<PAGE>
PROSPECTUS SUPPLEMENT (TO PROSPECTUS DATED SEPTEMBER 10, 1996)
[LOGO]
U.S. $250,000,000
NORFOLK SOUTHERN CORPORATION
MEDIUM-TERM NOTES, SERIES A
DUE 9 MONTHS OR MORE FROM DATE OF ORIGINAL ISSUANCE
--------------
Norfolk Southern Corporation (the "Corporation") may offer from time to time
its medium-term notes, which are issuable in one or more series and may be
offered and sold in the United States. The Medium-Term Notes, Series A (the
"Notes", which term shall, unless otherwise indicated, include Foreign Currency
Notes and Indexed Notes), offered by this Prospectus Supplement may be
denominated in U.S. dollars or such foreign currencies or currency units as may
be designated by the Corporation at the time of offering (the "Foreign Currency
Notes"). See "Foreign Currency Notes." The Notes may also be issued with the
principal amount thereof payable at Maturity to be determined by reference to
the relative value, rate or price of one or more specified currencies, currency
units, commodities or financial indices (the "Indexed Notes") as specified in
the applicable supplement to this Prospectus Supplement (a "Pricing
Supplement"). This Prospectus Supplement relates to Notes, the proceeds of which
aggregate up to U.S. $250,000,000 (or, if applicable, the equivalent thereof in
foreign currencies or currency units), subject to reduction as a result of the
sale by the Corporation of other Debt Securities (other than the Notes) pursuant
to the Registration Statement of which the accompanying Prospectus is a part.
See "Description of Notes" and "Plan of Distribution." The Notes will mature on
any day nine months or more from the date of original issuance, as selected by
the purchaser and agreed to by the Corporation.
The interest rates or interest rate formulas, if any, on the Notes will be
established by the Corporation from time to time and will be indicated in the
applicable Pricing Supplement. Any change in such interest rates or interest
rate formulas will not affect the interest rate or interest rate formula on any
Note purchased or accepted for purchase prior to the effective date of the
change. Unless otherwise indicated in the applicable Pricing Supplement, the
Notes (except Zero Coupon Notes) will bear interest at a fixed rate (the "Fixed
Rate Notes") or at a rate or rates determined by reference to the CD Rate, the
Commercial Paper Rate, LIBOR, the Treasury Rate, the Federal Funds Effective
Rate, the Prime Rate or other interest rate formula specified in the applicable
Pricing Supplement, as adjusted by the Spread or Spread Multiplier, if any,
applicable to such Notes (the "Floating Rate Notes"). Fixed Rate Notes may pay
an amount in respect of both principal and interest amortized over the life of
the Note (the "Amortizing Notes"). Zero Coupon Notes will be issued at a
discount from the principal amount payable at Maturity thereof, and holders of
such Notes will not receive periodic payments of interest. Unless otherwise
indicated in the applicable Pricing Supplement, the Notes will not be redeemable
or repayable prior to Maturity and will not be subject to any sinking fund. See
"Description of Notes."
The Notes will be issued only in fully registered form in minimum
denominations of U.S. $1,000 and integral multiples of U.S. $1,000 in excess
thereof, or, in the case of Foreign Currency Notes, in the denominations
indicated in the applicable Pricing Supplement. Each Note will be represented by
either a global security (a "Global Note") registered in the name of a nominee
of The Depository Trust Company, as Depositary (each such Note represented by a
Global Note being referred to herein as a "Book-Entry Note"), or a certificate
issued in definitive form (a "Certificated Note"), as set forth in the
applicable Pricing Supplement. Beneficial interests in Book-Entry Notes will be
shown on, and transfers thereof will be effected only through, records
maintained by the Depositary (with respect to participants' interests) and its
participants. Except as described herein under "Description of Notes -- Book
Entry System," Book-Entry Notes will not be issuable in definitive form or
denominated in foreign currencies or currency units.
Unless otherwise indicated in the applicable Pricing Supplement, interest on
Fixed Rate Notes is payable May 1 and November 1 and at Maturity. Interest on
Floating Rate Notes is payable on the dates indicated therein and in the
applicable Pricing Supplement.
------------------------
SEE "RISK FACTORS" COMMENCING ON PAGE S-3 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
-----------------
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, ANY PRICING
SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
-------------------
<TABLE>
<CAPTION>
PRICE TO AGENTS' PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) CORPORATION(2)(3)
-------------- --------------------- ----------------------------
<S> <C> <C> <C>
Per Note...................................................... 100% .125%-.750% 99.875%-99.250%
Total(4)...................................................... $ 250,000,000 $312,500-$1,875,000 $249,687,500-$248,125,000
</TABLE>
- ---------------
(1) Unless otherwise indicated in an applicable Pricing Supplement, Notes will
be issued at 100% of their principal amount.
(2) The Corporation will pay a commission to the Agents in the form of a
discount for sales of Notes through such Agents ranging from .125% to .750%
of the principal amount of any Note with a Stated Maturity from 9 months to
less than 30 years, depending upon its Stated Maturity, and a discount to be
negotiated for sales through such Agents of Notes with Stated Maturities in
excess of 30 years. Unless otherwise specified in an 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 an agency sale of a Note of
identical maturity, and may be resold by such Agent to investors and other
purchasers at varying prices relating to prevailing market prices as
determined by such Agent. No commission will be payable on any sales made
directly by the Corporation. The Corporation has agreed to indemnify the
Agents against certain liabilities, including liabilities under the
Securities Act of 1933 (the "Act").
(3) Before deduction of expenses payable by the Corporation estimated at
$50,000.
(4) Or the equivalent thereof in foreign currencies or currency units.
------------------------
The Notes are being offered from time to time by the Corporation through one
or more of Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, J.P. Morgan Securities Inc., and PaineWebber Incorporated (the
"Agents"), each of which has agreed to use its best efforts to solicit purchases
of the Notes. The Corporation has reserved the right to sell Notes directly on
its own behalf or to the Agents acting as principals for resale to the public.
Unless otherwise specified in an applicable Pricing Supplement, the Notes will
not be listed on any securities exchange, and there can be no assurance that the
Notes offered by this Prospectus Supplement will be sold or that there will be a
secondary market for the Notes. The Corporation reserves the right to withdraw,
cancel or modify the offer made hereby without notice. The Corporation or any
applicable Agent may reject any order in whole or in part. See "Plan of
Distribution."
------------------------
MERRILL LYNCH & CO.
J.P. MORGAN & CO.
PAINEWEBBER INCORPORATED
------------
The date of this Prospectus Supplement is September 10, 1996.
<PAGE>
In this Prospectus Supplement, all references to "U.S. dollars," "dollars"
and "$" are to United States dollars.
------------------------
IN CONNECTION WITH THE DISTRIBUTION OF NOTES UNDERWRITTEN BY AN AGENT ACTING
AS PRINCIPAL, SUCH AGENT MAY OVER-ALLOT OR EFFECT TRANSACTIONS IN THE NOTES WITH
A VIEW TO STABILIZING OR MAINTAINING THE MARKET PRICE OF THE NOTES AT LEVELS
OTHER THAN THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR OTHERWISE, AND,
IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
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<PAGE>
RISK FACTORS
THIS PROSPECTUS SUPPLEMENT DOES NOT DESCRIBE ALL OF THE RISKS OF AN
INVESTMENT IN NOTES THAT RESULT FROM SUCH NOTES BEING DENOMINATED OR PAYABLE IN
OR DETERMINED BY REFERENCE TO A CURRENCY OR COMPOSITE CURRENCY OTHER THAN U.S.
DOLLARS OR TO ONE OR MORE INTEREST RATE, CURRENCY OR OTHER INDICES OR FORMULAS.
THE CORPORATION AND THE AGENTS DISCLAIM ANY RESPONSIBILITY TO ADVISE PROSPECTIVE
INVESTORS OF SUCH RISKS AS THEY EXIST AT THE DATE OF THIS PROSPECTUS SUPPLEMENT
OR AS THEY CHANGE FROM TIME TO TIME. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR
OWN FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN
SUCH NOTES AND THE SUITABILITY OF INVESTING IN SUCH NOTES IN LIGHT OF THEIR
PARTICULAR CIRCUMSTANCES. SUCH NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR
INVESTORS WHO ARE UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS
OR TRANSACTIONS INVOLVING THE APPLICABLE INTEREST RATE OR CURRENCY INDEX OR
OTHER INDICES OR FORMULAS.
STRUCTURE RISKS
An investment in Notes indexed, as to principal, premium, if any, and/or
interest, if any, to one or more interest rate, currency (including exchange
rates and swap indices between currencies or composite currencies) or other
indices or formulas, either directly or inversely, entails significant risks
that are not associated with similar investments in a conventional fixed rate or
floating rate debt security. Such risks include, without limitation, the
possibility that such indices or formulas may be subject to significant changes,
that no interest will be payable, that interest may be payable at a rate lower
than one applicable to a conventional fixed rate or floating rate debt security
issued by the Corporation at the same time, that the repayment of principal
and/or premium, if any, may occur at times other than as expected by the
investor, and that the investor could lose all or a substantial portion of
principal and/or premium, if any, payable at Maturity. Such risks depend on a
number of interrelated factors, including economic, financial and political
events, over which the Corporation has no control. Additionally, if the formula
used to determine the amount of principal, premium, if any, and/or interest, if
any, payable with respect to such Notes contains a multiplier or leverage
factor, the effect of any change in the applicable index or indices or formula
or formulas will be magnified. In recent years, values of certain indices and
formulas have been highly volatile, and such volatility may be expected to
continue in the future. Fluctuations in the value of any particular index or
formula that have occurred in the past are not necessarily indicative, however,
of fluctuations that may occur in the future.
Any optional redemption feature of Notes might affect the market value of
such Notes. Since the Corporation may be expected to redeem such Notes when
prevailing interest rates are relatively low, an investor generally will not be
able to reinvest the redemption proceeds at an effective interest rate as high
as the interest rate on such Notes.
The Notes will not have an established trading market when issued, and there
can be no assurance of a secondary market for the Notes or the liquidity of such
a market if one were to develop. See "Plan of Distribution."
Any secondary market for Notes will be affected by a number of factors
independent of the creditworthiness of the Corporation and the value of the
applicable index or indices or formula or formulas, including the complexity and
volatility of each such index or formula, the method of calculating the
principal, premium, if any, and/or interest, if any, in respect of such Notes,
the time remaining to the maturity of such Notes, the outstanding amount of such
Notes, any redemption features of such Notes, the amount of other debt
securities linked to such index or formula and the level, direction and
volatility of market interest rates generally. Such factors also will affect the
market value of such Notes. In addition, certain Notes may be designed for
specific investment objectives or strategies and, therefore, may have a more
limited secondary market and experience more price volatility than conventional
debt securities. Investors may not be able to sell such Notes readily or at
prices that will enable investors to realize their anticipated yield. No
investor should purchase Notes unless such investor understands and is able to
S-3
<PAGE>
bear the risk that such Notes may not be readily saleable, that the value of
such Notes will fluctuate over time and that such fluctuations may be
significant.
FOREIGN CURRENCY RISKS
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in Foreign Currency Notes entails significant risks that are
not associated with a similar investment in a debt security denominated in U.S.
dollars. Such risks include, without limitation, the possibility of significant
changes in rates of exchange between the U.S. dollar and the various foreign
currencies and the possibility of the imposition or modification of foreign
exchange controls by either the United States or foreign governments. Such risks
generally depend on economic and political events over which the Corporation has
no control. In recent years, rates of exchange between the U.S. 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, however, of fluctuations in
the rate that may occur during the term of any Foreign Currency Note.
Depreciation of the specified foreign currency against the U.S. dollar would
result in a decrease in the U.S. dollar-equivalent yield, the value of the
principal repayable at Maturity and/or the market value of such Foreign Currency
Note.
Foreign Currency Notes will not be sold in, or to residents of, the country
of the currency in which particular Foreign Currency Notes are denominated. The
information set forth in this Prospectus Supplement is directed to prospective
purchasers who are United States residents, and the Corporation disclaims 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, premium, if any, and/or
interest, if any, on the Foreign Currency Notes. Such persons should consult
their own financial and legal advisors with regard to such matters.
Governments have imposed from time to time and may in the future impose or
revise exchange controls which could affect exchange rates as well as the
availability of a specified foreign currency at the time of payment of
principal, premium, if any, and/or interest, if any, on a Foreign Currency Note.
Even if there are no actual exchange controls, it is possible that the specified
currency for any particular Foreign Currency Note would not be available at the
time of any such payment. In that event, the Corporation will make payment in
U.S. dollars on the basis of the exchange rate as of the most recent practicable
date. See "Foreign Currency Notes -- Payment Currency."
JUDGMENTS
A judgment for money in an action based on Foreign Currency Notes in a
federal or state court in the United States ordinarily would be enforced in the
United States only in U.S. dollars. The date used to determine the rate of
conversion of the relevant foreign currency into U.S. dollars will depend upon
various factors, including which court renders the judgment.
CREDIT RATINGS
Any credit ratings assigned to the Corporation's medium-term note program
may not reflect the potential impact of all risks related to structure and other
factors on the value of the Notes.
S-4
<PAGE>
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered
hereby supplements and, to the extent inconsistent therewith, replaces the
description of the general terms of the Debt Securities set forth under the
heading "Description of Debt Securities" in the accompanying Prospectus, to
which description reference is made. The provisions of the Notes summarized
herein will apply to such Notes unless otherwise specified in the applicable
Pricing Supplement and the applicable Note.
The Notes are to be issued under an indenture, dated as of January 15, 1991
(the "Indenture"), between the Corporation and First Trust of New York, National
Association, as successor trustee (the "Trustee"). The following summaries of
certain provisions of the Indenture do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all of the
provisions of the Indenture. Capitalized terms not otherwise defined herein have
the meanings assigned to such terms in the accompanying Prospectus and in the
Indenture.
GENERAL
The Notes constitute a single series for purposes of the Indenture and are
limited to $250,000,000 in aggregate gross proceeds (or, if applicable, the
equivalent thereof in foreign currencies or currency units), subject to
reduction as a result of the sale by the Corporation of other Debt Securities
(other than Notes) pursuant to the Registration Statement of which the
accompanying Prospectus is a part. The Notes will be unsecured obligations of
the Corporation and will rank on a parity with all other unsecured and
unsubordinated indebtedness of the Corporation.
The Notes will be offered from time to time and will mature on a day nine
months or more from their date of original issuance, as selected by the initial
purchaser and agreed to by the Corporation.
Unless otherwise indicated in the applicable Pricing Supplement, the Notes
will not be subject to any sinking fund and will not be redeemable or repayable
prior to their Stated Maturity.
Interest rates offered by the Corporation with respect to the Notes may
differ depending upon, among other things, the aggregate principal amount of the
Notes purchased in any single transaction.
Each Note will be issued only in fully registered form as either a
Book-Entry Note or a Certificated Note. Except under certain circumstances as
set forth below, Book-Entry Notes will not be issuable in definitive form. See
"Book-Entry System."
Unless otherwise indicated in the applicable Pricing Supplement, the Notes
will be issued in U.S. dollar denominations of $1,000 and integral multiples of
$1,000 in excess thereof. If any of the Notes are to be denominated in a
currency, including a composite currency, other than U.S. dollars, or if the
principal, premium, if any, and/or interest, if any, on any of the Notes is to
be payable at the option of the Holder or the Corporation in a currency,
including a composite currency, other than U.S. dollars or other than that
currency in which such Note is denominated, the applicable Pricing Supplement
will provide additional information pertaining thereto. See "Foreign Currency
Notes."
The Notes may be issued with original issue discount for United States
federal income tax purposes. Holders of Notes issued with original issue
discount may be required to include amounts in gross income for federal income
tax purposes in advance of the receipt of the cash to which such income is
attributable. Original issue discount may arise because the stated principal
amount at Maturity of a Note exceeds its issue price, or because the Note
provides for interest payments other than those calculated on the basis of a
single fixed rate of interest or a variable rate of interest tied to a single
objective index of market interest rates. Examples of Notes which give rise to
original issue discount include Notes which do not pay any interest prior to
Maturity ("Zero Coupon Notes"), Notes with interest payments based on multiple
indices and Notes with irregular accrual periods. See "Certain Federal Income
Tax Consequences -- Discount Notes" and "Certain Federal Income Tax
Consequences -- Short-Term Obligations."
The Notes may be issued as Indexed Notes, as indicated in the applicable
Pricing Supplement. Holders of Indexed Notes, the principal amount of which is
payable at Maturity will be determined by
S-5
<PAGE>
reference to the rate of exchange between the currency or currency unit in which
such Note is denominated and one or more other currencies or currency units
("Currency Indexed Notes") may receive a principal amount at Maturity that is
greater than or less than the face amount of such Notes depending upon the
fluctuation of the relative value of the specified exchange rate or exchange
rates. Holders of Indexed Notes other than Currency Indexed Notes may receive
payments of principal and premium, if any, that will be computed by reference to
a formula based on the relative value, rate or price of one or more specified
commodities or indices. Specific information pertaining to the method for
determining the amount payable in respect of principal and premium, if any, a
historical comparison of the relative value, rate or price of each specified
commodity, currency or index and the face amount of the Indexed Note and certain
additional tax considerations will be described in the applicable Pricing
Supplement.
The Notes may be issued as Amortizing Notes. Amortizing Notes are securities
for which payments of principal and interest are made in equal installments over
the life of the security. Interest on each Amortizing Note will be computed on
the basis of a 360-day year of twelve 30-day months. Payments with respect to
Amortizing Notes will be applied first to interest due and payable thereon and
then to the reduction of the unpaid principal amount thereof. A table setting
forth repayment information in respect of each Amortizing Note will be provided
to the initial purchaser and will be available, upon request, to subsequent
Holders.
For Certificated Notes, payments of principal, premium, if any, and interest
payable at Maturity will be made in immediately available funds at the principal
office of the Trustee in the Borough of Manhattan, The City of New York,
provided that the Certificated Note is presented to the Paying Agent in time for
the Paying Agent to make such payments in such funds in accordance with its
normal procedures. Interest on Certificated Notes (other than interest payable
at Maturity) will be paid by check mailed to the address of the Person entitled
thereto as it appears in the Security Register as of the Regular Record Dates
or, at the option of the Corporation, by wire transfer to an account maintained
by such Person with a bank located in the United States. Notwithstanding the
foregoing, a Holder of $10,000,000 or more in aggregate principal amount of
Notes having the same Interest Payment Dates shall, upon written request, be
entitled to receive payments of interest (other than at Maturity) by wire
transfer to an account maintained by such Holder with a bank located in the
United States.
The total amount of any principal, premium, if any, and interest due on any
Global Note representing one or more Book-Entry Notes on any Interest Payment
Date or at the Stated Maturity will be made available to the Trustee on such
date. As soon as possible thereafter, the Trustee will cause such amounts to be
paid to The Depository Trust Company, New York, New York ("DTC" or the
"Depositary") in accordance with existing arrangements between the Trustee and
the Depositary. The Depositary will allocate such payments to each Book-Entry
Note represented by such Global Note and make payments to the owners or Holders
thereof in accordance with its existing operating procedures. Neither the
Corporation nor the Trustee shall have any responsibility or liability for such
payments by the Depositary. So long as the Depositary or its nominee is the
registered owner of any Global Note, the Depositary or its nominee, as the case
may be, will be considered the sole owner or Holder of the Book-Entry Note or
Notes represented by such Global Note for all purposes under the Indenture.
INTEREST AND INTEREST RATES
Each Note, other than a Zero Coupon Note or an Indexed Note, will bear
interest from its date of issuance or from the most recent Interest Payment Date
in respect of which interest on such Note has been paid or duly provided for at
the annual rate, or at a rate determined pursuant to an interest rate formula,
stated therein and in the applicable Pricing Supplement, until the principal
thereof is paid or made available for payment. Interest will be payable on each
Interest Payment Date and at Maturity. Interest will be payable generally to the
Person in whose name a Note (or any Predecessor Note) is registered at the close
of business on the Regular Record Date next preceding the related Interest
Payment Date; PROVIDED, HOWEVER, that interest payable at Maturity will be
payable to the Person to whom principal shall be 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
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<PAGE>
succeeding Regular Record Date to the registered owner on such next Regular
Record Date. Each date on which interest is payable on a Note is referred to
herein as an "Interest Payment Date."
Each Note, other than a Zero Coupon Note, will bear interest at either (a) a
fixed rate (the "Fixed Rate Notes") or (b) a floating rate determined by
reference to an interest rate formula, as specified in the applicable Pricing
Supplement (the "Floating Rate Notes"), which may be adjusted by a Spread or
Spread Multiplier (each as defined below).
The interest rate on the Notes will in no event be higher than the maximum
rate permitted by New York law, as the same may be modified by United States law
of general application. Under present New York law, the maximum rate of interest
is 25% per annum on a simple interest basis. The limit may not apply to Notes in
which $2,500,000 or more has been invested.
Interest rates and interest rate formulas are subject to change by the
Corporation from time to time but no such change will affect any Note
theretofore issued or which the Corporation has agreed to sell. Unless otherwise
indicated in the applicable Pricing Supplement, the Interest Payment Dates and
the Regular Record Dates for Fixed Rate Notes shall be as described below under
"Fixed Rate Notes." The Interest Payment Dates for Floating Rate Notes shall be
as indicated in the applicable Pricing Supplement, and each Regular Record Date
for a Floating Rate Note will be the fifteenth day (whether or not a Business
Day) next preceding each Interest Payment Date.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from its date of issuance at the
annual rate stated on the face thereof and in the applicable Pricing Supplement
until the principal amount thereof is paid or made available for payment. Unless
otherwise indicated in the applicable Pricing Supplement, Interest Payment Dates
for the Fixed Rate Notes will be on May 1 and November 1 of each year, and the
Regular Record Dates will be on April 15 and October 15 of each year. If any
Interest Payment Date or Maturity of a Fixed Rate Note falls on a day that is
not a Business Day with respect to such Fixed Rate Note, the payment due on such
Interest Payment Date or at Maturity will be made on the following day that is a
Business Day with respect to such Fixed Rate Note as if it were made on the date
such payment was due, and no interest shall accrue on the amount so payable for
the period from and after such Interest Payment Date or Maturity, as the case
may be. The first payment of interest on any Fixed Rate Note originally issued
between a Regular Record Date and an Interest Payment Date shall be made on the
Interest Payment Date following the next succeeding Regular Record Date.
Interest on Fixed Rate Notes will be computed and paid on the basis of a 360-day
year of twelve 30-day months. Interest payments for Fixed Rate Notes will be in
the amount of interest accrued from and including the next preceding Interest
Payment Date in respect of which interest has been paid or duly provided for (or
from and including the date of issue, if no interest has been paid with respect
to such Fixed Rate Note), to but excluding the applicable Interest Payment Date.
FLOATING RATE NOTES
The applicable Pricing Supplement relating to a Floating Rate Note will
designate an interest rate basis for such Floating Rate Note. Such basis may be:
(a) the CD Rate, in which case such Note will be a "CD Rate Note"; (b) the
Commercial Paper Rate, in which case such Note will be a "Commercial Paper Rate
Note"; (c) LIBOR, in which case such Note will be a "LIBOR Note"; (d) the
Treasury Rate, in which case such Note will be a "Treasury Rate Note"; (e) the
Federal Funds Effective Rate, in which case such Note will be a "Federal Funds
Rate Note"; (f) the Prime Rate, in which case such Note will be a "Prime Rate
Note"; or (g) such other interest rate basis as is set forth in such Pricing
Supplement.
The applicable Pricing Supplement also will specify the Spread or Spread
Multiplier, if any, applicable to each Floating Rate Note. The "Spread" is the
number of basis points specified in the applicable Pricing Supplement as being
applicable to such Floating Rate Note, and the "Spread Multiplier" is the
percentage specified in the applicable Pricing Supplement as being applicable to
such Floating Rate Note. In addition, such Pricing Supplement will define or
particularize for each Note the following terms, if applicable: the period to
maturity of the instrument or obligation on which the interest rate formula is
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based (the "Index Maturity"), Initial Interest Rate, Interest Payment Dates,
Regular Record Dates, Interest Reset Dates and any other term that is applicable
to the specific Note.
Except as provided below or in the applicable Pricing Supplement, interest
on Floating Rate Notes will be payable (a) in the case of Floating Rate Notes
with a daily, weekly or monthly Interest Reset Date (as defined below), on the
third Wednesday of each month or on the third Wednesday of March, June,
September and December of each year, as specified in the applicable Pricing
Supplement; (b) in the case of Floating Rate Notes with a quarterly Interest
Reset Date, on the third Wednesday of March, June, September and December of
each year; (c) in the case of Floating Rate Notes with a semi-annual Interest
Reset Date, on the third Wednesday of two months of each year, as specified in
the applicable Pricing Supplement; and (d) in the case of Floating Rate Notes
with an annual Interest Reset Date, on the third Wednesday of one month of each
year, as specified in the applicable Pricing Supplement. If any Interest Payment
Date for any Floating Rate Note would otherwise be a day that is not a Business
Day for such Floating Rate Note, the Interest Payment Date for such Floating
Rate Note shall be postponed to the next day that is a Business Day for such
Floating Rate Note, except that in the case of a LIBOR Note, if such Business
Day is in the next succeeding calendar month, such Interest Payment Date shall
be the immediately preceding Business Day. If the Maturity of a Floating Rate
Note falls on a day that is not a Business Day with respect to such Note, the
payment of principal and interest may be made on the next succeeding Business
Day with respect to such Note, and no interest on such payment shall accrue for
the period from and after Maturity. "Business Day" means any day that is not a
Saturday or Sunday and that, in The City of New York, is not a day on which
banking institutions are generally authorized or obligated by law to close and,
with respect to LIBOR Notes, is also a London Business Day (as defined below).
The rate of interest on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semi-annually or annually (each an "Interest Reset Date"),
as specified in the applicable Pricing Supplement. Except as provided in the
applicable Pricing Supplement, the Interest Reset Date will be: (a) in the case
of Floating Rate Notes which reset daily, each Business Day; (b) in the case of
Floating Rate Notes which reset weekly (other than Treasury Rate Notes), the
Wednesday of each week; (c) in the case of Treasury Rate Notes which reset
weekly, the Tuesday of each week; (d) in the case of Floating Rate Notes which
reset monthly, the third Wednesday of each month; (e) in the case of Floating
Rate Notes which reset quarterly, the third Wednesday of March, June, September
and December; (f) in the case of Floating Rate Notes which reset semi-annually,
the third Wednesday of two months of each year, as specified in the applicable
Pricing Supplement; and (g) in the case of Floating Rate Notes which reset
annually, the third Wednesday of one month of each year, as specified in the
applicable Pricing Supplement; PROVIDED, HOWEVER, that the interest rate in
effect from the date of issuance to the first Interest Reset Date with respect
to a Floating Rate Note will be the Initial Interest Rate (as set forth in the
applicable Pricing Supplement). If any Interest Reset Date for any Floating Rate
Note would otherwise be a day that is not a Business Day for such Floating Rate
Note, the Interest Reset Date for such Floating Rate Note shall be postponed to
the next day that is a Business Day for such Floating Rate Note, except that in
the case of a LIBOR Note, if such Business Day is in the next succeeding
calendar month, such Interest Reset Date shall be the immediately preceding
Business Day.
The Interest Determination Date pertaining to an Interest Reset Date for a
CD Rate Note (the "CD Interest Determination Date"), a Commercial Paper Rate
Note (the "Commercial Paper Interest Determination Date"), a Federal Funds Rate
Note (the "Federal Funds Interest Determination Date") or a Prime Rate Note (the
"Prime Determination Date") will be the second Business Day next preceding such
Interest Reset Date. The Interest Determination Date pertaining to an Interest
Reset Date for a LIBOR Note (the "LIBOR Interest Determination Date") will be
the second London Business Day preceding such Interest Reset Date. The Interest
Determination Date pertaining to an Interest Reset Date for a Treasury Rate Note
(the "Treasury Interest Determination Date") 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 normally sold at auction on Monday of each week,
unless that day is a legal holiday, in which case the
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auction is normally 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 Treasury
Interest Determination Date pertaining to the Interest Reset Date occurring in
the next succeeding week. If an auction date shall fall on any Interest Reset
Date for a Treasury Rate Note, then such Interest Reset Date shall instead be
the first Business Day immediately following such auction date.
Any Floating Rate Note also may have either or both of the following which
will be specified in the applicable Pricing Supplement: (i) a maximum numerical
interest rate limitation, or ceiling, and (ii) a minimum numerical interest rate
limitation, or floor, on the rate of interest which may accrue during any
interest period.
Where applicable, the date by which applicable interest rates pertaining to
any Interest Determination Date is to be determined (the "Calculation Date")
will be the earlier of (i) the tenth calendar day after such Interest
Determination Date or if such day is not a Business Day, the next succeeding
Business Day, or (ii) the Business Day preceding the applicable Interest Payment
Date or Maturity, as the case may be.
Unless otherwise indicated in the applicable Pricing Supplement, interest
payments for Floating Rate Notes will include interest accrued from the date of
issuance or from the last date to which interest has been paid to but excluding
the Interest Payment Dates or Maturity, as the case may be. Accrued interest
from the date of issuance or from the last date to which interest has been paid
is calculated by multiplying the face amount of a Note by an accrued interest
factor. This accrued interest factor is computed by adding the interest factors
calculated for each day from and including the date of issuance, or from but
excluding the last date for which interest has been paid, to and including the
date for which accrued interest is being calculated. The interest factor for
each such day is computed by dividing the interest rate applicable to such date
by 360, in the case of CD Rate Notes, Commercial Paper Rate Notes, LIBOR Notes,
Federal Funds Rate Notes and Prime Rate Notes, or by the actual number of days
in the year, in the case of Treasury Rate Notes.
Unless otherwise specified in the applicable Pricing Supplement, all
percentages resulting from any calculation on Floating Rate Notes will be
rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point rounded upward (E.G.,
9.876545% (or .09876545) being rounded to 9.87655% (or .0987655) and 9.876544%
(or .09876544) being rounded to 9.87654% (or .0987654)), and all dollar amounts
used in or resulting from such calculation on Floating Rate Notes will be
rounded to the nearest cent (with one-half cent being rounded upward).
Unless otherwise specified in the applicable Pricing Supplement, the Trustee
will act as calculation agent (the "Calculation Agent") for Floating Rate Notes.
The Calculation Agent will, upon the request of the Holder of any Floating Rate
Note, provide the interest rate then in effect and, if determined, the interest
rate which will become effective as a result of a determination made on the most
recent Interest Determination Date with respect to such Note. For purposes of
calculating the rate of interest payable on Floating Rate Notes, the Corporation
will enter into an agreement with the Calculation Agent.
CD RATE NOTES
CD Rate Notes will bear interest at interest rates (calculated with
reference to the CD Rate and the Spread or Spread Multiplier, if any) specified
in the CD Rate Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "CD Rate"
means, with respect to any CD Interest Determination Date, the rate for that CD
Interest Determination Date for negotiable certificates of deposit having the
Index Maturity designated in the applicable Pricing Supplement, as published by
the Board of Governors of the Federal Reserve System in "Statistical Release
H.15(519), Selected Interest Rates," or any successor publication published by
the Board of Governors of the Federal Reserve System ("H.15(519)"), under the
heading "CDs (Secondary Market)." In the event that
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such rate is not published prior to 9:00 A.M., New York City time, on the
Calculation Date pertaining to such CD Interest Determination Date, then the CD
Rate will be the rate for that CD Interest Determination Date for negotiable
certificates of deposit having the specified Index Maturity, as 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 ("Composite
Quotations"), under the heading "Certificates of Deposit." If by 3:00 P.M., New
York City time, on the Calculation Date pertaining to such CD Interest
Determination Date the rate for such CD Interest Determination Date is not yet
published in either H.15(519) or Composite Quotations, the CD Rate for that CD
Interest Determination Date will be calculated by the Calculation Agent and will
be the arithmetic mean of the secondary market offered rates of three leading
nonbank dealers in negotiable U.S. dollar certificates of deposit in The City of
New York selected by the Calculation Agent as of 10:00 A.M., New York City time,
on that CD Interest Determination Date, for negotiable certificates of deposit
of major United States money market banks having a remaining maturity closest to
the specified Index Maturity in a denomination of $5,000,000; PROVIDED, HOWEVER,
that if the dealers selected as aforesaid by the Calculation Agent are not
quoting as mentioned in this sentence, the CD Rate with respect to such CD
Interest Determination Date will be the CD Rate in effect on such CD Interest
Determination Date.
COMMERCIAL PAPER RATE NOTES
Commercial Paper Rate Notes will bear interest at the interest rates
(calculated with reference to the Commercial Paper Rate and the Spread or Spread
Multiplier, if any) specified in the Commercial Paper Rate Note and in the
applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Commercial
Paper Rate" means, with respect to any Commercial Paper Interest Determination
Date, the Money Market Yield (calculated as described below) of the rate on that
date for commercial paper having the Index Maturity designated in the applicable
Pricing Supplement as published in H.15(519) under the heading "Commercial
Paper." In the event that such rate is not published by 9:00 A.M., New York City
time, on the Calculation Date pertaining to such Commercial Paper Interest
Determination Date, then the Commercial Paper Rate shall be the Money Market
Yield of the rate on that Commercial Paper Interest Determination Date for
commercial paper having the Index Maturity designated in the applicable Pricing
Supplement as published in Composite Quotations under the heading "Commercial
Paper." If by 3:00 P.M., New York City time, on such Calculation Date pertaining
to such Commercial Paper Interest Determination Date such rate is not yet
published in either H.15(519) or Composite Quotations, the Commercial Paper Rate
for that Commercial Paper Interest Determination Date shall be calculated by the
Calculation Agent and shall be the Money Market Yield of the arithmetic mean of
the offered rates of three leading dealers of commercial paper in The City of
New York selected by the Calculation Agent as of 11:00 A.M., New York City time,
on that Commercial Paper Interest Determination Date, for commercial paper
having the Index Maturity designated in the applicable Pricing Supplement placed
for an industrial issuer whose bond rating issued by a nationally recognized
securities rating agency is "AA" or the equivalent; PROVIDED, HOWEVER, that if
the dealers selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, the Commercial Paper Rate with respect to such
Commercial Paper Interest Determination Date will be the Commercial Paper Rate
in effect on such Commercial Paper Interest Determination Date.
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
<TABLE>
<S> <C> <C> <C> <C>
D X 360
Money Market Yield = -------------
360 - (D X M) X 100
</TABLE>
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where "D" refers to the per annum rate for commercial paper, quoted on a bank
discount basis and expressed as a decimal; and "M" refers to the actual number
of days in the interest period for which interest is being calculated.
LIBOR NOTES
LIBOR Notes will bear interest at the interest rates (calculated with
reference to LIBOR and the Spread or Spread Multiplier, if any) specified in the
LIBOR Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, LIBOR will
be determined by the Calculation Agent in accordance with the following
provisions:
(i) With respect to a LIBOR Interest Determination Date, LIBOR will be
determined on the basis of the offered rate for U.S. dollar deposits of not
less than U.S. $1,000,000 having the Index Maturity designated in the
applicable Pricing Supplement, commencing on the second day on which
dealings in deposits in U.S. dollars are transacted in the London interbank
market ("London Business Day") immediately following that LIBOR Interest
Determination Date, which appears on the display page designated as "3750"
on the Dow Jones Telerate Service (or such other page as may replace
Telerate Page 3750 on that service for the purpose of displaying London
interbank offered rates of major banks) ("Telerate Page 3750") as of 11:00
A.M., London time, on that LIBOR Interest Determination Date. If no rate
appears, LIBOR in respect of that LIBOR Interest Determination Date will be
determined as if the parties had specified the rate described in (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which no
offered rate appears on Telerate Page 3750 as specified in (i) above, LIBOR
will be determined on the basis of the rates at which deposits in U.S.
dollars are offered by four major banks in the London interbank market
selected by the Calculation Agent (the "Reference Banks") as of 11:00 A.M.,
London time, on that LIBOR Interest Determination Date to prime banks in the
London interbank market having the Index Maturity designated in the
applicable Pricing Supplement commencing on the second London Business Day
immediately following that LIBOR Interest Determination Date and in a
principal amount equal to an amount of not less than U.S. $1,000,000 that is
representative for a single transaction in such market at such time. The
Calculation Agent will request the principal London office of each of such
Reference Banks to provide a quotation of its rate. If at least two such
quotations are provided, LIBOR in respect of that LIBOR Interest
Determination Date will be the arithmetic mean of such quotations. If fewer
than two quotations are provided, LIBOR in respect of that LIBOR Interest
Determination Date will be the arithmetic mean of the rates quoted by three
major banks in The City of New York selected by the Calculation Agent as of
11:00 A.M., New York City time, on that LIBOR Interest Determination Date
for loans in U.S. dollars to leading European banks, having the Index
Maturity designated in the applicable Pricing Supplement commencing on the
second London Business Day immediately following that LIBOR Interest
Determination Date and in a principal amount equal to an amount of not less
than U.S. $1,000,000 that is representative for a single transaction in such
market at such time; PROVIDED, HOWEVER, that if the banks in The City of New
York selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, LIBOR with respect to such LIBOR Interest
Determination Date will be LIBOR in effect on such LIBOR Interest
Determination Date.
TREASURY RATE NOTES
Treasury Rate Notes will bear interest at the interest rates (calculated
with reference to the Treasury Rate and the Spread or Spread Multiplier, if any)
specified in the Treasury Rate Note and in the applicable Pricing Supplement.
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Unless otherwise indicated in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Treasury Interest Determination Date, the rate
for the most recent auction of direct obligations of the United States
("Treasury Bills") having the Index Maturity designated in the applicable
Pricing Supplement 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 City time, on the Calculation Date pertaining
to such Treasury Interest Determination 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) as otherwise announced by the United
States Department of the Treasury. In the event that the results of the auction
of Treasury Bills having the Index Maturity designated in the applicable Pricing
Supplement are not otherwise reported as provided above by 3:00 P.M., New York
City time, on such Calculation Date or no such auction is held in a particular
week, then the Treasury Rate shall be calculated by the Calculation Agent and
shall 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 3:30 P.M., New York
City time, on such Treasury Interest Determination Date, of three leading
primary United States government securities dealers selected by the Calculation
Agent, for the issue of Treasury Bills with a remaining maturity closest to the
Index Maturity designated in the applicable Pricing Supplement; PROVIDED,
HOWEVER, that if the dealers selected as aforesaid by the Calculation Agent are
not quoting as mentioned in this sentence, the Treasury Rate with respect to
such Treasury Interest Determination Date will be the Treasury Rate in effect on
such Treasury Interest Determination Date.
FEDERAL FUNDS RATE NOTES
Federal Funds Rate Notes will bear interest at the interest rates
(calculated with reference to the Federal Funds Effective Rate and the Spread or
Spread Multiplier, if any) specified in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Federal
Funds Effective Rate" means, with respect to any Federal Funds Interest
Determination Date, the rate on that date for Federal Funds having the Index
Maturity specified in the applicable Pricing Supplement as published in
H.15(519) under the heading "Federal Funds (Effective)." In the event that such
rate is not so published by 9:00 A.M., New York City time, on the Calculation
Date pertaining to such Federal Funds Interest Determination Date, the Federal
Funds Effective Rate will be the rate on such Federal Funds Interest
Determination Date as published in Composite Quotations under the heading
"Federal Funds/Effective Rate." If such rate is published in neither H.15(519)
by 9:00 A.M., New York City time, on such Calculation Date nor Composite
Quotations by 3:00 P.M., New York City time, on such Calculation Date, the
Federal Funds Effective Rate for such Federal Funds Interest Determination Date
will be calculated by the Calculation Agent and will be the arithmetic mean of
the rates as of 11:00 A.M., New York City time, on such Federal Funds Interest
Determination Date for the last transaction in overnight Federal Funds arranged
by three leading brokers of Federal Funds transactions in The City of New York
selected by the Calculation Agent; PROVIDED, HOWEVER, that if the brokers
selected as aforesaid by the Calculation Agent are not quoting as mentioned in
this sentence, the Federal Funds Effective Rate will be the Federal Funds
Effective Rate in effect on such Federal Funds Interest Determination Date.
PRIME RATE NOTES
Prime Rate Notes will bear interest at the interest rates (calculated with
reference to the Prime Rate and the Spread or Spread Multiplier, if any)
specified in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Prime
Rate" means, with respect to any Prime Interest Determination Date, the rate set
forth on such date in H.15(519) under the heading "Bank Prime Loan." In the
event that such rate is not published prior to 9:00 A.M., New York City time, on
the Calculation Date pertaining to such Prime Interest Determination Date, then
the Prime Rate will be determined by the Calculation Agent and will be the
arithmetic mean of the rates of interest publicly
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announced by each bank that appears on the Reuters Screen USPRIME1 Page (as
defined below) as such bank's prime rate or base lending rate as in effect for
that Prime Interest Determination Date. If fewer than four, but more than one
such rates appear on the Reuters Screen USPRIME1 Page for the Prime Interest
Determination Date, the Prime Rate will be determined by the Calculation Agent
and will be the arithmetic mean of the prime rates quoted on the basis of the
actual number of days in the year divided by a 360-day year as of the close of
business on such Prime Interest Determination Date by four major money center
banks in The City of New York selected by the Calculation Agent. If fewer than
two such rates appear on the Reuters Screen USPRIME1 Page, the Prime Rate will
be determined by the Calculation Agent on the basis of the rates furnished in
The City of New York by the appropriate number of substitute banks or trust
companies organized and doing business under the laws of the United States, or
any State thereof, having total equity capital of at least U.S. $500,000,000 and
being subject to supervision or examination by federal or state authority,
selected by the Calculation Agent to provide such rate or rates; PROVIDED,
HOWEVER, that if the banks selected as aforesaid are not quoting as mentioned in
this sentence, the Prime Rate will be the Prime Rate in effect on such Prime
Interest Determination Date. "Reuters Screen USPRIME1 Page" means the display
designated as page "USPRIME1" on the Reuters Monitor Money Rates Service (or
such other page as may replace the USPRIME1 page on that service for the purpose
of displaying prime rates or base lending rates of major United States banks).
REDEMPTION AND SINKING FUNDS
The Pricing Supplement relating to each Note will indicate if such Note will
be redeemable at the option of the Corporation on a date or dates specified
prior to Stated Maturity at a price or prices, set forth in the applicable
Pricing Supplement, together with accrued interest to the date of redemption.
The Corporation may redeem any of the Notes which are redeemable and remain
outstanding either in whole or from time to time in part, upon not less than 30
days' nor more than 60 days' notice. If less than all of the Notes with like
tenor and terms are to be redeemed, the Notes to be redeemed shall be selected
by the Trustee by such method as the Trustee shall deem fair and appropriate.
Unless otherwise specified in the applicable Pricing Supplement, the Notes will
not be subject to any sinking fund.
REPAYMENT
The Pricing Supplement relating to each Note will indicate if such Note will
be repayable at the option of the Holder on a date or dates specified prior to
Stated Maturity at a price or prices set forth in the applicable Pricing
Supplement, together with accrued interest to the date of repayment.
In order for a Note to be repaid, the Trustee must receive at least 30 days'
but not more than 60 days' notice prior to the repayment date.
BOOK-ENTRY SYSTEM
Upon issuance, all Fixed Rate Book-Entry Notes having the same original
issuance date, interest rate, redemption provisions (if any), repayment
provisions (if any) and Stated Maturity will be represented by a single Global
Note. All Floating Rate Book-Entry Notes having the same interest rate basis,
original issuance date, Initial Interest Rate, Index Maturity, Spread, Spread
Multiplier, minimum interest rate (if any), maximum interest rate (if any),
redemption provisions (if any) and Stated Maturity will be represented by a
single Global Note. Each Global Note representing Book-Entry Notes will be
deposited with, or on behalf of, the Depositary and registered in the name of a
nominee of the Depositary. Except as set forth below, Book-Entry Notes will not
be exchangeable for Certificated Notes and will not be issuable in definitive
form or denominated in foreign currencies or currency units.
DTC has advised the Corporation that it is a limited-purpose trust company
organized under the New York Banking Law, a "banking organization" within the
meaning of the New York Banking Law, a
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member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC holds securities that its participants ("Participants") deposit
with DTC. DTC also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations. DTC is owned by a number
of its direct Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such as
securities brokers and dealers, banks and trust companies that clear through or
maintain a custodial relationship with a direct Participant, either directly or
indirectly. The rules applicable to DTC and its Participants are on file with
the Securities and Exchange Commission.
A further description of the Depositary's procedures with respect to Global
Notes representing Book-Entry Notes is set forth in the Prospectus under
"Description of Debt Securities." The Depositary has confirmed to the
Corporation, the Agents and the Trustee that it intends to follow such
procedures.
FOREIGN CURRENCY NOTES
GENERAL
Unless otherwise indicated in the applicable Pricing Supplement, the Notes
will be denominated in U.S. dollars, and payments of principal, premium, if any,
and interest, if any, on the Notes will be made in U.S. dollars. If any Notes
are to be denominated in a currency, including a composite currency, other than
U.S. dollars ("Foreign Currency Notes"), such currency will be specified in the
applicable Pricing Supplement.
EXCHANGE INFORMATION
Purchasers are required to pay for the Foreign Currency Notes in the foreign
currency specified in the applicable Pricing Supplement. Currently, there are
limited facilities in the United States for conversion of U.S. dollars into
foreign currencies, and vice versa. In addition, Federal Reserve regulations
prohibit United States banks from establishing non-dollar denominated checking
or savings account facilities in the United States. Accordingly, unless
otherwise specified in a Pricing Supplement or unless alternative arrangements
are made, payments of principal, premium, if any, and interest on Foreign
Currency Notes will be made in the specified currency to an account at a bank
outside the United States.
PAYMENT CURRENCY
If the principal, premium, if any, and interest, if any, on any Foreign
Currency Note is payable in a currency other than U.S. dollars and such currency
is not available to the Corporation for making payments thereof due to the
imposition of exchange controls or other circumstances beyond the control of the
Corporation, the Corporation will be entitled to satisfy its obligations to
Holders of the Foreign Currency Notes by making such payment in U.S. dollars on
the basis of the market exchange rate as of the most recent practicable date.
Any payment made under such circumstances in U.S. dollars where the required
payment is in a currency other than U.S. dollars will not constitute an Event of
Default under the Indenture.
FOREIGN CURRENCY RISKS
See "Risk Factors -- Foreign Currency Risks."
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of certain United States federal income
tax consequences relating to ownership of the Notes. No information is provided
herein with respect to foreign, state or local tax laws. This summary is based
upon the provisions of the Internal Revenue Code of 1986, as amended through the
date of this Prospectus Supplement (the "Code"), Treasury Regulations,
administrative rulings and judicial decisions currently in effect, all of which
are subject to change (possibly on a retroactive basis). The discussion below
generally deals only with Notes held by the original purchaser (the "Holder") as
"capital assets" (generally, property held for investment) within the meaning of
Section 1221 of the Code and generally does not deal with special tax
situations, such as Notes held by life insurance companies, tax-exempt
organizations, banks, foreign persons (except to the extent specifically
provided below), a Holder which actually or constructively owns 10% or more of
the total combined voting power of all classes of voting stock of the
Corporation, dealers in securities or currencies, or Notes held as a hedge or
hedged against currency risks. Prospective investors are urged to consult their
own tax advisors concerning the federal, state, local and foreign tax
consequences, if any, of holding and disposing of Notes.
GENERAL
In general, interest payments on a Note calculated on the basis of a single
fixed rate of interest, or a variable rate tied to a single objective index of
market interest rates, that is actually and unconditionally payable, at fixed
periodic intervals of one year or less over the entire term of the Note
(including short periods) ("Qualified Stated Interest Payments") will be
includible in the Holder's gross income as ordinary interest income in
accordance with such Holder's method of tax accounting.
DISCOUNT NOTES
Notes with a term greater than one year may be issued with original issue
discount for United States federal income tax purposes ("Discount Notes").
Original issue discount may arise because the stated principal amount at
maturity of a Discount Note exceeds its "issue price", or because the Discount
Note provides for payments other than Qualified Stated Interest Payments (such
as Notes the terms of which provide for contingent interest, interest holidays,
irregular accrual periods, interest payable in additional Notes, stepped rates,
or rates based on multiple indices). Under a de minimus rule, if the amount of
the original issue discount is less than one-quarter of one percent of the
Note's "stated redemption price at maturity" multiplied by the number of full
years from the Note's issue date to its maturity date, the Note will not be
considered to be issued with original issue discount. The stated redemption
price at maturity of a Discount Note generally will equal all payments due under
the Discount Note other than Qualified Stated Interest Payments, and the issue
price of such Discount Note will generally be equal to the initial price at
which a substantial amount of such Discount Notes is sold to the public. Holders
of Discount Notes will be required to include amounts in gross income for
federal income tax purposes in advance of the receipt of the cash to which such
income is attributable. The amount of original issue discount to be included in
income in any tax period will be determined using a constant yield to maturity
method, with the result that Holders generally will have to include in income
increasingly greater amounts of original issue discount in successive periods.
Any amounts included in income as original issue discount will increase a
Holder's tax basis in the Discount Note.
A legend setting forth the total amount of original issue discount with
respect to a Discount Note will appear on the face of the Discount Note, and the
Corporation will report annually to the Internal Revenue Service ("IRS") and
each Holder the original issue discount accrued with respect to the Discount
Note. Prospective Holders are advised to consult their tax advisors with respect
to the particular original issue discount characteristics of the Discount Note
that is being purchased.
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SHORT-TERM OBLIGATIONS
In general, a cash-method Holder of any Note issued with original issue
discount that matures one year or less from the date of its issuance
("Short-Term Discount Notes") is not required to accrue original issue discount
for United States federal income tax purposes unless it elects to do so (if such
election is not made, such Holders may be subject to limitations on the
deductibility of interest on indebtedness incurred to purchase or carry such
Short-Term Discount Notes). Accrual method Holders are required to include in
income currently the accrued original issue discount on such Short-Term Discount
Notes determined on a ratable accrual basis unless an election is made to accrue
the original issue discount under the constant yield method (based on daily
compounding). In the case of a Holder who is not required, and who does not
elect, to include the original issue discount in income currently, any gain
realized on the sale, exchange or redemption of the Short-Term Discount Note
will be ordinary income to the extent of the original issue discount accrued
through the date of sale, exchange or redemption.
SALE, EXCHANGE OR RETIREMENT
Upon the sale, exchange or retirement of a Note, a Holder will recognize
taxable gain or loss, if any, equal to the difference between the amount
realized on the sale, exchange or retirement and such Holder's tax basis in such
Note. Except as described above with respect to Short-Term Obligations and in
certain other limited circumstances, such gain or loss will be capital gain or
loss and will be long-term capital gain or loss if the Note has been held for
more than one year at the time of such sale, exchange or retirement.
FOREIGN CURRENCY NOTES
For the purposes of the following discussion it is assumed that the
functional currency of a United States Holder is the U.S. dollar. It is also
assumed that, in the case of a Holder who is an individual, expenses incurred in
connection with the acquisition, holding or disposition of a Note or foreign
currency, if any, meet the requirements of Section 162 or Section 212 of the
Code.
PAYMENTS OF INTEREST
In general, interest on a Foreign Currency Note (whether received in the
specified currency or U.S. dollars) will be taxable to a United States Holder as
ordinary interest income at the time it is accrued or received in accordance
with the United States Holder's method of accounting for tax purposes. If
payment is made in the specified currency, the amount of interest income for
cash basis taxpayers generally will be the U.S. dollar value of the specified
currency payment based on the exchange rate in effect on the date of receipt
and, for accrual basis taxpayers, generally will be the U.S. dollar value of the
accrued amount based on the average exchange rate in effect during the interest
accrual period, in either case, regardless of whether the interest payment is in
fact converted to U.S. dollars.
A cash basis taxpayer generally will not recognize any gain or loss on the
receipt of interest income (in other than U.S. dollars) on a Foreign Currency
Note attributable to fluctuations in currency exchange rates ("Foreign Currency
Exchange Gain or Loss"). However, an accrual basis taxpayer will recognize
Foreign Currency Exchange Gain or Loss upon receipt of an interest payment
(including a payment attributable to accrued but unpaid interest upon sale,
exchange or retirement of a Foreign Currency Note), measured by the difference,
if any, between (i) the U.S. dollar value of the specified currency payment
based on the exchange rate in effect on the date of receipt and (ii) the U.S.
dollar value of the accrued interest income based on the exchange rate in effect
during the accrual period. Any such Foreign Currency Exchange Gain or Loss will
be treated as ordinary income or loss. Rules similar to those described above
with respect to accrual basis taxpayers apply to Holders of Foreign Currency
Notes that accrue original issue discount. If the interest payment is made in
the specified currency, the U.S. dollar value of the specified currency payment
based on the exchange rate in effect on the date of receipt will be the Holder's
tax basis in the specified currency.
S-16
<PAGE>
PURCHASE, SALE AND RETIREMENT OF FOREIGN CURRENCY NOTES
A United States Holder's tax basis in a Foreign Currency Note will be the
U.S. dollar value of the foreign currency amount paid for such Foreign Currency
Note based on the exchange rate in effect on the date of purchase of the Foreign
Currency Note, plus the U.S. dollar value of any accrued original issue discount
on the Foreign Currency Note which the Holder has reported as income. A Holder
who converts U.S. dollars to a foreign currency and immediately uses that
currency to purchase a Foreign Currency Note denominated in the same currency
normally will not recognize Foreign Currency Exchange Gain or Loss in connection
with such conversion and purchase. If a Holder purchases a Foreign Currency Note
with previously owned foreign currency, the Holder will recognize Foreign
Currency Exchange Gain or Loss in an amount equal to the difference, if any,
between such Holder's U.S. dollar tax basis in the foreign currency and the U.S.
dollar fair market value of the foreign currency based on the exchange rate in
effect on the date of purchase of the Note.
Gain or loss will be recognized upon the sale, exchange or retirement of a
Foreign Currency Note equal to the difference, if any, between the U.S. dollar
value of the foreign currency received upon the sale, exchange or retirement and
the U.S. dollar tax basis in the Foreign Currency Note. Any gain or loss
recognized will be deemed to be Foreign Currency Exchange Gain or Loss, taxable
as ordinary income or loss, up to the amount determined by multiplying the
original purchase price paid by the Holder (expressed in the relevant foreign
currency) by the change in the relevant exchange rate (expressed in U.S. dollars
per unit of the relevant foreign currency) between the date on which the Holder
acquired the Foreign Currency Note and the date on which the Holder received
payment in respect of the sale, exchange or retirement of the Foreign Currency
Note. Any gain or loss recognized by such a Holder in excess of such Foreign
Currency Exchange Gain or Loss will be capital gain or loss.
INDEXED NOTES, FLOATING RATE NOTES AND OTHER NOTES SUBJECT TO CONTINGENT PAYMENT
RULES
Tax considerations associated with an investment in Indexed Notes, Floating
Rate Notes and other Notes subject to rules governing debt instruments that
provide for one or more contingent payments will be described in the applicable
Pricing Supplement.
HOLDERS WHO ARE UNITED STATES ALIENS
The term "United States Alien" means any person who, for United States
federal income tax purposes, is a foreign corporation, a nonresident alien
individual, a nonresident alien fiduciary of a foreign estate or trust or a
foreign partnership, one or more of the members of which is, for United States
federal income tax purposes, a foreign corporation, a nonresident alien
individual or a foreign estate or trust.
Under present United States federal income and estate tax law:
(a) payments of principal (including original issue discount on Discount
Notes) and any premium and interest on the Notes by the Corporation or any
of its paying agents to any United States Alien Holder or its agent
generally will not be subject to United States withholding tax, provided
that in the case of such Notes (1) the beneficial owner of the Note
certifies to the Corporation or its agent, under penalties of perjury, that
he is not a United States person and provides his name and address, or (2) a
securities clearing organization, bank or other financial institution which
holds customers' securities in the ordinary course of its trade or business
(a "Financial Institution") and holds the Note, certifies to the Corporation
or its agent under penalties of perjury that such statement has been
received from the beneficial owner by it or by a Financial Institution
between it and the beneficial owner and furnishes the payor with a copy
thereof;
(b) a Holder of a Note who is a United States Alien will not be subject
to United States federal income tax on gain realized on the sale, exchange
or redemption of a Note, unless (1) the gain is effectively connected with a
trade or business carried on by such Holder within the United States or,
S-17
<PAGE>
if the Holder is eligible for the benefits of a tax treaty, in general, the
gain is attributable to a United States permanent establishment maintained
by the Holder, (2) the Holder is an individual that is present in the United
States for 183 days or more during the taxable year of disposition and who
has a tax home inside the United States or (3) the Holder is subject to tax
pursuant to the provisions of the Code applicable to certain United States
expatriates;
(c) a Note or coupon held by an individual who at the time of death is
not a citizen or resident of the United States for United States estate tax
purposes generally will not be subject to United States federal estate tax
as a result of such individual's death if the income from the Note was not
effectively connected with a United States trade or business of the Holder;
and
(d) information reporting and backup withholding (at a rate of 31
percent) do not apply to payments of principal and interest (including
original issue discount, if any) on the Notes made outside the United States
or to payments made with respect to the Notes if the certification described
in clause (a) of this section is received, provided in each case that the
Corporation does not have actual knowledge that the Holder is a United
States person.
Payments of the proceeds from the sale of a Note to or through a foreign
office of a broker or the foreign office of a custodian, nominee or other agent
acting on behalf of the beneficial owner of a Note will not be subject to
information reporting or backup withholding, except that if the broker is a
United States person, a controlled foreign corporation or a foreign person 50%
or more of whose gross income is from a United States trade or business,
information reporting generally will apply to such payments, and the IRS has
indicated that it is studying the possible application of backup withholding in
such cases. Payment of the proceeds from a sale of a Note to or through the
United States office of a broker is subject to information reporting and backup
withholding, unless the Holder or beneficial owner certifies as to its non-U.S.
status or otherwise establishes an exemption from information reporting and
backup withholding.
Any amounts withheld under the backup withholding rules from a payment to a
Holder would be allowed as a refund or a credit against such Holder's United
States federal income tax, provided that the required information is furnished
to the IRS.
PLAN OF DISTRIBUTION
Under the terms of a Distribution Agreement, dated as of February 6, 1991,
the Notes are being offered from time to time by the Corporation through one or
more of Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
J.P. Morgan Securities Inc. and PaineWebber Incorporated, as agents (the
"Agents"), each of which has agreed to use its best efforts to solicit purchases
of the Notes. The Corporation 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 reasonably exercised, to
reject any proposed purchase of Notes through it in whole or in part. The
Corporation will pay each Agent a commission in the form of a discount ranging
from .125% to .750% of the principal amount of each Note with a Stated Maturity
from 9 months to less than 30 years sold through such Agent, depending upon the
Stated Maturity of such Note, and a discount to be negotiated for sales through
such Agent of Notes with Stated Maturities in excess of 30 years. No commission
will be payable on any sales made directly by the Corporation.
The Corporation may also sell the Notes to any Agent, as principal, at a
discount for resale to one or more investors and other purchasers at varying
prices related to prevailing market prices at the time of resale, as determined
by such Agent, or, if so agreed, on a fixed public offering price basis. The
Corporation reserves the right to sell Notes directly on its own behalf in those
jurisdictions where it is authorized to do so. No commission will be payable on
any sales made directly by the Corporation.
S-18
<PAGE>
In addition, each Agent may offer the Notes it has purchased as principal,
to or through dealers and, unless otherwise specified in the applicable Pricing
Supplement, such dealers may receive compensation in the form of discounts,
concessions or commissions from the Agent not in excess of the discount or
commission received by the Agent from the Corporation.
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 an agency sale of a Note of identical maturity and may
be resold by the Agent to investors and other purchasers as described above.
After the initial public offering of Notes to be resold to investors and other
purchasers the public offering price (in the case of Notes to be sold at a fixed
public offering price), the concession and the discount may be changed. The
applicable Pricing Supplement may set forth further information with respect to
distribution of the Notes.
Payment of the purchase price of the Notes will be required to be made in
funds immediately available in The City of New York.
Each Agent, as agent or principal, may be deemed to be an "underwriter"
within the meaning of the Act. The Corporation has agreed to indemnify each
Agent against certain liabilities, including liabilities under the Act, and will
reimburse the Agents for certain expenses.
The Corporation has been advised by each of the Agents that it may from time
to time purchase and sell Notes in the secondary market, but that none of them
is obligated to do so. The Notes are a new issue of securities with no
established trading market and, unless otherwise indicated in the applicable
Pricing Supplement, will not be listed on any securities exchange. No assurance
can be given as to the existence or liquidity of any secondary market for the
Notes.
Each of Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and J.P. Morgan Securities Inc. performs various investment banking
and commercial banking services for and engages in transactions with the
Corporation or one or more of its affiliates from time to time.
LEGAL MATTERS
The validity of the Notes will be passed upon for the Agents by Skadden,
Arps, Slate, Meagher & Flom. From time to time, Skadden, Arps, Slate, Meagher &
Flom has performed certain legal services for the Corporation.
S-19
<PAGE>
PROSPECTUS
[LOGO]
U.S. $250,000,000
NORFOLK SOUTHERN CORPORATION
DEBT SECURITIES
--------------
Norfolk Southern Corporation (the "Corporation") may offer from time to time
its debt securities ("Debt Securities") to be issued for proceeds of up to
$250,000,000 (or the equivalent in foreign denominated currencies or composite
currencies) in amounts and on terms to be determined by the Corporation in light
of market conditions at the time of sale. The Debt Securities will be unsecured
Debt Securities which, when issued, will rank on a parity with all the unsecured
and unsubordinated indebtedness of the Corporation. The Debt Securities may be
sold to underwriters for public offering pursuant to terms of offering fixed at
the time of sale. In addition, Debt Securities may be sold by the Corporation
directly or through agents. See "Plan of Distribution." As used herein, Debt
Securities shall include securities denominated in U.S. dollars or, at the
option of the Corporation if so specified in the applicable Prospectus
Supplement, in any other currency, including composite currencies, or in amounts
determined by reference to an index. Debt Securities of a series may be issuable
in registered definitive form ("Registered Notes") or in the form of one or more
global securities (each a "Global Note").
The specific aggregate principal amount, maturity, rate and time of payment
of interest, purchase price, any terms for redemption or other special terms and
the names of the underwriters, dealers or agents, if any, in connection with the
sale of Debt Securities in respect of which this Prospectus is being delivered
("Offered Debt Securities") are set forth in the accompanying Prospectus
Supplement ("Prospectus Supplement"), together with the terms of offering of the
Offered Debt Securities. Any underwriters, dealers or agents participating in
the offering may be deemed "underwriters" within the meaning of the Securities
Act of 1933 (the "Act").
-------------------
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. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-------------------
The date of this Prospectus is September 10, 1996.
<PAGE>
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by the Corporation can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549; Suite 1400, 500 West
Madison Street, Chicago, Illinois 60661; and Seven World Trade Center, 13th
Floor, New York, New York 10048. Copies of such material can be obtained by mail
from the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed fees. The Commission also maintains a
website that contains reports, proxy and information statements and other
information. The website address is http.//www.sec.gov. Reports, proxy
statements and other information concerning the Corporation may also be
inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005, where the Corporation's Common Stock is listed.
The Corporation has filed with the Commission a registration statement on
Form S-3 under the Act which relates to the Debt Securities (the "Registration
Statement"). As permitted by the rules and regulations promulgated by the
Commission, this Prospectus does not contain all the information set forth in
the Registration Statement and the exhibits and schedules thereto. For further
information with respect to the Corporation and the Debt Securities, reference
is hereby made to the Registration Statement and the exhibits and schedules
filed therewith. The Registration Statement may be inspected without charge by
anyone at the office of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and copies of all or any part thereof may be obtained from the
Commission upon payment of the prescribed fees. Statements contained in this
Prospectus as to the contents of any agreement, instrument or other document
referred to herein are not necessarily complete, and in each instance reference
is made to the copy of such document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission. Each such statement is
qualified in its entirety by reference to such agreement, instrument or
document.
-------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Corporation (File
No. 1--8339) are incorporated in this Prospectus by reference: (1) the
Corporation's Annual Report on Form 10--K for the fiscal year ended December 31,
1995, and (2) the Corporation's Quarterly Reports on Form 10--Q for the quarters
ended March 31, 1996 and June 30, 1996 and (3) the Corporation's Current Report
on Form 8-K dated May 9, 1996.
All documents filed by the Corporation pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Debt Securities shall be deemed to be
incorporated by reference in this Prospectus from the respective dates of filing
such documents. Any statement contained in this Prospectus or in a document all
or a portion of which is incorporated or deemed to be incorporated herein by
reference shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated herein
by reference modifies or supersedes such statement. Any statement so modified
shall not be deemed to constitute a part hereof except as so modified, and any
statement so superseded shall not be deemed to constitute a part hereof.
The Corporation will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written request of any such person, a copy of any or all of the foregoing
documents incorporated by reference herein, other than certain exhibits to such
documents. Requests should be directed to: NORFOLK SOUTHERN CORPORATION, THREE
COMMERCIAL PLACE, NORFOLK, VIRGINIA 23510-9219, ATTENTION: CORPORATE SECRETARY
(TELEPHONE NUMBER: (757) 629-2680).
2
<PAGE>
NORFOLK SOUTHERN CORPORATION
Norfolk Southern Corporation (the "Corporation") is a Virginia-based holding
company that owns all the common stock of and controls a major operating
railroad, Norfolk Southern Railway Company, and a diversified motor carrier,
North American Van Lines, Inc. ("NAVL"). The Corporation was incorporated in
July 1980 in the Commonwealth of Virginia. In June 1982, the Corporation
acquired control of Norfolk and Western Railway Company ("NW") and Southern
Railway Company ("Southern"). On December 31, 1990, the common stock of NW was
transferred to Southern and Southern changed its name to Norfolk Southern
Railway Company ("NS Railway"). NS Railway owns all the common stock of and
controls NW. On June 21, 1985, the Corporation acquired control of NAVL.
The Corporation's rail subsidiaries form a single interterritorial system,
extending over approximately 14,400 miles of road in twenty states, primarily in
the Southeast and Midwest, and the Province of Ontario, Canada. NAVL provides
household moving and specialized handling freight services in the United States
and Canada, and offers certain motor carrier services worldwide.
The Corporation's executive offices are located at Three Commercial Place,
Norfolk, Virginia 23510-9219 (telephone number: (757) 629-2600). Unless the
context indicates otherwise, references herein to the Corporation are to Norfolk
Southern Corporation and its consolidated subsidiaries.
USE OF PROCEEDS
Except as may be otherwise set forth in an accompanying Prospectus
Supplement, the Corporation intends to use the net proceeds from the sale of
Debt Securities primarily to purchase shares of the Corporation's Common Stock
from time to time in open market transactions pursuant to an ongoing share
purchase program commenced by the Corporation in 1989 and to retire the
Corporation's short-term indebtedness issued primarily to fund such share
purchase program. In addition, a portion of such net proceeds may be used for
general corporate purposes.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges of the
Corporation for each period indicated:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
- -------------------- ---------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(BASED ON UNAUDITED
DATA)
<CAPTION>
1996 1995 1995 1994 1993(1,2) 1992 1991
- --------- --------- --------- --------- ------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
6.76 6.68 6.70 6.66 5.67 5.67 1.71(3)
</TABLE>
- ------------------------
(1) 1993 results include a $54 million increase in the provision for income
taxes reflecting a 1% increase in the federal income tax rate, which reduced
net income by $54 million, or $0.39 per share. 1993 transportation operating
expenses include a $50 million restructuring charge for the disposition of
two NAVL trucking businesses. 1993 also includes the cumulative effect of
certain required accounting changes (see Note 2 below) which increased 1993
earnings by $223 million, or $1.60 per share.
(2) Effective January 1, 1993, the Corporation adopted SFAS 106 "Employers'
Accounting for Postretirement Benefits Other Than Pensions," SFAS 109
"Accounting for Income Taxes," and SFAS 112 "Employers' Accounting for
Postemployment Benefits." The Corporation recognized these accounting
changes on the immediate recognition basis. Therefore, the cumulative effect
on years prior to 1993 of adopting these new accounting standards was as
follows: SFAS 106 and 112 increased pretax expenses by $392 million ($243.5
million after-tax) and reduced earnings per share by $1.74; SFAS 109
increased net income by $466.8 million and increased earnings per share by
$3.34.
3
<PAGE>
(3) 1991 transportation operating expenses include a $680 million special
charge, primarily comprised of costs for labor force reductions and the
write-down of the goodwill portion of the Corporation's investment in NAVL.
This charge reduced net income by $498 million, or $3.37 per share.
For purposes of computing the ratios of earnings to fixed charges, earnings
represent income before income taxes, plus interest expenses (including a
portion of rental expenses representing an interest factor) and subsidiaries'
preferred dividend requirements, less the equity in undistributed earnings of
20%-49% owned companies. Fixed charges represent interest expenses (including a
portion of rental expense representing an interest factor) plus capitalized
interest and subsidiaries' preferred dividend requirements on a pre-tax basis.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will be issued under an indenture, dated as of January
15, 1991 (the "Indenture"), between the Corporation and First Trust of New York,
National Association, as successor trustee (the "Trustee").
The following summaries of certain provisions of the Indenture do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all of the provisions of the Indenture, including the
definitions therein of certain terms. Wherever particular sections or defined
terms of the Indenture are referred to, it is intended that such sections or
defined terms shall be incorporated herein by reference. Capitalized terms not
otherwise defined herein shall have the meanings given to them in the Indenture.
The following sets forth certain general terms and provisions of the Debt
Securities. Further terms of any Offered Debt Securities are set forth in the
applicable Prospectus Supplement.
Because the Corporation is a holding company, its rights and the rights of
its creditors, including the Holders of the Debt Securities offered hereby, to
participate in any distribution of the assets of any subsidiary upon the
liquidation or recapitalization of such subsidiary will be subject to the prior
claims of the subsidiary's creditors except to the extent that the Corporation
itself may be a creditor with recognized prior claims against the subsidiary.
GENERAL
The Indenture does not limit the aggregate principal amount of Debt
Securities which may be issued thereunder and provides that Debt Securities may
be issued from time to time in series. The Debt Securities will be unsecured
obligations of the Corporation and will rank on a parity with all other
unsecured and unsubordinated indebtedness of the Corporation.
The Prospectus Supplement describes the following terms of the Offered Debt
Securities: (1) the title of the Offered Debt Securities; (2) any limit on the
aggregate principal amount of the Offered Debt Securities; (3) the date or dates
on which the Offered Debt Securities will mature; (4) the rate or rates per
annum at which the Offered Debt Securities will bear interest, if any, or the
formula or provision pursuant to which such rate or rates are determined and the
date from which such interest, if any, will accrue; (5) the dates on which such
interest, if any, on the Offered Debt Securities will be payable and the Regular
Record Dates for such Interest Payment Dates; (6) any mandatory or optional
sinking fund or analogous provisions; (7) the date, if any, after which, and the
price or prices at which, the Offered Debt Securities may, pursuant to any
optional or mandatory redemption provisions, be redeemed and the other detailed
terms and provisions of any such optional or mandatory redemption provisions;
(8) the currency or currencies of payment of principal, premium, if any, and/or
interest, if any, on the Offered Debt Securities; (9) whether the Offered Debt
Securities are to be issued in whole or part in the form of a Global Note or
Notes and, if so, the identity of the Depositary for such Global Note or Notes;
(10) the terms and conditions, if any, upon which a Global Note or Notes may be
exchanged in whole or in part for other definitive Offered Debt Securities; (11)
any index used to determine the amount of payments of principal,
4
<PAGE>
premium, if any, and/or interest, if any, on the Offered Debt Securities; and
(12) any other terms of the series of Offered Debt Securities.
Unless otherwise provided in the Prospectus Supplement, principal, premium,
if any, and/or interest, if any, on the Offered Debt Securities will be payable,
and the transfer of the Offered Debt Securities will be registrable, at the
office of the Trustee, except that, at the option of the Corporation, interest
may be paid by mailing a check to the address of the person entitled thereto as
such address appears on the Security Register.
Offered Debt Securities may be issuable in whole or in part in the form of
one or more Global Notes, as described below under "Global Notes." Unless
otherwise indicated in the Prospectus Supplement, the Debt Securities will be
issued only in fully registered form without coupons and in minimum
denominations of $100,000 or any integral multiples of $1,000 in excess thereof.
One or more Global Notes will be issued in a denomination or aggregate
denominations equal to the aggregate principal amount of Outstanding Debt
Securities of the series to be represented by such Global Note or Notes. The
Prospectus Supplement relating to a series of Offered Debt Securities
denominated in a foreign or composite currency will specify the denomination
thereof. No service charge will be made for any transfer or exchange of the Debt
Securities, but the Corporation may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Debt Securities may be issued as Original Issue Discount Securities to be
sold at a substantial discount below their principal amount. Special federal
income tax and other considerations applicable thereto will be described in the
applicable Prospectus Supplement.
GLOBAL NOTES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Notes that will be deposited with, or on behalf of, a
depositary (the "Depositary") identified in the applicable Prospectus
Supplement, which also shall describe the specific terms of the depositary
arrangement. The Corporation anticipates that the following provisions will
apply to all depositary arrangements.
Upon the issuance of a Global Note, the Depositary for such Global Note will
credit, on its book-entry registration and transfer system, the respective
principal amounts of the Debt Securities represented by such Global Note to the
accounts of institutions that have accounts with such Depositary
("Participants"). The accounts to be credited shall be designated by the
underwriters or agents of such Debt Securities or by the Corporation, if such
Debt Securities are offered and sold directly by the Corporation. Ownership of
beneficial interests in a Global Note will be limited to Participants or persons
that may hold interests through Participants. Ownership of beneficial interests
in such Global Note will be shown on, and the transfer of that ownership will be
effected only through, records maintained by the Depositary for such Global Note
(with respect to interests of Participants) or by Participants or persons that
hold through Participants (with respect to interests of persons other than
Participants). The laws of some states may 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 own, transfer or pledge
beneficial interests in a Global Note.
So long as the Depositary for a Global Note, or its nominee, is the
registered owner of such Global Note, such Depositary or such nominee, as the
case may be, will be considered the sole owner or Holder of the Debt Securities
represented by such Global Note for all purposes under the Indenture. Except as
set forth below, owners of beneficial interests in a Global Note will not be
entitled to have Debt Securities of the series represented by such Global Note
registered in their names, will not receive or be entitled to receive physical
delivery of Debt Securities of such series in definitive form and will not be
considered the owners or holders thereof under the Indenture. Accordingly, each
person owning a beneficial interest in the Global Note must rely on the
procedures of the Depositary and, if such person is not a Participant,
5
<PAGE>
on the procedures of the Participant through which such person owns its
interest, to exercise any rights of a Holder under the Indenture. The Indenture
provides that the Depositary may grant proxies and otherwise authorize
Participants to take any action which a Holder is entitled to take under the
Indenture. The Corporation understands that under existing industry practice, in
the event that the Corporation requests any action of Holders or a beneficial
owner desires to take any action that a Holder is entitled to take, the
Depositary would authorize the Participants to take such action and that the
Participants would authorize beneficial owners owning through such Participants
to take such action or would otherwise act upon the instructions of beneficial
owners owning through such Participants.
Payment of principal, premium, if any, and/or interest, if any, on Debt
Securities registered in the name of or held by a Depositary or its nominee will
be made to the Depositary or its nominee, as the case may be, as the registered
owner or the holder of the Global Note representing such Debt Securities. None
of the Corporation, the Trustee, any Paying Agent or the Registrar for such Debt
Securities will have any responsibility or liability with respect to the records
relating to or payments made on account of beneficial ownership interests in a
Global Note for such Debt Securities or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
The Corporation expects that the Depositary for Debt Securities of a series,
upon receipt of any payment of principal, premium, if any, and/or interest in
respect of a Global Note, will immediately credit Participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such Global Note as shown on the records of such
Depositary. The Corporation also expects that payments by Participants to owners
of beneficial interests in such Global Note held through such Participants will
be governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of such Participants.
A Global Note may not be transferred except as a whole by the Depositary for
such Global Note to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary. A Global
Note is exchangeable for Debt Securities registered in the names of persons
other than the Depositary with respect to such Global Note or its nominee only
if (a) such Depositary notifies the Corporation that it is unwilling or unable
to continue as Depositary for such Global Note or if at any time such Depositary
ceases to be a clearing agency registered under the Exchange Act and, in either
case, a successor Depositary is not appointed by the Corporation within 90 days,
(b) the Corporation executes and delivers to the Trustee a Company Order that
all such Global Notes shall be exchangeable or (c) there shall have occurred and
be continuing an Event of Default or an event which, with the giving of notice
or lapse of time, or both, would constitute an Event of Default with respect to
the Debt Securities. Any Global Note that is exchangeable pursuant to the
preceding sentence shall be exchangeable for Debt Securities registered in such
names as the Depositary with respect to such Global Note shall direct.
If a Depositary for Notes of a series is at any time unwilling or unable to
continue as depositary, or if at any time such Depositary ceases to be a
clearing agency registered under the Securities Exchange Act of 1934, and, in
either case, a successor Depositary is not appointed by the Corporation within
90 days or if there shall have occurred and be continuing an Event of Default or
an event which, with the giving of notice or lapse of time, or both, would
constitute an Event of Default with respect to such Notes, then the Corporation
will issue Notes of such series in definitive form in exchange for all Global
Notes representing the Notes of such series. In addition, the Corporation may at
any time and in its sole discretion determine not to have the Notes of a series
represented by Global Notes and in such event, will issue Notes of such series
in definitive form in exchange for all Global Notes representing such Notes. In
any such instance, an owner of a beneficial interest in a Global Note will be
entitled to physical delivery in definitive form of Notes of the series
represented by such Global Note equal in principal amount to such beneficial
interest and to have such Notes registered in its name.
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<PAGE>
EVENTS OF DEFAULT
The Indenture defines an Event of Default with respect to Debt Securities of
any series as any of the following events: (a) failure to pay principal of or
any premium on any Debt Security of that series when due; (b) failure to pay any
interest on any Debt Security of that series when due, continued for 30 days;
(c) failure to pay any sinking fund installment with respect to any Debt
Security of that series when due; (d) failure to perform any other covenant of
the Corporation in the Indenture (other than a covenant included in the
Indenture solely for the benefit of series of Debt Securities other than that
series), continued for 90 days after written notice as provided in the
Indenture; (e) acceleration of Debt Securities or any other indebtedness for
borrowed money, in an aggregate principal amount exceeding $30,000,000, of the
Corporation or any Significant Subsidiary (within the meaning of the federal
securities laws) under the terms of the instrument or instruments under which
such indebtedness is issued or secured, if such acceleration is not annulled, or
such indebtedness is not discharged, or a sum of money sufficient to discharge
in full such indebtedness is not deposited in trust, within 10 days after
written notice as provided in the Indenture; (f) certain events of bankruptcy,
insolvency or reorganization; and (g) any other Event of Default provided with
respect to Debt Securities of that series.
If an Event of Default with respect to Debt Securities of any series at the
time Outstanding occurs and is continuing, either the Trustee or the Holders of
at least 25% in aggregate principal amount of the Outstanding Securities of that
series by notice as provided in the Indenture may declare the principal amount
(or, if the Debt Securities of that series are Original Issue Discount Notes,
such portion of the principal amount as may be specified in the terms of that
series) of all the Debt Securities of that series to be due and payable
immediately. At any time after a declaration of acceleration with respect to
Debt Securities of any series has been made, but before a judgment or decree for
payment of money has been obtained by the Trustee with respect to that series,
the Holders of a majority in aggregate principal amount of Outstanding
Securities of that series may, under certain circumstances, rescind and annul
such acceleration.
The Indenture provides that the Trustee will not be under any obligation to
exercise any of its rights or powers under the Indenture at the request or
direction of any of the Holders, unless such Holders shall have offered to the
Trustee reasonable indemnity. (Section 601) Subject to such provisions for the
indemnification of the Trustee, the Holders of a majority in aggregate principal
amount of the Outstanding Securities of any series will have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee, or of exercising any trust or power conferred on the Trustee,
with respect to the Debt Securities of that series.
The Corporation is required to furnish to the Trustee annually a statement
as to the performance by the Corporation of certain of its obligations under the
Indenture and as to any default in such performance.
SATISFACTION AND DISCHARGE OF INDENTURE
The Indenture provides generally that the Corporation may terminate its
obligations under the Indenture with respect to the Securities of any series if
all the Debt Securities of such series previously authenticated and delivered
(other than lost, destroyed or stolen Debt Securities of such series that have
been replaced or paid) have been delivered to the Trustee for cancellation and
the Corporation has paid all sums payable by it thereunder, or if the
Corporation irrevocably deposits with the Trustee (i) sufficient funds in the
currency in which the Debt Securities of such series are denominated to pay the
principal, premium, if any, and/or interest, if any, to Stated Maturity (or
redemption) on the Debt Securities of such series and/or (ii) such amount of
direct obligations of, or obligations the principal of and interest on which are
fully guaranteed by, the government which issued the currency in which the Debt
Securities are denominated, and which are not subject to prepayment, redemption
or call, as will, through the payment of principal and interest thereon in
accordance with their terms, be sufficient to pay when due,
7
<PAGE>
the principal, premium, if any, and/or interest, if any, to Stated Maturity (or
redemption) on, the Debt Securities of such series. As a condition to
defeasance, the Corporation must deliver to the Trustee an Opinion of Counsel to
the effect that the Holders of such Debt Securities will not recognize gain or
loss on such Debt Securities for federal income tax purposes solely as a result
of such defeasance and will be subject to federal income tax in the same amounts
and at the same times as would have been the case if such defeasance had not
occurred. In the event of any such defeasance, Holders of Debt Securities must
look to the deposited money for payment.
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Corporation
and the Trustee with the consent of the Holders of a majority in aggregate
principal amount of the Outstanding Securities of each series affected by such
modification or amendment; PROVIDED, HOWEVER, that no such modification or
amendment may, without the consent of the Holder of each Outstanding Security
affected thereby, (a) change the stated maturity date of the principal of, or
any installment of principal of or interest, if any, on, any Debt Security, (b)
reduce the principal, premium, if any, and/or interest, if any, on any Debt
Security, (c) reduce the amount of principal of an Original Issue Discount Debt
Security payable upon acceleration of the maturity thereof, (d) change the place
or currency of payment of principal, premium, if any, and/or interest, if any,
on any Debt Security, (e) impair the right to institute suit for the enforcement
of any payment on or with respect to any Debt Security, or (f) reduce the
percentage in principal amount of Outstanding Securities of any series, the
consent of whose Holders is required for modification or amendment of the
Indenture or for waiver of compliance with certain provisions of the Indenture
or for waiver of certain defaults.
The Holders of a majority in aggregate principal amount of the Outstanding
Securities of each series may, on behalf of all Holders of Debt Securities of
that series, waive, insofar as that series is concerned, compliance by the
Corporation with certain restrictive provisions of the Indenture. (Section 908)
The Holders of a majority in aggregate principal amount of the Outstanding
Securities of each series may, on behalf of all Holders of Debt Securities of
that series, waive any past default under the Indenture with respect to Debt
Securities of that series, except (a) a default in the payment of principal,
premium, if any, and/or interest, if any, on any Debt Security of such series
and (b) in respect of a covenant or provision of the Indenture which cannot be
modified or amended without the consent of the Holder of each Outstanding
Security of such series affected.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Corporation, without the consent of the Holders of any of the
Outstanding Securities under the Indenture, may not consolidate with or merge
into, or transfer or lease its assets substantially as an entirety to, any
corporation, unless (i) the successor corporation is a corporation organized and
existing under the laws of the United States of America or a state thereof or
the District of Columbia and assumes the Corporation's obligations on the Debt
Securities and under the Indenture, (ii) after giving effect to the transaction
no Event of Default, and no event which, after notice or lapse of time, would
become an Event of Default, shall have occurred and be continuing and (iii)
certain other conditions are met.
CONCERNING THE TRUSTEE
First Trust of New York, National Association, is the Trustee under the
Indenture and has been appointed by the Corporation as Security Registrar and
Paying Agent with regard to the Debt Securities.
The holders of a majority in principal amount of the outstanding Debt
Securities of any series will have the right to direct the time, method and
place of conducting any proceeding for exercising any remedy available to the
Trustee, subject to certain exceptions. The Indenture provides that if an Event
of Default occurs (and is not cured) with respect to a series of Debt
Securities, the Trustee will be required,
8
<PAGE>
in the exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request of any holder of Debt Securities of such series, unless such
holder shall have offered to the Trustee security and indemnity satisfactory to
it against any loss, liability or expense and then only to the extent required
by the terms of the Indenture.
GOVERNING LAW
The Indenture provides that it and the Debt Securities will be governed by,
and construed in accordance with, the laws of the State of New York.
PLAN OF DISTRIBUTION
The Corporation may sell Debt Securities to one or more underwriters for
public offering and sale by them or may sell Debt Securities to investors
directly or through agents. Any such underwriter or agent involved in the offer
and sale of the Offered Debt Securities is named in the Prospectus Supplement.
Underwriters may offer and sell the Offered Debt Securities at a fixed price
or prices, which may be changed, or from time to time at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Corporation also may offer and sell the
Offered Debt Securities in exchange for one or more of its outstanding issues of
debt. The Corporation also may, from time to time, authorize underwriters acting
as the Corporation's agents to offer and sell the Offered Debt Securities upon
terms and conditions set forth in any Prospectus Supplement. In connection with
the sale of Offered Debt Securities, underwriters may be deemed to have received
compensation from the Corporation in the form of underwriting discounts or
commissions and may also receive commissions from purchasers of Offered Debt
Securities for whom they may act as agent. Underwriters may sell Offered Debt
Securities to or through dealers, and such dealers may receive compensation in
the form of discounts, concessions or commissions from the underwriters and/or
commissions from the purchasers for whom they may act as agent.
Any underwriting compensation paid by the Corporation to underwriters or
agents in connection with the offering of Offered Debt Securities, and any
discounts, concessions or commissions allowed by underwriters to participating
dealers, are set forth in the Prospectus Supplement. Underwriters, dealers and
agents participating in the distribution of the Offered Debt Securities may be
deemed to be underwriters, and any discounts and commissions received by them
and any profit realized by them on resale of the Offered Debt Securities may be
deemed to be underwriting discounts and commissions under the Act. Underwriters,
dealers and agents may be entitled, under agreements entered into with the
Corporation, to indemnification against and contribution toward certain civil
liabilities, including liabilities under the Act.
LEGAL MATTERS
The validity of the Offered Debt Securities will be passed upon for the
Corporation by J. Gary Lane, Esq., General Counsel -- Corporate for the
Corporation, Norfolk, Virginia, and for any underwriters by counsel named in the
applicable Prospectus Supplement. Mr. Lane, in his capacity as General
Counsel -- Corporate for the Corporation, is paid a salary by the Corporation
and is a participant in various employee benefit and incentive plans, including
stock option plans, offered to employees of the Corporation.
9
<PAGE>
EXPERTS
The consolidated financial statements and schedules of the Corporation as of
December 31, 1995 and 1994, and for each of the three years in the three-year
period ended December 31, 1995, have been incorporated by reference herein and
in the Registration Statement in reliance upon the report of KPMG Peat Marwick
LLP, independent certified public accountants, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing. The
report of KPMG Peat Marwick LLP refers to changes in accounting methods related
to income taxes, postretirement benefits and postemployment benefits.
10
<PAGE>
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT, ANY
PRICING SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS IN CONNECTION WITH THE OFFER
CONTAINED HEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION OR BY THE
AGENTS. THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO
BUY, ANY SECURITIES OFFERED HEREBY IN ANY JURISDICTION IN WHICH IT IS NOT LAWFUL
OR TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE ANY SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT, ANY PRICING
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL
UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THEIR RESPECTIVE DATES.
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TABLE OF CONTENTS
_PAGE_
<TABLE>
<CAPTION>
PROSPECTUS SUPPLEMENT
<S> <C>
Risk Factors........................... S-3
Description of Notes................... S-5
Foreign Currency Notes................. S-14
Certain Federal Income Tax
Consequences.......................... S-15
Plan of Distribution................... S-18
Legal Matters.......................... S-19
PROSPECTUS
Available Information.................. 2
Incorporation of Certain Documents by
Reference............................. 2
Norfolk Southern Corporation........... 3
Use of Proceeds........................ 3
Ratios of Earnings to Fixed Charges.... 3
Description of Debt Securities......... 4
Plan of Distribution................... 9
Legal Matters.......................... 9
Experts................................ 10
</TABLE>
[LOGO]
U.S. $250,000,000
NORFOLK SOUTHERN
CORPORATION
MEDIUM-TERM NOTES,
SERIES A
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PROSPECTUS SUPPLEMENT
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MERRILL LYNCH & CO.
J.P. MORGAN & CO.
PAINEWEBBER INCORPORATED
SEPTEMBER 10, 1996
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