<PAGE> 1
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DISTRICT OF COLUMBIA 52-089-1669
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
</TABLE>
2201 COOPERATIVE WAY
HERNDON, VIRGINIA 22071
(703) 709-6700
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JOHN JAY LIST, GENERAL COUNSEL
NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION
2201 COOPERATIVE WAY
HERNDON, VIRGINIA 22071
(703) 709-6700
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
<TABLE>
<S> <C>
MARK L. WEISSLER THOMAS R. BROME
MILBANK, TWEED, HADLEY & MCCLOY LLP CRAVATH, SWAINE & MOORE
1 CHASE MANHATTAN PLAZA 825 EIGHTH AVENUE
NEW YORK, NEW YORK 10005 NEW YORK, NEW YORK 10019
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to
time after the effective date of this registration statement as determined by
market conditions.
IF THE ONLY SECURITIES BEING REGISTERED ON THIS FORM ARE BEING OFFERED PURSUANT
TO DIVIDEND OR INTEREST REINVESTMENT PLANS, PLEASE CHECK THE FOLLOWING BOX. [ ]
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON A
DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF
1933, OTHER THAN SECURITIES OFFERED ONLY IN CONNECTION WITH DIVIDEND OR INTEREST
REINVESTMENT PLANS, PLEASE CHECK THE FOLLOWING BOX. [X]
IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING PURSUANT
TO RULE 462(b) UNDER THE SECURITIES ACT OF 1933, PLEASE CHECK THE FOLLOWING BOX
AND LIST THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER
EFFECTIVE REGISTRATION STATEMENT FOR THE SAME OFFERING. [ ]
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(c) UNDER
THE SECURITIES ACT OF 1933, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT
REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT
FOR THE SAME OFFERING. [ ]
IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE 434,
PLEASE CHECK THE FOLLOWING BOX. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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TITLE OF EACH CLASS OF SECURITIES TO BE PROPOSED MAXIMUM AGGREGATE
REGISTERED OFFERING PRICE* AMOUNT OF REGISTRATION FEE
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<S> <C> <C>
Debt Securities............................ $300,000,000 $79,200
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</TABLE>
* Estimated solely for the purpose of calculating the registration fee.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
PURSUANT TO RULE 429 OF THE COMMISSION UNDER THE SECURITIES ACT OF 1933,
THE WITHIN PROSPECTUS RELATES TO DEBT SECURITIES REGISTERED HEREBY AND TO DEBT
SECURITIES PREVIOUSLY REGISTERED BY REGISTRATION STATEMENT NO. 333-53847.
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<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THESE DEBT SECURITIES UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE DEBT SECURITIES AND WE ARE
NOT SOLICITING AN OFFER TO BUY THESE DEBT SECURITIES IN ANY STATE
WHERE THE OFFER OR SALE IS NOT PERMITTED.
PROSPECTUS
SUBJECT TO COMPLETION, DATED FEBRUARY 9, 2000
[CFC LOGO]
National Rural Utilities
Cooperative Finance Corporation
$400,000,000
Debt Securities
------------------------
We plan to issue from time to time up to $400,000,000 of debt securities. We
will provide the specific terms of these debt securities in supplements to this
prospectus. You should read this prospectus and any supplements carefully.
------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these debt securities, or determined if
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
------------------------
This prospectus may not be used to consummate sales of debt securities unless
accompanied by a prospectus supplement.
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The date of this prospectus is February , 2000
<PAGE> 3
WHERE YOU CAN FIND MORE INFORMATION ABOUT
NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION
National Rural Utilities Cooperative Finance Corporation ("CFC") files
annual, quarterly and current reports and other information with the SEC. You
may read and copy any document CFC files at the SEC's public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference rooms. CFC's
SEC filings are also available to the public at the SEC's web site at
http://www.sec.gov.
The SEC allows the incorporation by reference of information filed in other
documents into this prospectus, which means that CFC can disclose information
important to you by referring you to those documents. The information
incorporated by reference is considered to be a part of this prospectus, and
later information filed with the SEC will update and supersede this information.
CFC incorporates by reference the documents listed below and any future filings
made with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 until this offering is completed:
- Annual Report on Form 10-K for the year ended May 31, 1999;
- Current Reports on Form 8-K dated June 10, 1999 and October 13,
1999;
- Quarterly Reports on Form 10-Q for the quarters ended August 31,
1999 and November 30, 1999.
You may request a copy of these filings, at no cost, by writing to or
telephoning us at the following address:
Steven L. Lilly
Senior Vice President and Chief Financial Officer
National Rural Utilities Cooperative Finance Corporation
Woodland Park, 2201 Cooperative Way
Herndon, VA 20171-3025
(703) 709-6700
---------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT. WE HAVE AUTHORIZED NO
ONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. YOU SHOULD NOT ASSUME THAT THE
INFORMATION CONTAINED IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT IS
ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT COVER OF THE DOCUMENT.
WE ARE NOT MAKING AN OFFER OF THESE DEBT SECURITIES IN ANY STATE WHERE THE OFFER
IS NOT PERMITTED.
2
<PAGE> 4
CFC
CFC was incorporated as a private, not-for-profit cooperative association
under the laws of the District of Columbia in 1969. CFC's principal purpose is
to provide its members with a source of financing to supplement the loan program
of the Rural Utilities Service ("RUS") (formerly the Rural Electrification
Administration) of the United States Department of Agriculture. CFC makes loans
primarily to its rural utility system members to enable them to acquire,
construct and operate electric distribution, generation, transmission and
related facilities. CFC also makes loans to service organization members to
finance office buildings, equipment, related facilities and services provided by
them to the rural utility systems. CFC has also provided guarantees for
tax-exempt financing of pollution control facilities and other properties
constructed or acquired by its members, and in addition has provided loans or
guarantees through National Cooperative Services Corporation in connection with
certain lease transactions of its members. Also, through Rural Telephone Finance
Cooperative, a controlled affiliate of CFC established in 1987, CFC provides
financing to rural telephone and telecommunications companies and their
affiliates. In addition, through Guaranty Funding Cooperative, a controlled
affiliate of CFC established in 1991, CFC provides financing for members to
refinance their debt to the Federal Financing Bank of the United States
Treasury. CFC's offices are located at Woodland Park, 2201 Cooperative Way,
Herndon, VA 20171-3025 and its telephone number is (703) 709-6700.
CFC's 1,057 members as of May 31, 1999 included 908 utility members,
virtually all of which are consumer-owned cooperatives, 76 service members and
73 associate members. The utility members included 838 distribution systems and
70 generation and transmission systems operating in 48 states and U.S.
territories.
CFC's long-term loans to rural utility system members generally have
35-year maturities. Loans are made directly to members or in conjunction with
concurrent RUS loans. Loans made to members that do not also have RUS loans are
generally secured by a mortgage or substantially all the rural utility system
member's property, including revenues. Loans made to members that also have RUS
loans are generally secured ratably with RUS's loans by a common mortgage on
substantially all the rural utility system member's property, including
revenues. Interest rates on these loans are either fixed or variable. Fixed
rates are offered weekly based on the overall cost of long-term funds and may be
obtained for any period from one to 35 years. Variable rates are adjusted
monthly in line with changes in the cost of short-term funds.
CFC makes short-term line-of-credit loans and intermediate-term loans with
up to five-year maturities. These loans are made on either a secured or an
unsecured basis. Rates on these loans may be adjusted semi-monthly in line with
changes in the short-term cost of funds. The intermediate-term loans are
generally made to power supply systems in connection with the planning and
construction of new generating plants and transmission facilities.
CFC also makes loans to telecommunication systems through Rural Telephone
Finance Cooperative. These loans are long-term fixed or variable rate loans with
maturities not exceeding 15 years and short-term loans.
At November 30, 1999, CFC had a total of $15,195.5 million of loans
outstanding and $1,777.9 million of guarantees outstanding.
CFC's guarantees are senior obligations ranking on a par with its other
senior debt. Even if the system defaults in payment of the guaranteed
obligations, the debt cannot be accelerated as long as CFC pays the debt service
under its guarantee as due. The system is generally obligated to reimburse CFC
on demand for amounts paid on the guarantee, and this obligation is usually
secured by a mortgage, often joint with RUS, on the system's property or, in the
case of a lease transaction, on the leased property. Holders of $933.8 million
of the guaranteed pollution control debt at November 30, 1999 had the right at
certain times to tender their bonds for remarketing, and, if they cannot
otherwise be remarketed, CFC has committed to purchase bonds so tendered.
By policy, CFC maintains an allowance for loan losses at a level believed
to be adequate in relation to the quality and size of its loans and guarantees
outstanding. At November 30, 1999, the allowance was $229.6 million. At November
30, 1999, CFC's ten largest borrowers had outstanding loans totaling
3
<PAGE> 5
$3,053.9 million, which represented approximately 20.0% of CFC's total loans
outstanding. As of November 30, 1999, outstanding guarantees for these same ten
largest borrowers totaled $548.3 million, which represented 30.8% of CFC's total
guarantees outstanding, including guarantees of the maximum amounts of lease
obligations at such date. On that date, no member had loans and guarantees
outstanding in excess of 10% of the aggregate amount of CFC's outstanding loans
and guarantees; however, one of the ten largest borrowers, Deseret Generation &
Transmission Co-operative, was operating under a restructuring agreement. At May
31, 1999, loans outstanding to Deseret accounted for 4.2% of total loans
outstanding. Guarantees outstanding for Deseret accounted for 4.0% of total
guarantees outstanding.
CFC's fixed charge coverage ratio was as follows for the periods indicated:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
NOVEMBER 30, YEAR ENDED MAY 31,
- ----------------- ------------------------------------------------
1999 1998 1999 1998 1997 1996 1995
- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
1.12 1.12 1.12 1.12 1.12 1.12 1.13
</TABLE>
Margins used to compute the fixed charge coverage ratio represent net
margins before extraordinary loss resulting from redemption premiums on bonds
plus fixed charges. The fixed charges used in the computation of the fixed
charge coverage ratio consist of interest and amortization of bond discount and
bond issuance expenses.
USE OF PROCEEDS
Unless otherwise specified in a prospectus supplement, CFC will add the net
proceeds from the sale of the debt securities to the general funds, which will
be used to make loans to members, repay short-term borrowings, refinance
existing long-term debt and for other corporate purposes. CFC expects to incur
additional indebtedness from time to time, the amount and terms of which will
depend upon the volume of its business, general market conditions and other
factors.
4
<PAGE> 6
SUMMARY FINANCIAL INFORMATION
The following is a summary of selected financial data for each of the five
years ended May 31, 1999.
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
For the year ended May 31:
Operating income............... $ 790,803 $ 637,573 $ 564,439 $ 505,073 $ 440,109
=========== =========== ========== ========== ==========
Operating margin............... $ 74,717 $ 54,411 $ 51,530 $ 46,857 $ 41,803
Nonoperating income............ 1,722 2,611 3,206 3,764 3,409
Gain on sale of land........... -- 5,194 -- -- --
Extraordinary loss(A).......... -- -- -- (1,580) --
----------- ----------- ---------- ---------- ----------
Net margins.................... $ 76,439 $ 62,216 $ 54,736 $ 49,041 $ 45,212
=========== =========== ========== ========== ==========
Fixed charge coverage
ratio(A)..................... 1.12 1.12 1.12 1.12 1.13
=========== =========== ========== ========== ==========
As of May 31:
Assets......................... $13,925,252 $10,682,888 $9,057,495 $8,054,089 $7,080,789
=========== =========== ========== ========== ==========
Long-term debt(B).............. $ 6,891,122 $ 5,024,621 $3,596,231 $3,682,421 $3,423,031
=========== =========== ========== ========== ==========
Quarterly income capital
securities................... $ 400,000 $ 200,000 $ 125,000 $ -- $ --
=========== =========== ========== ========== ==========
Members' subordinated
certificates................. $ 1,239,816 $ 1,229,166 $1,212,486 $1,207,684 $1,234,715
=========== =========== ========== ========== ==========
Members' equity................ $ 296,481 $ 279,278 $ 271,594 $ 269,641 $ 270,221
=========== =========== ========== ========== ==========
Leverage ratio(C).............. 7.00 6.37 5.84 5.69 5.13
=========== =========== ========== ========== ==========
Debt to equity ratio(D)........ 5.52 4.51 3.97 3.63 3.01
=========== =========== ========== ========== ==========
</TABLE>
- ---------------
(A) Extraordinary loss for the year ended May 31, 1996 represents premiums in
connection with the prepayment of collateral trust bonds. Margins used to
compute the fixed charge coverage ratio represent net margins before
extraordinary loss plus fixed charges. The fixed charges used in the
computation of the fixed charge coverage ratio consist of interest and
amortization of bond discount and bond issuance expenses.
(B) Includes commercial paper reclassified as long-term debt and excludes $983.0
million, $327.3 million, $268.7 million, $351.5 million and $262.7 million
in long-term debt that comes due, matures and/or will be redeemed early
during fiscal years 2000, 1999, 1998, 1997 and 1996, respectively.
(C) In accordance with CFC's revolving credit agreements, the leverage ratio is
calculated by dividing debt and guarantees outstanding, excluding quarterly
income capital securities ("QUICS") and debt used to fund loans guaranteed
by the U.S. Government, by the total of QUICS, members' subordinated
certificates and members' equity.
(D) The debt to equity ratio is calculated by dividing debt outstanding,
excluding QUICS and debt used to fund loans guaranteed by RUS, by the total
of QUICS, members' subordinated certificates, members' equity and the loan
and guarantee loss allowance.
CFC has had outstanding guarantees for its members' indebtedness in each of
the fiscal years shown above. Members' interest expense on such indebtedness was
approximately $73.5 million for the year ended May 31, 1999.
CFC does not have outstanding any common stock and does not pay dividends.
Annually CFC allocates its net margin to its members in the form of patronage
capital certificates. Under current policies, CFC retires patronage capital
certificates 70% during the next fiscal year, and expects to retire the
remaining 30% after 15 years. All retirements of patronage capital certificates
are subject to approval by the Board of Directors, if permitted by CFC's
contractual obligations and to the extent that the Board of Directors in its
discretion may determine from time to time that the financial condition of CFC
will not be impaired as a result.
5
<PAGE> 7
CAPITALIZATION
The following table shows the capitalization of CFC as of November 30,
1999.
<TABLE>
<CAPTION>
(DOLLARS IN
THOUSANDS)
<S> <C>
Senior debt:
Short-term debt(A)........................................ $ 6,389,697
Long-term debt(A)......................................... 6,883,576
----------
Total senior debt(B).............................. 13,273,273
----------
Subordinated debt and members' equity:
Deferrable subordinated debt(C)........................... 400,000
Members' subordinated certificates(D)..................... 1,308,550
Members' equity(E)........................................ 274,538
----------
Total capitalization.............................. $15,256,361
==========
</TABLE>
- ------------
(A) At November 30, 1999, CFC short-term indebtedness is used to fund CFC's
short-, intermediate- and long-term variable rate loans, as well as its
long-term fixed rate loans on a temporary basis. It generally consists of
commercial paper with maturities of up to nine months. To support its own
commercial paper and its obligations with respect to tax-exempt debt issued
on behalf of members, CFC had at November 30, 1999, bank revolving credit
agreements providing for borrowings aggregating up to $5,492.5 million. CFC
may borrow under the revolving credit agreements only if it continues to
meet conditions, including maintenance of members' equity and members'
subordinated certificates of at least $1,373.9 million increased each fiscal
year by 90% of net margins not distributed to members and an average fixed
charge coverage ratio over the six most recent fiscal quarters of at least
1.025. The revolving credit agreements also require a fixed charge coverage
ratio of 1.05 for the preceding fiscal year as a condition to the retirement
of patronage capital and prohibit CFC from pledging collateral in excess of
150% of the principal amount of collateral trust bonds outstanding.
Commercial paper in the amount of $2,402.5 million, which is supported by a
five-year revolving credit agreement, is shown as long-term debt. Long-term
debt also includes CFC's outstanding collateral trust bonds and medium-term
notes.
(B) At November 30, 1999 CFC had outstanding guarantees of tax-exempt securities
issued on behalf of members in the aggregate amount of $1,046.3 million.
Guaranteed tax-exempt securities include $933.8 million of long-term
adjustable or floating/fixed rate pollution control bonds which are required
to be remarketed at the option of the holders. CFC has agreed to purchase
any such bonds that cannot be remarketed. At November 30, 1999, CFC had
guaranteed its members' obligations in connection with certain lease
transactions and other debt in the amount of $731.6 million.
(C) As of November 30, 1999, CFC had issued a total of $400.0 million of
deferrable subordinated debt in the form of QUICS. QUICS are subordinate and
junior in right of payment to senior indebtedness. CFC has the right at any
time and from time to time during the term of the QUICS to defer the payment
of interest for up to 20 consecutive quarters.
(D) Subordinated certificates are subordinated obligations purchased by members
as a condition of membership and in connection with CFC's extension of
long-term credit to them. Those issued as a condition of membership, $642.0
million at November 30, 1999, generally mature 100 years from issuance and
bear interest at 5% per annum. The others either mature 46 to 50 years from
issuance, or mature at the same time as, or amortize proportionately with,
the credit extended, and either are non-interest bearing or bear interest at
varying rates.
(E) CFC allocates its net margins among its members in proportion to interest
earned from such members. The current policy of CFC is to return the amounts
so allocated to its members 70% in the following year and the remaining 30%
after 15 years with due regard for CFC's financial condition. The unretired
allocations for fiscal years 1988-1993 are being retired over the 15-year
period from 1994 through 2008. The current policy of RTFC is to retire 70%
of current year's margins within 8 1/2 months of the end of the fiscal year
with the remainder to be retired at the discretion of RTFC's Board of
Directors. The current policy of GFC is to retire 100% of current year's
margins shortly after the end of the fiscal year.
6
<PAGE> 8
DESCRIPTION OF DEBT SECURITIES
The following description summarizes the general terms and provisions that
may apply to the debt securities. Each prospectus supplement will state the
particular terms of the debt securities and the extent, if any, to which the
general provisions may apply to the debt securities included in the supplement.
GENERAL
The debt securities will be issued under an indenture between CFC and
Harris Trust and Savings Bank, or other trustee to be named, as trustee, dated
as of February 15, 1994. The statements in this prospectus concerning the
indenture, one or more supplemental indentures, board resolutions or officer's
certificates establishing the debt securities and the debt securities are merely
an outline and do not purport to be complete. The forms of the debt securities
are filed, or will be filed, as exhibits to the Registration Statement of which
this prospectus forms a part, or as an exhibit to a current report on Form 8-K
to be incorporated by reference in this prospectus. This description makes use
of the terms defined in the indenture and is qualified in its entirety by
reference to the indenture. The debt securities will be unsecured and
subordinated obligations of CFC.
Reference is made to the prospectus supplement and pricing supplement
relating to any particular issue of offered debt securities for the following
terms:
- the title and the limit on aggregate principal amount of such securities;
- the date or dates on which the debt securities will mature;
- the annual rate or rates, which may be fixed or variable, or the method
of determining any rate or rates at which the debt securities will bear
interest;
- the date or dates from which the interest shall accrue and the date or
dates at which interest will be payable;
- the place where payments may be made on the debt securities;
- any redemption or sinking fund terms;
- the denominations in which the debt securities will be issuable, if other
than $1,000 and any integral multiple thereof;
- if the amount payable in respect of principal of or any premium or
interest on any of such debt securities may be determined with reference
to an index or other fact or event ascertainable outside the indenture,
the manner in which the amounts will be determined;
- if other than the currency of the United States, the currency or
currencies, including composite currencies in which the principal of and
premium and interest on any debt securities will be payable;
- if other than the principal amount of the debt securities, the portion of
the principal amount of the debt securities payable upon declaration of
acceleration of the maturity;
- if the principal of or premium or interest on the debt securities are to
be payable in securities or other property, the type and amount of
securities or other property, or the method of determining the amount,
and the terms and conditions of the election;
- the terms, if any, on which debt securities may be converted into or
exchanged for securities of CFC or any other person;
- the obligations or instruments, if any, considered eligible obligations
in respect of debt securities denominated in a currency other than
dollars or in a composite currency, and any additional or alternative
provisions for the reinstatement of CFC's indebtedness in respect of the
debt securities after their satisfaction and discharge;
- whether the debt securities will be issued as registered securities, in a
form registered as to principal only with or without coupons, or as
bearer securities including temporary and definitive global form, or any
combination thereof and applicable exchange provisions;
7
<PAGE> 9
- any limitations on the rights of the holders of debt securities to
transfer or exchange or to obtain the registration of transfer of debt
securities, and the amount or terms of a service charge if any for the
registration of transfer or exchange of debt securities;
- any changes to the events of default or covenants described in this
prospectus; and
- any other terms of the debt securities, not inconsistent with the
provisions of the Indenture. (Section 301)
Debt securities may be sold at a substantial discount below their principal
amount. Special United States federal income tax considerations applicable to
debt securities sold at an original issue discount may be described in the
applicable prospectus supplement. In addition, special United States federal
income tax or other considerations applicable to any debt securities denominated
in a currency or currency unit other than dollars may be described in the
applicable prospectus supplement.
Except as otherwise described in the prospectus supplement, the covenants
contained in the indenture would not afford holders of debt securities
protection in the event of a highly-leveraged transaction involving CFC.
SUBORDINATION
The debt securities will be subordinate and junior in right of payment to
all senior indebtedness of CFC.
No payment of principal of, including redemption and sinking fund payments,
or premium or interest on, the debt securities may be made if any senior
indebtedness is not paid when due, or a default has occurred with respect to the
senior indebtedness permitting the holders to accelerate its maturity and the
default has not been cured or waived and has not ceased to exist. Upon any
acceleration of the principal amount due on the debt securities or any
distribution of assets of CFC to creditors upon any dissolution, winding-up,
liquidation or reorganization, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership or other proceedings, all principal of, and
premium, if any, and interest due or to become due on, all senior indebtedness
must be paid in full before the holders of the debt securities are entitled to
receive or retain any payment. The holders of the debt securities will be
subrogated to the rights of the holders of senior indebtedness to receive
payments or distributions until all amounts owing on the debt securities are
paid in full. (Article 15)
The term "senior indebtedness" is defined in the indenture to mean
- all indebtedness heretofore or hereafter incurred by CFC for money
borrowed unless by its terms it is provided that such indebtedness is not
senior indebtedness,
- all other indebtedness hereafter incurred by the CFC which by its terms
provides that such indebtedness is senior indebtedness,
- all guarantees, endorsements and other contingent obligations in respect
of, or obligations to purchase or otherwise acquire or service,
indebtedness or obligations of others, and
- any amendments, modifications, deferrals, renewals or extensions of any
such senior indebtedness heretofore or hereafter issued in evidence of or
exchange of such senior indebtedness.
The indenture does not limit the aggregate amount of senior indebtedness
that CFC may issue. As of May 31, 1999, outstanding senior indebtedness of CFC
aggregated approximately $13.5 billion, including contingent guarantees of $1.7
billion.
FORM, EXCHANGE AND TRANSFER
Unless otherwise specified in the applicable prospectus supplement, the
debt securities will be issuable only in fully registered form without coupons
and in denominations of $1,000 and any integral multiple of $1,000. (Sections
201 and 302)
At the option of the holder, subject to the terms of the indenture and the
limitations applicable to global securities, debt securities of any series will
be exchangeable for other debt securities of the same series, of any authorized
denomination and of like tenor and aggregate principal amount. (Section 305)
8
<PAGE> 10
Subject to the terms of the indenture and the limitations applicable to
global securities, debt securities may be presented for exchange as provided
above or for registration of transfer, duly endorsed or accompanied by a duly
executed instrument of transfer, at the office of the security registrar or at
the office of any transfer agent designated by CFC for such purpose. CFC may
designate itself the security registrar. No service charge will be made for any
registration of transfer or exchange of debt securities, but CFC may require
payment of a sum sufficient to cover any applicable tax or other governmental
charge. The transfer or exchange will be effected upon the security registrar or
such transfer agent, as the case may be, being satisfied with the documents of
title and identity or the person making the request. (Section 305) Any transfer
agent in addition to the security registrar initially designated by CFC for any
debt securities will be named in the applicable prospectus supplement. CFC may
at any time designate additional transfer agents or rescind the designation of
any transfer agent or approve a change in the office through which any transfer
agent acts, but CFC will be required to maintain a transfer agent in each place
of payment for the debt securities of each series. (Section 602)
CFC will not be required to issue, register the transfer of, or exchange
any debt security or any tranche thereof during a period beginning at the
opening of business 15 days before the day of mailing of a notice of redemption
of any such debt security called for redemption and ending at the close of
business on the day of such mailing. CFC will not be required to register the
transfer of or exchange any debt security so selected for redemption, in whole
or in part, except the unredeemed portion of any such debt security being
redeemed in part. (Section 305)
PAYMENT AND PAYING AGENTS
Unless otherwise specified in an applicable prospectus supplement or
pricing supplement, payment of interest on a debt security on any interest
payment date will be made to the person in whose name such debt security or one
or more predecessor securities is registered at the close of business on the
regular record date for the payment. (Section 307)
Unless otherwise indicated in the applicable prospectus supplement or
pricing supplement, principal of and any premium and interest on the debt
securities of a particular series will be payable at the office of paying agents
CFC may designate from time to time. Unless otherwise indicated in the
applicable prospectus supplement or pricing supplement, Harris Trust Company of
New York in New York City, an affiliate of the trustee, will be designated as
CFC's sole paying agent for payments with respect to debt securities of each
series. Any other paying agents initially designated by CFC for the debt
securities of a particular series will be named in the applicable prospectus
supplement or pricing supplement. CFC may at any time designate additional
paying agents or rescind the designation of any paying agent or approve a change
in the office through which any paying agent acts, but CFC will be required to
maintain a paying agent in each place of payment for the debt securities of a
particular series. (Section 602)
All moneys paid by CFC to a paying agent for the payment of the principal,
premium or interest on any debt security that remains unclaimed at the end of
two years after becoming due and payable will be repaid to CFC. After that time,
the holder of the debt security will, as an unsecured general creditor, look
only to CFC for payment out of those repaid amounts. (Section 603)
REDEMPTION
Any terms for the optional or mandatory redemption of debt securities will
be set forth in the applicable prospectus supplement or a pricing supplement.
Unless otherwise provided in the applicable prospectus supplement with respect
to debt securities that are redeemable at the option of the holder, debt
securities will be redeemable only upon notice by mail not less than 30 nor more
than 60 days prior to the date fixed for redemption. If less than all the debt
securities of a series or tranche are to be redeemed, the particular debt
securities to be redeemed will be selected by a method of random selection that
the security registrar deems fair and appropriate. (Section 403 and 404)
Any notice of redemption at the option of CFC may state that the redemption
will be conditional upon receipt by the paying agent or agents, on or prior to
the dated fixed for such redemption, of money sufficient to pay the principal of
and premium, if any, and interest, if any, on such debt securities. The notice
may also
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<PAGE> 11
state that if the money has not been received, the notice will be of no force
and effect and CFC will not be required to redeem such debt securities. (Section
404)
CONSOLIDATION, MERGER, AND SALE OF ASSETS
CFC may not consolidate with or merge into any other corporation or
transfer its assets substantially as an entirety to any person unless
- the successor is a corporation organized under the laws of any domestic
jurisdiction;
- the successor corporation assumes CFC's obligations on the debt
securities and under the Indenture;
- immediately after giving effect to the transaction, no event of default,
and no event that, after notice or lapse of time, or both, would become
an event of default, has occurred and is continuing; and
- CFC delivers to the trustee an officer's certificate and an opinion of
counsel as provided in the indenture. (Section 1101)
EVENTS OF DEFAULT
Each of the following will constitute an event of default under the
indenture with respect to debt securities of any series:
- failure to pay interest on any debt securities for 60 days after the
security becomes due and payable;
- failure to pay principal or premium, if any, on any debt security within
three business days after the security becomes due and payable;
- failure to perform or breach of any other covenant or warranty in the
indenture that continues for 60 days after written notice to CFC from the
trustee, or holders of at least 33% in principal amount of the debt
securities of the series;
- certain events of bankruptcy, insolvency or reorganization; and
- such other events as may be specified for each series.
No event of default with respect to one series of debt securities
necessarily constitutes an event of default with respect to another series debt
securities.
If an event of default with respect to any series of debt securities occurs
and is continuing, either the trustee or the holders of not less than 33% in
principal amount of the outstanding debt securities of the series may declare
the principal amount, or if the debt securities are discount notes or similar
debt securities, the portion of the principal amount specified by the terms of
the debt securities, of all of the debt securities of that series to be due and
payable immediately. However, if an event of default occurs and is continuing
with respect to more than one series of debt securities, the trustee or the
holders of not less than 33% in aggregate principal amount of the outstanding
debt securities of series, considered as one class, may make the declaration of
acceleration and not the holders of the debt securities of any one series.
At any time after a declaration of acceleration with respect to the debt
securities of any series and before a judgment or decree for payment of the
money due has been obtained, the events of default giving rise to the
declaration of acceleration will be deemed waived, and the declaration and its
consequences will be deemed rescinded and annulled, if
- CFC has paid or deposited with the trustee a sum sufficient to pay:
- all overdue interest on all debt securities of such series;
- the principal of and premium, if any, on any debt securities of such
series which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate or rates prescribed
therefor in such debt securities;
- interest upon overdue interest at the rate or rates prescribed
therefor in such debt securities, to the extent that payment of such
interest is lawful; and
- all amounts due to the trustee under the indenture; and
10
<PAGE> 12
- any other events of default with respect to the debt securities of such
series, other than the nonpayment of the principal of the debt securities
of such series which has become due solely by such declaration of
acceleration, have been cured or waived as provided in the indenture.
(Section 802)
Subject to the provisions of the indenture relating to the duties of the
trustee in case an event of default shall occur and be continuing, the trustee
will be under no obligation to exercise any of its rights or powers under the
indenture at the request or direction of any of the holders, unless the holders
shall have offered to the trustee reasonable indemnity. (Section 903) Subject to
the provisions for the indemnification of the trustee, 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
any remedy available to the trustee, or exercising any trust or power conferred
on the trustee, with respect to the debt securities of that series. (Section
812)
No holder of a debt security of any series will have any right to institute
any proceeding with respect to the indenture, or for the appointment of a
receiver or a trustee, or for any other remedy, unless
- the holder has previously given to the trustee written notice of a
continuing event of default with respect to the debt securities of the
series,
- the holders of not less than 33 1/3% in aggregate principal amount of the
outstanding debt securities of the series have made written request to
the trustee, and the holder or holders have offered reasonable indemnity
to the trustee to institute the proceeding as trustee and
- the trustee has failed to institute the proceeding, and has not received
from the holders of a majority in aggregate principal amount of the
outstanding debt securities of that series a direction inconsistent with
the request, within 60 days after the notice, request and offer. (Section
807)
However, these limitations do not apply to a suit instituted by a holder of a
debt security for the enforcement of payment of the principal of or any premium
or interest on the debt security on or after the applicable due date specified
in the debt security. (Section 808)
CFC will be required to furnish to the trustee annually a statement by an
appropriate officer as to the officer's knowledge of CFC's compliance with all
conditions and covenants under the indenture, determined without regard to any
period of grace or requirement of notice under the indenture. (Section 605)
MODIFICATION AND WAIVER
Without the consent of any holder of debt securities, CFC and the trustee
may enter into one or more supplemental indentures for any of the following
purposes:
- to evidence the assumption by any permitted successor to CFC of the
covenants of CFC in the indenture and the debt securities,
- to add one or more covenants of CFC or other provisions for the benefit
of the holders of all or any series of outstanding debt securities or to
surrender any right or power conferred upon CFC by the indenture,
- to add any additional events of default with respect to all or any series
of outstanding debt securities,
- to change or eliminate any provision of the indenture or to add any new
provision to the indenture, but if the change, elimination or addition
will adversely affect the interests of the holders of debt securities of
any series in any material respect, the change, elimination or addition
will not become effective with respect to the series,
- to provide collateral security for the debt securities,
- to establish the form or terms of debt securities of any series as
permitted by the indenture,
- to provide for the acceptance of appointment of a successor trustee with
respect to the debt securities of one or more series and to add to or
change any of the provisions of the indenture as necessary or to
facilitate the administration of the trusts under the indenture by more
than one trustee,
- to provide for the procedures required to permit the utilization of a
noncertificated system of registration for any series of debt securities,
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<PAGE> 13
- to change any place where
- the principal of and premium, if any, and interest, if any, on any
debt securities is payable,
- any debt securities may be surrendered for registration of transfer or
exchange and
- notices and demands to or upon CFC in respect of debt securities and
the indenture may be served,
- to cure any ambiguity or inconsistency or to make or change any other
provisions with respect to matters and questions arising under the
indenture, so long as the changes or additions will not adversely affect
the interests of the holders of debt securities of any series in any
material respect. (Section 1201)
The holders of not less than a majority in aggregate principal amount of
the outstanding debt securities of any series may waive compliance by CFC with
certain restrictive provisions of the indenture. (Section 606) The holders of a
majority in principal amount of the outstanding debt securities of any series
may waive any past default under the indenture, except a default in the payment
of principal, premium or interest and other covenants and provisions of the
indenture that can be modified or be amended only with the consent of the holder
of each outstanding debt security of the series affected. (Section 813)
If the Trust Indenture Act of 1939, as amended, is amended after the date
of the indenture to require changes to the indenture or the incorporation of
additional provisions or to permit changes to, or the elimination of, provisions
which, at the date of the indenture were required by the Trust Indenture Act to
be contained in the indenture, the indenture will be deemed amended so as to
conform to the amendment or to effect the changes or elimination. CFC and the
trustee may, without the consent of any holders, enter into one or more
supplemental indentures to evidence or effect the amendment. (Section 1201)
Except as provided above, the consent of the holders of not less than a
majority in aggregate principal amount of the debt securities of all series then
outstanding, considered as one class, is required to add any provisions to, or
change in any manner, or eliminate any of the provisions of, the indenture.
However, if less than all of the series of debt securities outstanding are
directly affected by a proposed supplemental indenture, then the consent only of
the holders of a majority in aggregate principal amount of outstanding debt
securities of all series so directly affected, considered as one class, will be
required. If the debt securities of any series have been issued in more than one
tranche and if the proposed supplemental indenture directly affects the rights
of the holders of one or more, but less than all, tranches, the consent only of
the holders of a majority in aggregate principal amount of the outstanding debt
securities of all tranches directly affected, considered as one class, will be
required. However, no amendment or modification may
- change the stated maturity of the principal of, or any installment of
principal of or interest on, any debt security, or reduce the principal
amount or the rate of interest or the amount of any installment of
interest or change the method of calculating such rate or reduce any
premium payable upon the redemption thereof, or reduce the amount of the
principal of any discount security that would be due and payable upon a
declaration of acceleration of maturity or change the coin or currency or
other property in which any debt security or any premium or the interest
thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the stated maturity of any
debt security or, in the case of redemption, on or after the redemption
date without, in any such case, the consent of the holder of the debt
security,
- reduce the percentage in principal amount of the outstanding debt
securities of any series, or any tranche, the consent of the holders of
which is required for any supplemental indenture, or the consent of the
holders of which is required for any waiver of compliance with any
provision of the indenture or any default and its consequences, or reduce
the requirements for quorum or voting, without, in any such case, the
consent of the holder of each outstanding debt security of the series or
tranche, or
- modify certain of the provisions of the indenture relating to
supplemental indentures, waivers of certain covenants and waivers of past
defaults with respect to the debt securities of any series, or any
tranche, without the consent of the holder of each outstanding debt
security affected.
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<PAGE> 14
A supplemental indenture that changes or eliminates any provision of the
indenture expressly included solely for the benefit of a particular series of
debt securities or tranches, or modifies the rights of the holders of debt
securities of the series or tranches with respect to the provision, will be
deemed not to affect the rights under the indenture of the holders of the debt
securities of any other series or tranche. (Section 1202)
The indenture provides that in determining whether the holders of the
requisite principal amount of the outstanding debt securities have given or
taken any direction, notice, consent, waiver or other action under the Indenture
as of any date,
- debt securities owned by CFC or any other obligor upon the securities or
any affiliate of CFC or of the other obligor unless CFC, the affiliate or
obligor owns all securities outstanding under the indenture, or all
outstanding securities of each the series and the tranche, as the case
may be, determined without regard to this bullet point shall be
disregarded and deemed not outstanding;
- the principal amount of a discount security deemed outstanding shall be
the amount of the principal that would be due and payable as of the date
of determination upon a declaration of acceleration of the maturity as
provided in the indenture; and
- the principal amount of a debt security denominated in foreign currencies
or a composite currency deemed outstanding will be the dollar equivalent,
determined as of that date in the manner prescribed for that debt
security, of the principal amount of that debt security, or, in the case
of a debt security described in the second bullet point above, of the
amount described in that bullet point. (Section 101)
If CFC solicits from holders any request, demand, authorization, direction,
notice, consent, election, waiver or other act, CFC may, at its option, by board
resolution, fix in advance a record date for the determination of holders
entitled to give such request, demand, authorization, direction, notice,
consent, election, waiver or other act, but CFC shall have no obligation to do
so. If a record date is fixed, the request, demand, authorization, direction,
notice, consent, election, waiver or other act may be given before or after the
record date, but only the holders of record at the close of business on the
record date shall be deemed holders for the purposes of determining whether
holders of the requisite proportion of the outstanding securities have
authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other act, and for that purpose the
outstanding securities shall be computed as of the record date. Any request,
demand, authorization, direction, notice, consent, election, waiver or other act
of a holder shall bind every future holder of the same security and the holder
of every security issued upon the registration of transfer or in exchange or in
lieu of the security in respect of anything done, omitted or suffered to be done
by the trustee or CFC in reliance thereon, whether or not notation is made upon
security. (Section 104)
DEFEASANCE
Unless otherwise indicated in the applicable prospectus supplement or
pricing supplement, any debt security, or any portion of the principal amount,
will be deemed paid for purposes of the indenture, and, at CFC's election, the
entire indebtedness of CFC in respect thereof will be deemed satisfied and
discharged, if there has been irrevocably deposited with the trustee or any
paying agent other than CFC in trust any of the following in an amount
sufficient to pay when due the principal of and premium, if any, and interest,
if any, due and to become due on the debt securities or portions thereof:
- money;
- eligible obligations;
- a combination of the above bullet points. (Section 701)
For this purpose, unless otherwise indicated in the applicable prospectus
supplement or pricing supplement, eligible obligations include direct
obligations of, or obligations unconditionally guaranteed by, the United States,
entitled to the benefit of its full faith and credit, and certificates,
depositary receipts or other instruments which evidence a direct ownership
interest in those obligations or in any specific interest or principal payments
due on them, in each case which do not contain provisions permitting the
redemption or other prepayment at the option of the issuer. Among the conditions
to CFC's making the election to have its entire indebtedness deemed satisfied
and discharged, CFC is required to deliver to the trustee an opinion of counsel
to the effect that the deposit and related defeasance would not cause the
holders of the debt securities
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<PAGE> 15
to recognize income, gain or loss for United States federal income tax purposes
and that the holders will be subject to United States federal income tax in the
same amounts, in the same manner and at the same times as would have been the
case if the deposit and related defeasance had not occurred.
TITLE
CFC, the trustee and any agent of CFC or the trustee may treat the person
in whose name a debt security is registered as the absolute owner, whether or
not the debt security may be overdue, for the purpose of making payment and for
all other purposes. (Section 308)
GOVERNING LAW
The indenture and the debt securities will be governed by, and construed in
accordance with, the laws of the State of New York. (Section 112)
THE TRUSTEE
Harris Trust and Savings Bank, Chicago, Illinois is the trustee.
GLOBAL SECURITIES
The Depository Trust Company ("DTC") may act as securities depository for
some or all of the debt securities of any series. These debt securities will be
issued in fully-registered form in the name of Cede & Co. (DTC's partnership
nominee). One or more fully-registered certificates will be issued as global
securities for the debt securities in the aggregate principal amount of the debt
securities, and will be deposited with, or held for the benefit of, DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "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 deposit with DTC. DTC
also facilitates the settlement among direct participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in direct 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.
Purchases of the debt securities under the DTC system must be made by or
through direct participants, which will receive a credit for the debt securities
on DTC's records. The ownership interest of each actual purchaser of the debt
securities ("Beneficial Owner") is in turn to be recorded on the participants'
records. Beneficial owners will not receive written confirmation from DTC of
their purchases, but beneficial owners are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the participant through which the beneficial
owner entered into the transaction. Transfers of ownership interests in the debt
securities are to be accomplished by entries made on the books of participants
acting on behalf of beneficial owners. Beneficial owners will not receive
certificates representing their ownership interests in the debt securities,
except in the event that use of the book-entry system for the debt securities is
discontinued.
To facilitate subsequent transfers, all the debt securities deposited by
direct participants with DTC are registered in the name of DTC's partnership
nominee, Cede & Co. The deposit of the debt securities with DTC and their
registration in the name of Cede & Co. effect no change in beneficial ownership.
DTC has no knowledge of the actual beneficial owners of the debt securities;
DTC's records reflect only the identity of the direct participants to whose
accounts such debt securities are credited, which may or may not be the
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<PAGE> 16
beneficial owners. The participants will remain responsible for keeping account
of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants, and by
participants to beneficial owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to the debt
securities. Under its usual procedures, DTC would mail an omnibus proxy to CFC
as soon as possible after the record date. The omnibus proxy assigns Cede &
Co.'s consenting or voting rights to those direct participants to whose accounts
the debt securities are credited on the record date (identified in a listing
attached to the omnibus proxy).
Principal and interest payments on the debt securities will be made to DTC.
DTC's practice is to credit direct participants' accounts on the payable date in
accordance with their respective holdings shown on DTC's records unless DTC has
reason to believe that it will not receive payment on the payable date. Payments
by participants to beneficial owners will be governed by standing instructions
and customary practices, as is the case with securities held for the accounts of
customers in bearer form or registered in "street name", and will be the
responsibility of such participant and not of DTC, CFC or the Trustee, subject
to any statutory or regulatory requirements as may be in effect from time to
time. Payment of principal and interest to DTC is the responsibility of CFC or
the Trustee, disbursement of such payments to direct participants shall be the
responsibility of DTC, and disbursements of such payments to the beneficial
owners shall be the responsibility of participants.
DTC may discontinue providing its services as securities depository with
respect to the debt securities at any time by giving reasonable notice to CFC or
the Trustee. Under such circumstances, in the event that a successor securities
depository is not obtained, the debt securities certificates are required to be
printed and delivered.
CFC may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor securities depository). In that event, the debt
securities certificates will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that CFC believes to be reliable (including DTC),
but CFC takes no responsibility for the accuracy thereof. According to DTC, the
foregoing information with respect to DTC has been provided to the financial
community for informational purposes only and is not intended to serve as a
representation, warranty, or contract modification of any kind.
Neither CFC, the Trustee nor any underwriter will have any responsibility
or obligation to participants, or the persons for whom they act as nominees,
with respect to the accuracy of the records of DTC, its nominee or any
participant with respect to any ownership interest in the debt securities, or
payments to, or the providing of notice for, participants or beneficial owners.
PLAN OF DISTRIBUTION
Debt securities of any series may be purchased to be reoffered to the
public through underwriting syndicates led by Lehman Brothers Inc. or other
underwriters. The underwriters with respect to an underwritten offering of debt
securities will be named in the prospectus supplement relating to the offering.
Unless otherwise set forth in the prospectus supplement, the obligations of the
underwriters to purchase debt securities will be subject to conditions precedent
and each of the underwriters with respect to a sale of debt securities will be
obligated to purchase all of its debt securities if any are purchased. The
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers set forth in the prospectus supplement may be
changed from time to time.
The place and time of delivery for the offered debt securities in respect
of which this prospectus is delivered will be set forth in the prospectus
supplement.
Certain of the underwriters and their associates may engage in transactions
with and perform services for CFC in the ordinary course of business.
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<PAGE> 17
In connection with an offering of debt securities, the underwriters may
purchase and sell debt securities in the open market. These transactions may
include over-allotment and stabilizing transactions and purchases to cover short
positions created by the underwriters in connection with the offering.
Stabilizing transactions consist of certain bids or purchases for the purpose of
preventing or retarding a decline in the market price of debt securities, and
short positions created by the underwriters involve the sale by the underwriters
of a greater aggregate principal amount of debt securities than they are
required to purchase from CFC. The underwriters may also impose a penalty bid,
under which selling concessions allowed to broker-dealers in respect of the debt
securities sold in the offering may be reclaimed by the underwriters if those
debt securities are repurchased by the underwriters in stabilizing or covering
transactions. These activities may stabilize, maintain or otherwise affect the
market price of the debt securities, which may be higher than the price that
might otherwise prevail in the open market. These activities, if commenced, may
be discontinued at any time. These transactions may be effected in the
over-the-counter market or otherwise.
LEGAL OPINIONS
The validity of the debt securities offered hereby will be passed upon for
CFC by Milbank, Tweed, Hadley & McCloy LLP, 1 Chase Manhattan Plaza, New York,
New York, and for the underwriters, if any, by Cravath, Swaine & Moore,
Worldwide Plaza, 825 Eighth Avenue, New York, New York.
EXPERTS
The audited financial statements included in CFC's Annual Report on Form
10-K for the year ended May 31, 1999, incorporated by reference in this
prospectus, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
incorporated herein in reliance upon the authority of said firm as experts in
giving said reports.
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<PAGE> 18
PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses in connection with the issuance and distribution of the
securities covered hereby, other than underwriting commissions, are, subject to
further contingencies, estimated as follows:
<TABLE>
<S> <C>
Registration statement filing fee........................... $ 79,200
Printing.................................................... 50,000
Legal fees and expenses..................................... 200,000
Blue sky fees and expenses.................................. 10,000
Accounting fees............................................. 13,000
Fees of trustee............................................. 10,000
Fees of rating agencies..................................... 150,000
Miscellaneous............................................... 24,000
--------
Total............................................. $536,200
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 29-1104(9) of the District of Columbia Cooperative Association Act
provides that an association such as the Registrant shall have the capacity "to
exercise . . . any power granted to ordinary business corporations, save those
powers inconsistent with this chapter." Section 29-304(16) of the District of
Columbia Business Corporation Act permits any corporation:
"To indemnify any and all of its directors or officers or former
directors or officers or any person who may have served at its request as a
director or officer of another corporation in which it owns shares of
capital stock or of which it is a creditor against expenses actually and
necessarily incurred by them in connection with the defense of any action,
suit, or proceeding in which they, or any of them, are made parties, or a
party, by reason of being or having been directors or officers or a
director or officer of the corporation, or of such other corporation,
except in relation to matters as to which any such director or officer or
former director or officer or person shall be adjudged in such action,
suit, or proceeding to be liable for negligence or misconduct in the
performance of duty. Such indemnification shall not be deemed exclusive of
any other rights to which those indemnified may be entitled, under any
bylaw, agreement, vote of stockholders, or otherwise."
The board of directors of CFC has resolved to indemnify all CFC directors,
officers and employees in accordance with the terms of the first sentence of the
above section. The bylaws of CFC also provide for indemnification of all CFC
directors, officers and employees as set forth above.
ITEM 16. LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <C> <S>
1 -- Form of Underwriting Agreement to be used in connection with
Debt Securities. Incorporated by reference to Exhibit 1 to
Registration Statement No. 33-64231 filed on November 14,
1995.
4.1 -- Form of Indenture relating to Debt Securities. Incorporated
by reference to Exhibit 4.1 to Registration Statement No.
33-64231 filed on November 14, 1995.
5 -- Opinion and consent of Milbank, Tweed, Hadley & McCloy.
12 -- Schedule of computation of ratio of margins to fixed
charges.
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of Milbank, Tweed, Hadley & McCloy. Included as part
of Exhibit 5.
24 -- Power of Attorney (included on signature pages of this
Registration Statement).
25 -- Form T-1 Statement of Eligibility and Qualification under
the Trust Indenture Act of 1939 of Mellon Bank, N.A., as
Trustee. Incorporated by reference to Exhibit 25 to
Registration Statement No. 33-64231 filed on November 14,
1995.
</TABLE>
II-1
<PAGE> 19
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement (other than
as provided in the proviso and instructions to Item 512(a) of Regulation
S-K):
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in this registration
statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the debt securities offered
therein, and the offering of such debt securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the debt securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934 that is incorporated by reference in this registration statement
shall be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such debt securities at that
time shall be deemed to be the initial bona fide offering thereof.
(5) That, for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the debt securities
being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-2
<PAGE> 20
THE REGISTRANT AND EACH PERSON WHOSE ORIGINAL SIGNATURE APPEARS BELOW
HEREBY AUTHORIZES EACH OF SHELDON C. PETERSEN, STEVEN L. LILLY AND JOHN JAY LIST
(THE "AGENTS") TO FILE ONE OR MORE AMENDMENTS (INCLUDING POST-EFFECTIVE
AMENDMENTS) TO THE REGISTRATION STATEMENT AND ANY REGISTRATION STATEMENT OF THE
REGISTRANT RELATING TO DEBT SECURITIES FILED AFTER THE DATE HEREOF PURSUANT TO
RULE 462(b) UNDER THE SECURITIES ACT OF 1933, AS AMENDED, WHICH AMENDMENTS AND
REGISTRATION STATEMENT MAY MAKE SUCH CHANGES IN THE REGISTRATION STATEMENT AS
SUCH AGENT DEEMS APPROPRIATE AND THE REGISTRANT AND EACH SUCH PERSON HEREBY
APPOINTS EACH SUCH AGENT AS ATTORNEY-IN-FACT TO EXECUTE IN THE NAME AND ON
BEHALF OF THE REGISTRANT AND EACH SUCH PERSON, INDIVIDUALLY AND IN EACH CAPACITY
STATED BELOW, ANY SUCH AMENDMENTS TO THE REGISTRATION STATEMENT AND ANY SUCH
ADDITIONAL REGISTRATION STATEMENT.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT OR AMENDMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN THE COUNTY OF FAIRFAX, COMMONWEALTH OF VIRGINIA, ON THE 9TH
DAY OF FEBRUARY, 2000.
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
By: /s/ SHELDON C. PETERSEN
-------------------------------------
SHELDON C. PETERSEN
GOVERNOR AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT OR AMENDMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ SHELDON C. PETERSEN Governor and Chief
- ------------------------------------------------ Executive Officer
SHELDON C. PETERSEN
/s/ STEVEN L. LILLY Senior Vice President and
- ------------------------------------------------ Chief Financial Officer
STEVEN L. LILLY (Principal Financial
Officer)
/s/ STEVEN L. SLEPIAN Controller (Principal
- ------------------------------------------------ Accounting Officer)
STEVEN L. SLEPIAN
/s/ BENSON HAM President and Director
- ------------------------------------------------
BENSON HAM
/s/ R. B. SLOAN, JR. Vice President and Director February 9, 2000
- ------------------------------------------------
R. B. SLOAN, JR.
/s/ WADE R. HENSEL Secretary-Treasurer and
- ------------------------------------------------ Director
WADE R. HENSEL
/s/ JAMES M. ANDREW Director
- ------------------------------------------------
JAMES M. ANDREW
/s/ ROBERT A. CAUDLE Director
- ------------------------------------------------
ROBERT A. CAUDLE
Director
- ------------------------------------------------
GLENN ENGLISH
/s/ ALDEN J. FLAKOLL Director
- ------------------------------------------------
ALDEN J. FLAKOLL
/s/ JAMES A. HUDELSON Director
- ------------------------------------------------
JAMES A. HUDELSON
</TABLE>
II-3
<PAGE> 21
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ KENNETH KRUEGER Director
- ------------------------------------------------
KENNETH KRUEGER
/s/ STEPHEN R. LOUDER Director
- ------------------------------------------------
STEPHEN R. LOUDER
/s/ EUGENE MEIER Director
- ------------------------------------------------
EUGENE MEIER
/s/ R. LAYNE MORRILL Director
- ------------------------------------------------
R. LAYNE MORRILL
/s/ ROBERT J. OCCHI Director
- ------------------------------------------------
ROBERT J. OCCHI
/s/ CLIFTON M. PIGOTT Director
- ------------------------------------------------
CLIFTON M. PIGOTT
/s/ TIMOTHY REEVES Director February 9, 2000
- ------------------------------------------------
TIMOTHY REEVES
/s/ BRIAN D. SCHLAGEL Director
- ------------------------------------------------
BRIAN D. SCHLAGEL
/s/ THOMAS W. STEVENSON Director
- ------------------------------------------------
THOMAS W. STEVENSON
Director
- ------------------------------------------------
CLIFFORD G. STEWART
/s/ ROBERT STROUP Director
- ------------------------------------------------
ROBERT STROUP
/s/ ROBERT C. WADE Director
- ------------------------------------------------
ROBERT C. WADE
/s/ ROBERT O. WILLIAMS Director
- ------------------------------------------------
ROBERT O. WILLIAMS
/s/ ELDWIN A. WIXSON Director
- ------------------------------------------------
ELDWIN A. WIXSON
</TABLE>
II-4
<PAGE> 22
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBITS PAGE
- ------- -------- ------------
<C> <C> <S> <C>
1 -- Form of Underwriting Agreement to be used in connection with
Debt Securities. Incorporated by reference to Exhibit 1 to
Registration Statement No. 33-64231 filed on November 14,
1995. ......................................................
4.1 -- Form of Indenture relating to Debt Securities. Incorporated
by reference to Exhibit 4.1 to Registration Statement No.
33-64231 filed on November 14, 1995.........................
5 -- Opinion and consent of Milbank, Tweed, Hadley & McCloy......
12 -- Schedule of computation of ratio of margins to fixed
charges.....................................................
23.1 -- Consent of Arthur Andersen LLP..............................
23.2 -- Consent of Milbank, Tweed, Hadley & McCloy. Included as part
of Exhibit 5................................................
24 -- Power of Attorney (included on signature pages of this
Registration Statement).....................................
25 -- Form T-1 Statement of Eligibility and Qualification under
the Trust Indenture Act of 1939 of Mellon Bank, N.A., as
Trustee. Incorporated by reference to Exhibit 25 to
Registration Statement No. 33-64231 filed on November 14,
1995. ......................................................
</TABLE>
<PAGE> 1
EXHIBIT 5
February 9, 2000
National Rural Utilities Cooperative
Finance Corporation
2201 Cooperative Way
Herndon, Virginia 20171-3025
Dear Sirs:
We have acted as special counsel for National Rural Utilities Cooperative
Finance Corporation ("CFC") in connection with the proposed public offering from
time to time, directly to purchasers or through agents or underwriters to be
designated from time to time, of Debt Securities (the "Debt Securities") of CFC,
such Debt Securities to be issued under an Indenture dated as of February 15,
1994, between CFC and Harris Trust and Savings Bank, as Trustee, as contemplated
in CFC's Registration Statement filed on Form S-3 on the date hereof pursuant to
Rule 415 under the Securities Act of 1933 (the "Registration Statement"). We
submit this opinion for use as Exhibit 5 to the Registration Statement and
hereby consent to the use of this opinion in the Registration Statement and to
the use of our name under the caption "Legal Opinions" in the prospectus.
We have investigated the corporate status of CFC and have examined the
corporate proceedings authorizing the creation and issuance of the Debt
Securities.
Based upon the foregoing, and having regard to legal considerations that we
deem relevant, we are of the opinion that the Debt Securities, when duly
authorized and executed by CFC and authenticated by or on behalf of the Trustee
pursuant to the terms of the Indenture, and issued for value in accordance with
the terms of the Indenture and applicable resolutions of the Board of Directors
of CFC, will be the validly issued, binding obligations of CFC.
Very truly yours,
Milbank, Tweed, Hadley & McCloy LLP
<PAGE> 1
EXHIBIT 12
NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION
COMPUTATION OF RATIO OF MARGINS TO FIXED CHARGES
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
NOVEMBER 30, FOR THE YEARS ENDED MAY 31,
------------------- ----------------------------------------------------
1999 1998 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Net margins before
extraordinary loss........... $ 45,579 $ 35,723 $ 76,436 $ 62,216 $ 54,736 $ 50,621 $ 45,212
Add: Fixed charges............. 396,001 310,367 664,109 540,535 475,729 426,079 361,338
-------- -------- -------- -------- -------- -------- --------
Margins available for fixed
charges...................... $441,580 $346,360 $740,548 $602,751 $530,465 $476,700 $406,550
======== ======== ======== ======== ======== ======== ========
Fixed charges:
Interest on all debt
(including amortization of
discount and issuance
costs)..................... $396,001 $310,367 $664,109 $540,535 $475,729 $426,079 $361,338
-------- -------- -------- -------- -------- -------- --------
Total fixed charges... $396,001 $310,367 $664,109 $540,535 $475,729 $426,079 $361,338
======== ======== ======== ======== ======== ======== ========
Ratio of margins to fixed
charges...................... 1.12 1.12 1.12 1.12 1.12 1.12 1.13
======== ======== ======== ======== ======== ======== ========
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement of our report dated July 16, 1999
included in National Rural Utilities Cooperative Finance Corporation's Form 10-K
for the year ended May 31, 1999 and to all references to our Firm included in
this Registration Statement.
ARTHUR ANDERSEN LLP
Vienna, VA
February 3, 2000
