owned
by the Company or such Restricted Subsidiary immediately prior thereto, the
Company or such Restricted Subsidiary, as the case may be, will in such event be
deemed to have created a mortgage or lien, within the prohibition of the
covenant referred to above, unless (i) such merger or consolidation involving a
Restricted Subsidiary constitutes a disposition by the Company of its interest
in the Restricted Subsidiary or (ii) either (a) at or prior to the effective
date of such merger, consolidation, sale or purchase such lien shall be released
of record or satisfied to the extent it would extend to such Principal Plant or
(b) prior thereto, the Company or such Restricted Subsidiary shall have created,
as security for the Securities (and, if the Company shall so determine, as
security for any other indebtedness of the Company then existing or thereafter
created ranking equally with the Securities and any other indebtedness of such
Restricted Subsidiary then existing or thereafter created), a valid lien which
will rank prior to the lien of such mortgage or other lien of such other
corporation on such Principal Plant of the Company or such Restricted
Subsidiary, as the case may be (Section 1006(b)).
In each instance referred to in the preceding paragraphs where the Company
is obligated to provide security for the Securities, the Company would be
required to provide comparable security for other outstanding indebtedness under
the indentures and other agreements relating thereto.
Limitation on Funded Debt of Restricted Subsidiaries
The Company will not permit any Restricted Subsidiary to create, assume or
permit to exist any Funded Debt other than (i) Funded Debt secured by a
mortgage, pledge or lien which is permitted to such Restricted Subsidiary under
the provisions of Section 1006 described above under "Creation of Secured
Indebtedness", (ii) Funded Debt owed to the Company or any Restricted
Subsidiary, (iii) Funded Debt of a corporation existing at the time it becomes a
Restricted Subsidiary, (iv) Funded Debt created in connection with, or with a
view to, compliance by such Restricted Subsidiary with the requirements of any
program, law, statute or regulation of any federal, state or local governmental
authority and applicable to such Restricted Subsidiary and providing financial
or tax benefits to such Restricted Subsidiary which are not available directly
to the Company, or not available on as favorable terms, (v) guarantees existing
at the date of the Indenture and (vi) guarantees of Funded Debt with respect to
which the Company is liable, on terms substantially similar to the terms of the
Supplemental Agreement described below under "ABI Co-Obligation" (Section
1008(a)).
Notwithstanding the provisions referred to in the immediately preceding
paragraph, any Restricted Subsidiary may create, assume or permit to exist
Funded Debt in addition to that permitted by such provisions, and renew, extend
or replace such Funded Debt, provided that at the time of such creation,
assumption, renewal,
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extension or replacement, and after giving effect thereto, the aggregate
amount of such Funded Debt which would otherwise be subject to such restriction,
together with the aggregate amount of indebtedness for borrowed money permitted
by Section 1006(d) as described above under "Creation of Secured Indebtedness"
and the aggregate amount of the fair market value of property transferred in
sale and leaseback transactions permitted by Section 1007(c) as described below
under "Sale-Leaseback Financings" (computed without duplication of amounts) does
not at the time exceed 10% of Net Tangible Assets (Section 1008(b)).
Sale-Leaseback Financings
The Indenture provides that neither the Company nor any Restricted
Subsidiary will enter into any sale and leaseback transaction involving any
Principal Plant, other than a sale by a Restricted Subsidiary to the Company or
a Restricted Subsidiary or a transaction involving a lease for a temporary
period, not to exceed three years, by the end of which it is intended to
discontinue use of the property, unless (i) the net proceeds of such sale
(including any purchase money mortgages received in connection with such sale)
are at least equal to the fair market value (as determined by Board Resolution)
of such property and (ii) within 120 days of the transfer of title to such
property the Company purchases and retires a principal amount of Securities, or
repays other Funded Debt of the Company or any Restricted Subsidiary, or makes
expenditures for the expansion, construction or acquisition of a Principal
Plant, or effects some combination of such repurchases, repayments and plant
expenditures, equal to the net proceeds received by the Company or such
Restricted Subsidiary upon such sale (Section 1007).
Notwithstanding the restriction referred to in the immediately preceding
paragraph, the Company or any Restricted Subsidiary may transfer property in
sale and leaseback transactions which would otherwise be subject to such
restriction if the aggregate amount of the fair market value of the property so
transferred, when added to the aggregate amount of certain Funded Debt of
Restricted Subsidiaries permitted by Section 1008(d) as described above under
"Limitation on Funded Debt of Restricted Subsidiaries" and the aggregate amount
of indebtedness for borrowed money permitted by Section 1006(d) as described
above under "Creation of Secured Indebtedness" (computed without duplication of
amounts), does not at the time exceed 10% of Net Tangible Assets (Section
1007(c)).
Merger
The Indenture provides that the Company may not consolidate with or merge
into any other corporation or transfer or lease its properties and assets
substantially as an entirety unless certain conditions are met, including the
assumption of the Securities by any successor corporation to the Company
(Sections 801 and 1006).
Modification of the Indenture
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with consent of the Holders of a majority in principal amount of
the Outstanding Securities affected thereby (voting as a single class), provided
that no supplemental indenture may reduce the principal amount of or interest or
premium payable on any Security, change the maturity date or dates of the
principal, the interest payment dates or other terms of payment, or reduce the
percentage of Holders necessary to modify or alter the Indenture, without the
consent of each Holder of Outstanding Debt Securities affected thereby (Section
902). The Company and the Trustee may modify and amend the Indenture without the
consent of any Holders for certain specified purposes, including to make any
change which, in the opinion of counsel to the Company, does not materially
adversely affect the interests of the Holders of the Series of Securities
affected thereby (Section 901).
ABI Co-Obligation
Pursuant to a Supplemental Agreement to be entered into with respect to
each Series, in the form attached to the Indenture, ABI will be jointly and
severally liable with the Company for the payment of the principal of (and
premium, if any) and interest on the Debt Securities of such Series. As provided
in such Supplemental Agreement, the Company may elect to terminate the
obligations of ABI thereunder if (1) there is outstanding no Funded Debt for
which ABI is liable, as direct obligor, co-obligor, guarantor or otherwise,
except for Funded Debt permitted under the provisions described above under
"Limitation on Funded Debt of Restricted Subsidiaries", and (2) all liability of
ABI as co-obligor for Funded Debt of the Company shall have been terminated or
shall terminate at approximately the same time as the termination of the
obligations of ABI under such Supplemental Agreement, and (3) there shall be no
Event of Default or event which, with the passage of time or giving of notice,
or both, would become an Event of Default.
Events of Default, Notice and Waiver
The Indenture defines an Event of Default, with respect to any Issue of
Securities, as: (a) default in the payment of any interest on any Security of
that Issue, continued for 30 days, (b) default in the payment of principal, or
premium, if any, on any Security of that Issue when due, and, in the case of a
principal payment
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becoming due by reason of an optional redemption by the Company,
continuance of such default for 30 days, (c) default in the deposit of a
required Sinking Fund installment (if any) in respect of such Issue and
continuance of such default for 30 days, (d) default in the performance of any
other covenant of the Company continued for 90 days after written notice by the
Trustee or holders of at least 25% in principal amount of the Outstanding
Securities of all Issues affected thereby, and (e) certain events of bankruptcy,
insolvency or reorganization (Section 501). Additional Events of Default, if
any, applicable to the Series or Issue of Securities in respect of which this
Prospectus is being delivered are specified in the accompanying Prospectus
Supplement. Other events or occurrences regarding the Company or the Securities,
some of which may be adverse to Holders of Securities, would not constitute
Events of Default and would not give rise to the remedies provided in the
Indenture.
If there shall occur and be continuing an Event of Default with respect to
the payment of principal or premium, if any, or interest or any Sinking Fund
installment on the Securities of any Issue, the Trustee, or the holders of at
least 25% in principal amount of the Securities of such Issue then Outstanding,
may declare the principal amount of all the Securities of such Issue immediately
due and payable. If there shall occur and be continuing (i) an Event of Default
with respect to any covenant of the Company applicable to the Securities of any
or all Issues or (ii) any other Event of Default referred to above, other than
payment defaults, the Trustee or the Holders of at least 25% in principal amount
of all Securities then Outstanding in respect of which the Event of Default has
occurred (voting as a single class) may declare the principal amount of all of
the Securities so affected immediately due and payable. The Holders of a
majority in principal amount of the Securities then Outstanding so affected
(voting as a single class) (or, in the case of a payment default as to any
Issue, the Holders of a majority in principal amount of the Securities of such
Issue) may rescind such declaration and the effects thereof if the default is
cured. No Holder of Securities may enforce the Indenture except in the case of a
refusal or neglect of the Trustee to act after notice of default and after
request by the Holders of a majority in principal amount of the outstanding
Securities of any Issue or Series as to which a default has occurred, and the
offer to the Trustee of reasonable indemnity, but this provision does not
prevent any holder of any Security from enforcing payment of principal or
premium, if any, or interest on such holder's Security (Sections 502, 507 and
508).
The Indenture provides that the Trustee will, within 90 days after the
occurrence of a default with respect to any Securities, give to the Holders of
such Securities notice of all uncured defaults (as defined, not including any
grace periods) known to it; but, except in the case of a payment default on any
of the Securities, the Trustee will be protected in withholding such notice if
it in good faith determines that the withholding of such notice is in the
interest of such Holders (Section 602).
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 Securities issued thereunder before proceeding
to exercise any right or power under the Indenture at the request of such
Holders (Section 603(e)). The Indenture provides that the Holders of a majority
in principal amount of the Outstanding Securities of any Series (voting as a
single 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 upon the Trustee in respect of the Securities of such Series (Section
512).
The Holders of a majority in principal amount of the Outstanding Securities
of all Series affected thereby (voting as a single class) may, on behalf of the
Holders of all such Securities, waive certain past defaults except a default in
payment of the principal of, or premium, if any, or interest on any Security
(Section 513). The Holders of a majority in principal amount of Outstanding
Securities of all Series entitled to the benefits thereof (voting as a single
class) may waive compliance with certain covenants under the Indenture (Section
1010).
The Company is required to furnish to the Trustee, annually, a statement as
to the fulfillment by the Company of its obligations under the Indenture
(Section 1004).
Satisfaction and Discharge
The Indenture provides that, at the option of the Company, the Indenture
will be satisfied and discharged and cease to be of further effect (except for
certain rights relating to transfers or exchanges of Securities) if all of the
Outstanding Securities have been delivered to the Trustee for cancellation,
except for Securities in respect of which the Company has made irrevocable
provision for payment within one year in accordance with the requirements of the
Indenture (Article Four).
At the election of the Company, (a) the obligations of the Company under
the Indenture with respect to one or more Series of Securities (except for
certain obligations relating to transfers or exchanges of Securities) or (b) the
obligations of the Company under certain covenants contained in the Indenture
(including, among others, those described above under "Creation of Secured
Indebtedness," "Limitation on Funded Debt of Restricted Subsidiaries" and
"Sale-Leaseback Financings") with respect to one or more Series of Securities,
may be
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satisfied and discharged upon the satisfaction of certain conditions,
including the deposit with the Trustee of money or U.S. government obligations
sufficient for payment of such Series of Securities (Article Thirteen).
Regarding the Trustee
For each Series or Issue of Debt Securities, the Trustee under the
applicable Indenture will either be The Chase Manhattan Bank or a new Trustee
selected by the Company, as specified in the related Prospectus Supplement or an
attachment thereto.
The Chase Manhattan Bank is the Trustee under one of the Indentures
referred to herein, which is dated as of August 1, 1995. The following Series of
Securities have been issued under this Indenture: (a) $250,000,000 principal
amount of 7-1/8% Debentures Due July 1, 2017, (b) $250,000,000 principal amount
of 7.1% Notes due June 15, 2007 (c) $100,000,000 principal amount of 7% Notes
Due September 1, 2005, (d)$250,000,000 principal amount 6.75% Notes Due November
1, 2006, (e) $150,000,000 principal amount of 7-3/8% Debentures Due September
15, 2015, (f) $200,000,000 principal amount of 7% Debentures Due December 1,
2025 and (g) $200,000,000 principal amount of 6.75% Notes Due August 1, 2003.
The Chase Manhattan Bank also acts as trustee (or successor trustee) under the
following Indentures with the Company: (i) an Indenture dated as of September 1,
1992 under which there have been issued $200,000,000 principal amount of 6.90%
Notes Due October 1, 2002, $200,000,000 principal amount of 7-3/8% Debentures
Due July 1, 2023, $200,000,000 principal amount of 6.75% Notes Due June 1, 2005,
and $35,000,000 principal amount of Medium-Term Notes; (ii) an Indenture dated
as of August 1, 1987 under which there have been issued $350,000,000 principal
amount of 9% Debentures Due December 1, 2009, $250,000,000 principal amount of 8
3/4% Notes Due December 1, 1999 and $60,000,000 principal amount of Medium-Term
Notes, Second Series; and (iii) an Indenture dated as of October 1, 1982 under
which there have been issued $150,000,000 principal amount of 8-5/8% Sinking
Fund Debentures Due December 1, 2016 and $150,000,000 principal amount of 8-1/2%
Sinking Fund Debentures Due March 1, 2017. The Chase Manhattan Bank also is a
party to a credit agreement with the Company, under which it has committed to
lend to the Company a maximum of $125 million.
Information regarding any other Trustee under the applicable Indenture for
a Series or Issue of Debt Securities will be furnished with the Prospectus
Supplement relating to such Series or Issue of Debt Securities.
BOOK-ENTRY SECURITIES
If so indicated on the related Prospectus Supplement, the Debt Securities
will be issued in book-entry form ("Book-Entry Securities"), which will be
represented by a single global Security, and which will be deposited with, or on
behalf of, The Depository Trust Company, as depositary (the "Depositary"), and
will be registered in the name of the Depositary or a nominee of the Depositary.
Ownership of beneficial interests in a global Security will be limited to
participants and to persons that may hold interests through institutions that
have accounts with the Depositary ("participants"). Ownership of beneficial
interests by participants in a global Security will be shown on, and the
transfer of that ownership interest will be effected only through, records
maintained by the Depositary for such global Security. Ownership of beneficial
interests in such global Security by persons that hold through participants will
be shown on, and the transfer of that ownership interest within such participant
will be effected only through, records maintained by such participant.
Payment of principal of and any premium and interest on Book-Entry
Securities represented by such global Security will be made to the Depositary or
its nominee, as the case may be, as the sole registered owner and the sole
Holder of the Book-Entry Securities represented thereby for all purposes under
the Indenture. The Company, the Trustee and their agents will not have any
responsibility or liability for any aspect of the Depositary's records relating
to or payments made on account of beneficial ownership interests in a global
Security representing any Book-Entry Securities or for maintaining, supervising
or reviewing any of the Depositary's records relating to such beneficial
ownership interests.
The Company has been advised by the Depositary that upon receipt of any
payment of principal of or any premium or interest on such global Security, the
Depositary will immediately credit, on its book-entry registration and transfer
system, the accounts of participants with payments in amounts proportionate to
their respective beneficial interests in the principal amount of such global
Security as shown on the records of the Depositary. Payments by participants to
owners of beneficial interests in the global Security held through such
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for customer accounts registered in
"street name", and will be the sole responsibility of such participants.
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The global Security may not be transferred except as a whole by a nominee
of the Depositary to the Depositary or another nominee of the Depositary or by
the Depositary or any such nominee to a successor of the Depositary or a nominee
of such successor.
The global Security representing Book-Entry Securities is exchangeable for
definitive Securities in registered form, bearing interest (if any) at the same
rate or pursuant to the same formula, having the same date of issuance,
redemption provisions, stated maturity and other terms and of differing
denominations aggregating a like amount, only if (x) the Depositary notifies the
Company that it is unwilling or unable to continue as Depositary for such global
Security or if at any time the Depositary ceases to be a clearing agency
registered under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the Company does not appoint a successor Depositary within 90 days or
(y) the Company approves such exchange. In that event, the global Security will
be exchangeable for definitive Securities in registered form, bearing interest
at the same rate, having the same date of issuance, redemption provisions,
stated maturity and other terms and of differing denominations aggregating a
like principal amount. Such definitive Securities will be registered in the
names of the owners of the beneficial interests in the global Securities as
provided by the Depositary's participants.
Except as provided above, owners of beneficial interests in such global
Security will not be entitled to receive physical delivery of Securities in
definitive form and will not be considered the Holders thereof for any purpose
under the Indenture, and the global Security representing Book-Entry Securities
will not be exchangeable. Accordingly, each person owning a beneficial interest
in such global Security must rely on the procedures of the Depositary and, if
such person is not a participant, on the procedures of the participant through
which such person owns its interest, to exercise any rights of a Holder under
the Indenture. The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a global Security.
The Depositary may grant proxies and otherwise authorize participants to
give or take any request, demand, authorization, direction, notice, consent,
waiver or other action which a Holder is entitled to give or take under the
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 in such a global Security desires to give or take any action
which a Holder is entitled to give or take under the 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 owning through them.
The Depositary has advised the Company that the Depositary 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 under the Exchange Act. The Depositary was created to hold the
securities of 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 (which may
include agents or underwriters referred to in the related Prospectus
Supplement), banks, trust companies, clearing corporations, and certain other
organizations some of whom (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
custodian relationship with a participant, either directly or indirectly.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities in any of three ways: (i) through
underwriters or dealers; (ii) directly to a limited number of institutional
purchasers or to a single purchaser; or (iii) through agents. Any such
underwriter, dealer or agent may be deemed to be an underwriter within the
meaning of the Securities Act of 1933. The terms of the offering of the Series
of Debt Securities with respect to which this Prospectus is being delivered are
set forth in the Prospectus Supplement which accompanies this Prospectus,
including the name or names of any underwriters, the purchase price of such
Series and the proceeds to the Company from such sale, any underwriting
discounts and other items constituting underwriters' compensation, any initial
public offering price and any discounts or concessions which may be allowed or
reallowed or paid to dealers and any securities exchanges on which the Series
may be listed.
If underwriters are used in the sale, the Debt Securities will be acquired
by the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. The Debt
Securities may be
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offered to the public either through underwriting syndicates represented by
managing underwriters or directly by such managing underwriters or other firms.
Unless otherwise set forth in the Prospectus Supplement, the obligations of the
underwriters to purchase the Debt Securities described in the accompanying
Prospectus Supplement will be subject to certain conditions precedent and the
underwriters will be obligated to purchase all such Debt Securities if any are
purchased. Any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to time. Debt
Securities may be sold directly by the Company or through agents designated by
the Company from time to time. Any agents involved in the offer or sale of the
Debt Securities in respect of which this Prospectus is being delivered are
named, and any commissions payable by the Company to such agents are set forth,
in the accompanying Prospectus Supplement. Unless otherwise indicated in the
Prospectus Supplement, any such agent will be acting on a best efforts basis for
the period of its appointment. If so indicated in the Prospectus Supplement, the
Company will authorize agents, underwriters or dealers to solicit offers by
certain specified institutions to purchase the Issue or Series of Debt
Securities to which this Prospectus and the Prospectus Supplement relates from
the Company at the public offering price set forth in the Prospectus Supplement
pursuant to delayed delivery contracts providing for payment and delivery on a
specified date in the future. Such contracts will be subject only to those
conditions set forth in the Prospectus Supplement, and the Prospectus Supplement
will set forth the commission payable for solicitation of such contracts. Agents
and underwriters may be entitled under agreements entered into with the Company
to indemnification by the Company against certain civil liabilities, including
liabilities under the Securities Act of 1933. Agents and underwriters may be
customers of, engage in transactions with, or perform services for the Company
in the ordinary course of business.
LEGAL OPINION
Certain legal matters relating to the Debt Securities are being passed upon
for the Company by its counsel, Bryan Cave LLP, One Metropolitan Square, St.
Louis, Missouri 63102.
EXPERTS
The annual consolidated financial statements of the Company incorporated in
this Prospectus by reference to the Company's Annual Report on Form 10-K for the
year ended December 31, 1996 have been so incorporated in reliance on the report
of Price Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting.
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TABLE OF CONTENTS
Prospectus Supplement
Page
----
Description of Notes ...................... S-2
Foreign Currency Risks .................... S-11
United States Taxation .................... S-12
Plan of Distribution ...................... S-19
Experts ................................... S-20
Prospectus
Available Information ........................ 2
Incorporation of Documents by Reference...... 2
The Company .................................. 3
Use of Proceeds .............................. 3
Description of Debt Securities................ 3
Book-Entry Securities......................... 9
Plan of Distribution.......................... 10
Legal Opinion ................................ 11
Experts ...................................... 11
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[GRAPHIC OMITTED]
ANHEUSER-BUSCH COMPANIES
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$100,000,000 Medium-Term Notes
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PROSPECTUS SUPPLEMENT
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Goldman, Sachs & Co.
Merrill Lynch & Co.
J.P. Morgan & Co.
Morgan Stanley Dean Witter
SBC Warburg Dillon Read Inc.
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