<PAGE>
<PAGE>
Rule 424B5
Registration Nos. 33-49697
33-50615
PROSPECTUS SUPPLEMENT
(To Prospectus dated October 22, 1993)
$450,000,000
New York Telephone Company
THIRTY YEAR 7-1/4% DEBENTURES, DUE FEBRUARY 15, 2024
Interest on the Debentures is payable on February 15 and August 15 of each
year, commencing August 15, 1994. The Debentures are not subject to
redemption prior to February 15, 2004. The Debentures are redeemable on or
after February 15, 2004, at the option of the Company, in whole or in part,
on any date upon at least 30 days' notice at the redemption prices set forth
herein under "Certain Terms of Debentures--Redemption Provisions."
The Debentures will be represented by global debentures (the "Global
Debentures") registered in the name of the nominee of The Depository Trust
Company (the "Depositary" ). Beneficial interests in the Global Debentures
will be shown on, and transfers thereof will be effected only through,
records maintained by the Depositary (in respect of its participants) and by
its participants. See "Certain Terms of Debentures--Book-Entry System."
Except as described in the Prospectus, Debentures in definitive form will not
be issued. See "Description of Securities--Global Securities" in the
Prospectus.
The Debentures will constitute unsecured indebtedness of the Company. The
Company's Refunding Mortgage Bonds, Series I, L through R, inclusive, T and
V, in the aggregate principal amount of $1,100,000,000, are secured by
substantially all the property that the Company now owns or hereafter
acquires in the State of New York and all securities (subject to certain
exceptions) that the Company now owns or hereafter acquires.
Application will be made to list the Debentures on the New York Stock
Exchange.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public (1) Commissions (2) Company (1) (3)
<S> <C> <C> <C>
Per Debenture 98.872% .875% 97.997%
Total $444,924,000 $3,937,500 $440,986,500
(1) Plus accrued interest, if any, from February 28, 1994.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(3) Before deduction of expenses payable by the Company estimated at
$230,000.
</TABLE>
The Debentures are offered, subject to prior sale, when, as and if accepted
by the Underwriters and subject to approval of certain legal matters by
Simpson Thacher & Bartlett, counsel for the Underwriters. It is expected that
delivery of the Debentures will be made on or about February 28, 1994 through
the facilities of the Depositary, against payment therefor in New York funds.
Morgan Stanley & Co.
Incorporated
CS First Boston
Kidder, Peabody & Co.
Incorporated
Lehman Brothers
Salomon Brothers
Inc
February 15, 1994
<PAGE>
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEBENTURES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE
OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
No person has been authorized by the Company, the Underwriters or any dealer
to give any information or to make any representations other than those
contained or incorporated by reference in this Prospectus Supplement or the
Prospectus and, if given or made, such information or representations must
not be relied upon as having been so authorized. Neither this Prospectus
Supplement nor the Prospectus constitutes an offer to sell or the
solicitation of an offer to buy any securities other than the securities
described in this Prospectus Supplement or an offer to sell or the
solicitation of an offer to buy such securities in any jurisdiction to any
person to whom it is unlawful to make such offer in such jurisdiction.
Neither the delivery of this Prospectus Supplement and the accompanying
Prospectus nor any sale made hereunder or thereunder shall under any
circumstances imply that the information herein or therein is correct as of
any date subsequent to the date hereof.
TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
<S> <C>
Use of Proceeds S-3
Recent Developments S-3
Certain Terms of Debentures S-4
Underwriters S-5
Prospectus
Available Information 2
Incorporation of Documents by Reference 2
The Company 3
Use of Proceeds 3
Ratio of Earnings to Fixed Charges 3
Description of Securities 3
Limitations on Issuance of Bearer
Securities 10
United States Taxation 11
Plan of Distribution 13
Experts 14
Legal Matters 14
</TABLE>
S-2
<PAGE>
<PAGE>
USE OF PROCEEDS
The Company will use the proceeds from the sale of the Debentures to repay
short-term advances received from NYNEX Corporation. These advances were used
to redeem on December 30, 1993, the Company's Thirty-Eight Year 8-5/8%
Debentures, due May 15, 2024, in the aggregate principal amount of
$450,000,000.
RECENT DEVELOPMENTS
Financial Information
The following summarizes selected financial information of the Company for
the twelve months ended December 31, 1993 and 1992:
<TABLE>
<CAPTION>
For the Twelve
Months
Ended December 31,
1993* 1992
(In Millions)
<S> <C> <C>
Operating revenues $7,847.0 $7,746.4
Operating expenses 7,504.6 6,258.7
Earnings before income taxes and cumulative effect of change in accounting
principle 13.8 1,199.2
Earnings before cumulative effect of change in accounting principle 81.6 856.4
Cumulative effect of change in accounting for postemployment benefits, net
of taxes (89.3) --
Net income (Loss) (7.7) 856.4
</TABLE>
*Selected financial information presented above for 1993 is unaudited.
The results for 1993 reflect the effects of pretax charges of $1,239 million
($806 million after-tax) for business restructuring and other charges,
primarily related to efforts to redesign operations and incremental costs
associated with work force reductions.
The ratio of earnings to fixed charges for the twelve months ended December
31, 1993 is 1.04. For the purpose of this ratio: (i) earnings have been
calculated by adding to Earnings before income taxes and cumulative effect of
change in accounting principle Interest expense and the estimated interest
portion of rentals; and (ii) fixed charges are comprised of Interest expense
and the estimated interest portion of rentals.
State Regulatory Matters
In the first phase of a proceeding to investigate performance-based incentive
regulatory plans for the Company for 1994 and beyond, the New York State
Public Service Commission (the "NYSPSC") issued Orders (the "Orders") on
December 24, 1993 and January 28, 1994 for a reduction in the Company's
intrastate rates of $170 million, effective January 1, 1994. The reduction is
intended to reduce the Company's intrastate revenues by $141 million
annually. In addition, the NYSPSC determined that an additional $153.3
million of current revenues is to be made available "for the ultimate benefit
of customers and the Company's competitive position through earnings
incentives for short-term service improvements and a longer term plan for
performance-based earning incentives and network improvements." The possible
development of such a long-term plan is being pursued in a second phase of
the proceeding.
The NYSPSC did not make a final finding on return on equity for 1994. Subject
to the Company's achieving net productivity gains, the rates adopted by the
Orders would, according to the Orders, allow the Company an opportunity to
earn above a 10.8% return on equity, with equal sharing between shareholders
and ratepayers of any earnings above a 12% return on equity.
The Orders required the Company to incur a pretax charge of $75 million ($49
million after-tax) in 1993. This charge represents a reversal of a portion of
a regulatory asset related to deferred pension costs. These costs, which the
Company previously expected to recover through the regulatory process, were
deferred, and the asset was created, under the provisions of Statement of
Financial Accounting Standards No. 71, "Accounting for the Effects of Certain
Types of Regulation."
S-3
<PAGE>
<PAGE>
On October 9, 1992, the Company filed a Regulatory Asset Recovery Plan. In
the plan, the Company outlined how certain regulatory assets currently
accounted for as deferred charges could be recovered over six years, starting
in 1993, by utilizing Central Office Equipment tax savings and other revenues
currently being provided in rates. The NYSPSC's January 28, 1994 Order
approved the Company's Regulatory Asset Recovery Plan.
CERTAIN TERMS OF DEBENTURES
The following summary of the particular terms of the Debentures offered
hereby (referred to in the Prospectus as "Securities") supplements, and to
the extent inconsistent therewith replaces, the description of the general
terms and provisions of Securities set forth in the Prospectus, to which
description reference is hereby made.
General
The Debentures will be limited to $450,000,000 aggregate principal amount and
will be issuable only in registered form under an indenture, dated as of June
1, 1993 (the "Indenture"), from the Company to The Chase Manhattan Bank,
N.A., Trustee, which is more fully described in the accompanying Prospectus
under "Description of Securities."
The Debentures will mature on February 15, 2024. Interest on the Debentures
will be paid from February 28, 1994, and will be payable semiannually on each
February 15 and August 15, commencing August 15, 1994, to the persons in
whose names the Debentures are registered at the close of business on the
February 1 or August 1 prior to the payment date at the annual rate set forth
on the cover page of this Prospectus Supplement.
Principal of, including any premium, and interest on the Debentures will be
payable at the office or agency of the Company to be maintained in New York
City, which at the date of this Prospectus Supplement is the principal
corporate trust office of the Trustee. Debentureholders may be required to
surrender the Debentures to collect principal payments. At the option of the
Company, interest on the Debentures may be paid by check mailed to the person
entitled thereto at the address of such person appearing on the register of
the Debentures.
The Indenture does not contain any covenants or other provisions that are
specifically intended to afford holders of the Debentures special protection
in the event of a highly leveraged reorganization, restructuring or similar
transaction involving the Company that may adversely affect holders of the
Debentures. However, any such transaction would likely require regulatory
approval.
Redemption Provisions
The Debentures are not redeemable prior to February 15, 2004. On or after
February 15, 2004 and prior to maturity, the Company, at its option, may
redeem all or from time to time any part of the Debentures on at least 30
days' notice at the following redemption prices (expressed in percentages of
the principal amount) during the 12-month periods beginning February 15:
<TABLE>
<S> <C> <C> <C>
2004 103.061% 2009 101.531%
2005 102.755% 2010 101.224%
2006 102.449% 2011 100.918%
2007 102.143% 2012 100.612%
2008 101.837% 2013 100.306%
</TABLE>
and thereafter at 100%, together in each case with accrued interest to the
date fixed for redemption.
Book-Entry System
The Debentures will be issued in the form of fully registered Global
Debentures which will be deposited with, or on behalf of, the Depositary, and
registered in the name of the Depositary's nominee.
The Depositary has advised as follows: It is a limited-purpose trust company
which was created to hold securities for its participating organizations (the
"Participants") and to facilitate the clearance and settlement of securities
transactions between Participants in such securities through electronic
book-entry changes in accounts of its Participants. Participants include
securities brokers and dealers
S-4
<PAGE>
<PAGE>
(including the Underwriters), banks and trust companies, clearing
corporations and certain other organizations. Access to the Depositary's
system is also available to others such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly ("indirect participants"). Persons
who are not Participants may beneficially own securities held by the
Depositary only through Participants or indirect participants.
Principal, premium, if any, and interest payments on the Debentures
registered in the name of the Depositary's nominee will be made by the
Trustee to the Depositary's nominee as the registered owner of the Global
Debentures. Under the terms of the Indenture, the Company and the Trustee
will treat the persons in whose names the Debentures are registered as the
owners of such Debentures for the purpose of receiving payment of principal,
premium, if any, and interest on the Debentures and for all other purposes
whatsoever. Therefore, neither the Company, the Trustee nor any Paying Agent
has any direct responsibility or liability for the payment of principal,
premium, if any, or interest on the Debentures to owners of beneficial
interests in the Global Debentures. The Depositary has advised the Company
and the Trustee that its present practice is, upon receipt of any payment of
principal, premium, if any, or interest, to immediately credit the accounts
of the Participants with such payment in amounts proportionate to their
respective holdings in principal amount of beneficial interests in the Global
Debentures as shown on the records of the Depositary.
UNDERWRITERS
Under the terms of and subject to the conditions set forth in the
Underwriting Agreement, the Company has agreed to sell to each of the
Underwriters named below, severally, and each of the Underwriters has
severally agreed to purchase, the principal amount of the Debentures set
forth opposite its name below.
<TABLE>
<CAPTION>
Principal
Amount
Name of Debentures
<S> <C>
Morgan Stanley & Co. Incorporated $ 90,000,000
CS First Boston Corporation 90,000,000
Kidder, Peabody & Co. Incorporated 90,000,000
Lehman Brothers Inc. 90,000,000
Salomon Brothers Inc 90,000,000
Total $450,000,000
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
thereunder are subject to approval of certain legal matters by counsel and to
various other conditions. The nature of the Underwriters' obligations is such
that they are committed to take and pay for all of the Debentures if any are
taken.
The Underwriters initially propose to offer the Debentures directly to the
public at the public offering price set forth on the cover page of this
Prospectus Supplement and to certain dealers at such price less a concession
of .500% of the principal amount of the Debentures. The Underwriters may
allow and such dealers may reallow to certain other dealers a concession not
in excess of .250% of the principal amount of the Debentures. After the
initial public offering, the offering price and other selling terms may be
changed by the Underwriters.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
The Debentures are a new issue of securities with no established trading
market. The Company has been advised by the Underwriters that they currently
intend to make a market in the Debentures, as permitted by applicable laws
and regulations. The Underwriters are not obligated, however, to make a
market in the Debentures and any such market making may be discontinued at
any time at the sole discretion of the Underwriters. Accordingly, no
assurance can be given as to the liquidity of, or trading markets for, the
Debentures.
S-5
<PAGE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<PAGE>
PROSPECTUS
$1,450,000,000
New York Telephone Company
Debt Securities
New York Telephone Company ("Company") may offer from time to time in one or
more series up to $1,450,000,000 aggregate principal amount of its debt
securities ("Securities"), on terms to be determined at the time Securities
are offered for sale. Securities may be offered for sale directly to
purchasers and may also be offered through underwriters, dealers or agents.
The terms of the Securities, including, where applicable, the specific
designation, aggregate principal amount, authorized denominations, maturity,
interest rate (or manner of calculation thereof) and time of payment of
interest, if any, any redemption terms, the initial public offering price,
the net proceeds to the Company from the sale of the Securities, the names of
any underwriters or agents, any compensation to such underwriters or agents
and any other specific terms in connection with the offering and sale of the
Securities in respect of which this Prospectus is being delivered are set
forth in the accompanying Prospectus Supplement ("Prospectus Supplement").
The Securities may be issued in registered form or bearer form. In addition,
all or a portion of the Securities of a series may be issued in global form.
Subject to certain exceptions, Securities in bearer form will not be offered,
sold or delivered to persons within the United States or to United States
persons. See "Limitations on Issuance of Bearer Securities."
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.
October 22, 1993
<PAGE>
<PAGE>
No person has been authorized to give any information or to make any
representation not contained or incorporated by reference in this Prospectus
or in the Prospectus Supplement in connection with the offer made by this
Prospectus or the Prospectus Supplement and, if given or made, such
information or representation must not be relied upon as having been
authorized by the Company or by any underwriter, dealer or agent. This
Prospectus and the Prospectus Supplement do not constitute an offer to sell
or a solicitation of an offer to buy any of the Securities offered hereby in
any jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. This Prospectus and the Prospectus
Supplement do not constitute an offer to sell or a solicitation of an offer
to buy any Securities other than those to which they relate. The delivery of
this Prospectus or the Prospectus Supplement at any time does not imply that
the information herein or therein is correct as of any time subsequent to its
date.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended ("Exchange Act"), and in accordance
therewith files reports and other information with the Securities and
Exchange Commission ("SEC"). Such reports and other information filed by the
Company can be inspected and copied at the public reference facilities of the
SEC, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC
20549, as well as at the following SEC Regional Offices: Seven World Trade
Center, New York, NY 10048; and Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, IL 60661. Copies can be obtained from the SEC by
mail at prescribed rates. Requests should be directed to the SEC's Public
Reference Section, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, DC 20549.
The Company has filed with the SEC Registration Statements on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended ("Securities Act"),
covering the Securities offered hereby. This Prospectus does not contain all
of the information set forth in the Registration Statements, certain parts of
which are omitted from the Prospectus in accordance with the rules and
regulations of the SEC. For further information, reference is made to the
Registration Statements.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents have been filed by the Company with the SEC (File No.
1-3435) and are hereby incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for the year ended December
31, 1992;
(2) The Company's Quarterly Report on Form 10-Q and Form 10-Q/A for the
quarter ended March 31, 1993 and Quarterly Report on Form 10-Q for the
quarter ended June 30, 1993; and
(3) The Company's Current Reports on Form 8-K, date of reports January 28,
February 25, April 20, April 22, June 1, June 17, August 3, August 5 and
August 17, 1993 (two reports).
All documents filed 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 shall be deemed to be incorporated by reference
in this Prospectus and to be part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
2
<PAGE>
<PAGE>
Any such statement so modified or superseded shall not be deemed, except as
so modified or superseded, to constitute a part of this Prospectus.
Copies of the above documents (excluding exhibits to such documents, unless
such exhibits are specifically incorporated by reference therein) may be
obtained upon written or oral request without charge by each person to whom
this Prospectus is delivered from the Treasurer of the Company, Room 3521,
1095 Avenue of the Americas, New York, NY 10036 (telephone number212
395-2121).
THE COMPANY
The Company is engaged in the business of providing telecommunications
services in New York State and in a small portion of Connecticut (Greenwich
and Byram only). Since January 1, 1984, the Company has been a wholly owned
subsidiary of NYNEX Corporation ("NYNEX"), one of the seven regional holding
companies formed by American Telephone and Telegraph Company ("AT&T") in
connection with the court-ordered divestiture by AT&T of certain portions of
its 22 wholly owned operating telephone companies. Prior to its divestiture
by AT&T on January 1, 1984, the Company was an associated company of the Bell
System and a wholly owned subsidiary of AT&T.
The Company, incorporated in 1896 under the laws of the State of New York,
has its principal executive offices at 1095 Avenue of the Americas, New York,
NY 10036 (telephone number212 395-2121).
USE OF PROCEEDS
The Company intends to apply the proceeds from the sale of the Securities to
repay short-term and/or long-term debt, to refinance outstanding long-term
debt and/or for general corporate purposes. If market conditions are such
that the Company determines it is in its best interests to refinance
long-term debt, the Company would consider redeeming, repurchasing or
refinancing, in whole or in part, one or more outstanding issues identified
in the Prospectus Supplement relating to the particular series of Securities
being offered hereby.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the historical ratios of earnings to fixed
charges of the Company for the periods indicated:
<TABLE>
<CAPTION>
Six Months
Ended
June 30, Year Ended December 31,
1993 1992 1991 1990 1989 1988
(Unaudited)
<S> <C> <C> <C> <C> <C>
4.06 3.98 2.68 3.52 2.45 3.75
</TABLE>
For the purpose of this ratio: (i) earnings have been calculated by adding to
earnings before interest expense and income taxes the estimated interest
portion of rentals; and (ii) fixed charges are comprised of interest expense
and the estimated interest portion of rentals.
DESCRIPTION OF SECURITIES
The following describes certain general terms and provisions of the
Securities to which any Prospectus Supplement may relate. The particular
terms and provisions of the series of Securities offered by a Prospectus
Supplement, and the extent to which such general terms and provisions
described below may apply thereto, will be described in the Prospectus
Supplement relating to such series of Securities.
The Securities are to be issued under an Indenture dated as of June 1, 1993
("Indenture"), from the Company to The Chase Manhattan Bank, N.A., Trustee
("Trustee"). The following
3
<PAGE>
<PAGE>
summaries of certain provisions of the Securities and the Indenture do not
purport to be complete and are subject to, and are qualified in their
entirety by reference to, all provisions of the Indenture, 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.
General
The Indenture does not limit the amount of Securities which can be issued
thereunder, and additional debt securities may be issued thereunder up to the
aggregate principal amount which may be authorized from time to time by, or
pursuant to a resolution of, the Company's Board of Directors or by a
supplemental indenture. Reference is made to the Prospectus Supplement for
the following terms of the particular series of Securities being offered
hereby: (i) the title of the Securities of the series; (ii) any limit upon
the aggregate principal amount of the Securities of the series; (iii) the
date or dates (or manner of determining the same) on which the principal of
the Securities of the series will mature; (iv) the rate or rates (or manner
of calculation thereof), if any, at which the Securities of the series will
bear interest, the date or dates from which any such interest will accrue and
on which such interest will be payable (or manner of determining the same),
and, with respect to Securities of the series in registered form, the record
date for the interest payable on any interest payment date; (v) the place or
places where the principal of and interest, if any, on the Securities of the
series will be payable; (vi) any redemption or sinking fund provisions; (vii)
if other than the principal amount thereof, the portion of the principal
amount of Securities of the series which will be payable upon declaration of
acceleration of the maturity thereof; (viii) whether the Securities of the
series will be issuable in registered form ("registered Securities") or
bearer form ("bearer Securities") or both, and whether and the terms upon
which bearer Securities will be exchangeable for registered Securities and
vice versa; (ix) any provisions for payment of additional amounts for taxes
and any provision for redemption, in the event the Company must comply with
reporting requirements in respect of a Security or must pay such additional
amounts in respect of any Security; (x) whether the Securities of the series
will be issued in whole or in part in the form of a temporary or permanent
global Security or Securities and, in such case, the depositary therefor;
(xi) any other terms of the Securities (which terms shall not be inconsistent
with the provisions of the Indenture), including any terms which may be
required by or advisable under United States laws or regulations or advisable
in connection with the marketing of Securities of such series. (Sections
2.01. and 2.02.) To the extent not described herein, principal, premium, if
any, and interest, if any, will be payable, and the Securities of a
particular series will be transferable, in the manner described in the
Prospectus Supplement relating to such series.
Each series of Securities will constitute unsecured indebtedness of the
Company and will rank on a parity with the Company's other unsecured
indebtedness.
Securities may be sold at a substantial discount below their stated principal
amount, bearing no interest or interest at a rate which at the time of
issuance is below market rates. Federal income tax consequences applicable to
any such Securities will be described in the Prospectus Supplement relating
thereto.
Denominations, Registration of Transfer and Exchange
Unless otherwise indicated in the Prospectus Supplement, the Securities will
be issuable in denominations of $1,000 and integral multiples thereof.
Securities of a series may be issuable in whole or in part in the form of one
or more global Securities, as described below under "Global Securities". One
or more global Securities will be issued in a denomination or aggregate
denominations equal to the aggregate principal amount of Securities of the
series to be represented by such global Security or Securities. If so
provided with respect to a series of Securities, Securities of such series
will be issuable solely as bearer Securities with coupons attached or as both
registered Securities and bearer Securities.
In connection with the sale during the "restricted period" as defined in
Section 1.163-5(c)(2)(i)(D)(7) of the United States Treasury Regulations
(generally, the first 40 days after the
4
<PAGE>
<PAGE>
closing date and, with respect to unsold allotments, until sold), no bearer
Security shall be mailed or otherwise delivered to any location in the United
States (as defined under "Limitations on Issuance of Bearer Securities"). A
bearer Security in definitive form (including interests in a permanent global
Security) may be delivered only if the person entitled to receive such bearer
Security furnishes written certification, in the form required by the
Indenture, to the effect that such bearer Security is not owned by or on
behalf of a United States person (as defined under "Limitations on Issuance
of Bearer Securities"), or, if a beneficial interest in such bearer Security
is owned by or on behalf of a United States person, that such United States
person (i) acquired and holds the bearer Security through a foreign branch of
a United States financial institution, (ii) is a foreign branch of a United
States financial institution purchasing for its own account or resale (and in
either case, (i) or (ii), such financial institution agrees to comply with
the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue
Code of 1986, as amended ("Code"), and the regulations thereunder) or (iii)
is a financial institution purchasing for resale during the restricted period
which certifies that it has not acquired such bearer Security for purposes of
resale to a United States person or to a person within the United States.
(Section 2.03.(d)) See "Global Securities--Bearer Debt Securities" and
"Limitations on Issuance of Bearer Securities". Bearer Securities and the
coupons related thereto will be transferable by delivery. (Section 2.12.(e))
Registered Securities of any series (other than a global Security) may be
exchanged for other registered Securities of that series, of any authorized
denominations and in a like aggregate principal amount having identical
terms. In addition, if Securities of any series are issuable as both
registered Securities and as bearer Securities, at the option of the holder,
and subject to the terms of the Indenture, bearer Securities (with all
unmatured coupons, except as provided below, and all matured coupons in
default) of such series may be exchanged for registered Securities of that
series of any authorized denominations and of a like aggregate principal
amount having identical terms. Unless otherwise indicated in an applicable
Prospectus Supplement, any bearer Security surrendered in exchange for a
registered Security between a regular record date or a special record date
and the relevant date for payment of interest shall be surrendered without
the coupon relating to such date for payment of interest and interest will
not be payable in respect of the registered Security issued in exchange for
such bearer Security but will be payable only to the holder of such coupon
when due in accordance with the terms of the Indenture. (Section 2.12.(b))
Except as provided in an applicable Prospectus Supplement, bearer Securities
will not be issued in exchange for registered Securities.
Securities may be presented for exchange as provided above, and registered
Securities (other than a global Security) may be presented for registration
of transfer (with the form of transfer endorsed thereon duly executed), at
the office of the registrar or at the office of any co-registrar appointed by
the Company for such purpose with respect to any series of Securities and
referred to in an applicable Prospectus Supplement, without service charge
and upon payment of any taxes and other governmental charges as described in
the Indenture. (Sections 2.04. and 2.12.(c)) Such transfer or exchange will
be effected upon the registrar or co-registrar, as the case may be, being
satisfied with the documents of title and identity of the person making the
request. The Company has initially appointed the Trustee as registrar under
the Indenture. If a Prospectus Supplement refers to any co-registrars (in
addition to the registrar) initially appointed by the Company with respect to
any series of Securities, the Company may at any time terminate the
appointment of any such co-registrar, except that, if Securities of a series
are issuable only as registered Securities, the Company will be required to
maintain a registrar for such series. The Company may at any time designate
additional co-registrars with respect to any series of Securities. (Section
2.04.)
Neither the Company nor the registrar shall be required (i) to issue,
register the transfer of or exchange Securities of any series for the period
of 15 days immediately preceding the selection of any such Securities to be
redeemed or (ii) to register the transfer of or exchange Securities of any
series selected, called or being called for redemption as a whole or the
portion being redeemed of any such Securities selected, called or being
called for redemption in part. (Section 2.12.(d))
5
<PAGE>
<PAGE>
Payment and Paying Agents
Unless otherwise indicated in an applicable Prospectus Supplement, payment of
(i) principal of (and premium, if any, on) registered Securities will be paid
only against presentation and surrender thereof at the office of the paying
agent (as defined below) in New York, New York, unless the Company shall have
otherwise instructed the Trustee and (ii) interest, if any, on registered
Securities (other than a global Security) may be paid on the interest payment
date for such Securities to the holder thereof at the close of business on
the relevant record date specified in the Securities by check mailed to such
holder's address as it appears on the register for such Securities. (Section
2.05.(b))
Unless otherwise indicated in an applicable Prospectus Supplement, payment of
(i) principal of (and premium, if any, on) bearer Securities will be paid
only against presentation and surrender thereof, (ii) interest, if any, on
bearer Securities will be paid only against presentation and surrender of the
coupons for such interest installments as are evidenced thereby as they
mature and (iii) original issue discount (as defined in the Code), if any, on
bearer Securities will be paid only against presentation and surrender of
such Securities (and in either case, (ii) or (iii), at the office of the
paying agent located outside of the United States, unless the Company shall
have otherwise instructed the Trustee in writing). If at the time that
payment of principal of (and premium, if any), interest, if any, or original
issue discount, if any, on a bearer Security or coupon shall become due, the
payment so payable at the office or offices of all paying agents outside the
United States is illegal or effectively precluded because of the imposition
of exchange controls or other similar restrictions on the payment of such
amount in United States currency, then the Company may instruct the Trustee
to make such payments at the office of the paying agent located in the United
States. (Section 2.05.(c)) No payment of interest on a bearer Security will
be made unless on the earlier of the date of the first such payment by the
Company or the delivery by the Company of the bearer Security in definitive
form (including interests in a permanent global Security) (the "Certification
Date"), a written certificate in the form and to the effect described under
"Denominations, Registration of Transfer and Exchange" is provided to the
Trustee. (Section 2.08.)
The Company shall maintain in the Borough of Manhattan, The City of New York,
an office or agency where Securities which are issued solely as registered
Securities may be presented for payment ("paying agent"). With respect to any
series of Securities issued in whole or in part as bearer Securities, the
Company shall maintain one or more paying agents located outside the United
States and shall maintain such paying agents for a period of two years after
the principal of such bearer Securities has become due and payable. During
any period thereafter for which it is necessary in order to conform to United
States tax laws or regulations, the Company will maintain a paying agent
outside the United States to which the bearer Securities (or coupons
appertaining thereto) may be presented for payment. The Company may appoint
one or more additional paying agents and may terminate the appointment of any
paying agent at any time upon written notice. The Company initially appoints
the Trustee as paying agent. (Section 2.04.)
Global Securities
The Securities of a series may be issued in whole or in part in the form of
one or more global Securities that will be deposited with or on behalf of a
depositary identified in the Prospectus Supplement relating to such series.
Global Securities may be issued in either registered or bearer form and in
either temporary or permanent form. (Section 2.01.)
The specific terms of the depositary arrangement with respect to any
Securities of a series will be described in the Prospectus Supplement
relating to such series. The Company anticipates that the following
provisions will apply to all depositary arrangements.
Unless otherwise specified in an applicable Prospectus Supplement, Securities
which are to be represented by a global Security in registered form to be
deposited with or on behalf of a depositary will be registered in the name of
such depositary or its nominee. Upon the issuance of a global Security in
registered form, the depositary for such global Security will credit the
respective
6
<PAGE>
<PAGE>
principal amounts of the Securities represented by such global Security to
the accounts of institutions that have accounts with such depositary or its
nominee ("participants"). The accounts to be credited shall be designated by
the underwriters or agents of such Securities or by the Company, if such
Securities are offered and sold directly by the Company. Ownership of
beneficial interests in such global Securities will be limited to
participants or persons that may hold interests through participants.
Ownership of beneficial interests by participants in such global Securities
will be shown on, and the transfer of that ownership interest will be
effected only through, records maintained by the depositary or its nominee
for such global Security. Ownership of beneficial interests in global
Securities by persons that hold through participants will be shown on, and
the transfer of that ownership interest within such participant will be
effected only through, records maintained by such participant. The laws of
some jurisdictions require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such limits and such
laws may impair the ability to transfer beneficial interests in a global
Security.
So long as the depositary for a global Security in registered form, or its
nominee, is the registered owner of such global Security, such depositary or
such nominee, as the case may be, will be considered the sole owner or holder
of the Securities represented by such global Security for all purposes under
the Indenture. Except as set forth below, owners of beneficial interests in
such global Securities will not be entitled to have Securities of the series
represented by such global Security registered in their names, will not
receive or be entitled to receive physical delivery of Securities of such
series in definitive form and will not be considered the owners or holders
thereof under the Indenture.
Payment of principal of, premium, if any, and any interest on 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 Security. Neither the Company, the Trustee, any
paying agent nor the registrar for such Securities shall owe any duty or
obligation to any beneficial owner of any Security or have any responsibility
or liability for any aspect of the records or notices relating to or payments
made on account of beneficial ownership interests in a global Security or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests. (Section 2.07.(c))
The Company expects that the depositary for a permanent global Security in
registered form, upon receipt of any payment of principal, premium or
interest in respect of a permanent global Security, will credit immediately
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such global
Security as shown on the records of such depositary. The Company also expects
that payments by participants to owners of beneficial interests in such
global Security 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 Security in registered form may not be transferred except as a whole
by the depositary for such global Security to a nominee of such depositary or
by a nominee of such depositary to such depositary or another nominee of such
depositary or by such depositary or any such nominee to a successor of such
depositary or a nominee of such successor. If a depositary for a permanent
global Security in registered form is at any time unwilling or unable to
continue as depositary and a successor depositary is not appointed by the
Company within 90 days, the Company will issue Securities in definitive
registered form in exchange for the global Security or Securities
representing such Securities. In addition, the Company may at any time and in
its sole discretion determine not to have any Securities in registered form
represented by one or more global Securities and, in such event, will issue
Securities in definitive form in exchange for all of the global Securities
representing such Securities. Further, if the Company so specifies with
respect to the Securities of a series, an owner of a beneficial interest in a
global Security representing Securities of such series may, on terms
acceptable to the Company and the depositary for such global Security,
receive Securities of such series in definitive form. In any such instance,
7
<PAGE>
<PAGE>
an owner of a beneficial interest in a global Security will be entitled to
physical delivery in definitive form of Securities of the series represented
by such global Security equal in principal amount to such beneficial interest
and to have such Securities registered in its name (if the Securities of such
series are issuable as registered Securities). Securities of such series so
issued in definitive form will be issued as either registered or bearer
Securities if the Securities of such series are issuable in either form.
(Section 2.12) See, however, "Limitation on Issuance of Bearer Securities"
below for a description of certain restrictions on the issuance of a bearer
Security in definitive form in exchange for an interest in a global Security.
Bearer Debt Securities. If so specified in an applicable Prospectus
Supplement, pending the availability of a permanent global Security, all or
any portion of the Securities of a series which may be issuable as bearer
Securities will initially be represented by one or more temporary global
Securities, without interest coupons, to be delivered to a depositary
designated in the applicable Prospectus Supplement, for the benefit of Morgan
Guaranty Trust Company of New York, Brussels office, as operator of the
Euro-clear System ("Euro-clear") and Centrale de Livraison de Valeurs
Mobilieres, S.A. ("CEDEL, S.A.") and for credit to the designated accounts.
The interests of the beneficial owner or owners in a temporary global
Security in bearer form will be exchangeable for definitive Securities
(including interests in a permanent global Security in bearer form),
representing Securities having the same interest rate and stated maturity,
but only upon written certification in the form and to the effect described
under "Denominations, Registration of Transfer and Exchange" unless such
certification has been provided on an earlier interest payment date. The
beneficial owner of a Security represented by a temporary global Security in
bearer form or a permanent global Security in bearer form may, on or after
the applicable exchange date and upon 30 days' written notice to the Trustee
or the global exchange agent given through Euro-clear or CEDEL, S.A.,
exchange its interest for definitive bearer Securities or, if specified in an
applicable Prospectus Supplement, definitive registered Securities of any
authorized denomination. No bearer Security delivered in exchange for a
portion of a temporary global Security or a permanent global Security shall
be mailed or otherwise delivered to any location in the United States.
(Section 2.08.)
Unless otherwise specified in an applicable Prospectus Supplement, interest
in respect of any portion of a temporary global Security in bearer form
payable in respect of an interest payment date occurring prior to the
applicable exchange date will be paid to each of Euro-clear and CEDEL, S.A.
with respect to the portion of the temporary global Security in bearer form
held for its account, but only upon receipt in each case of written
certification, in the form and to the effect described under "Denominations,
Registration of Transfer and Exchange". Each of Euro-clear and CEDEL, S.A.
will undertake in such circumstances to credit such interest received by it
in respect of a temporary global Security in bearer form to the respective
accounts for which it holds such temporary global Security in bearer form as
of the relevant interest payment date.
Certain Covenants
The Company currently has outstanding under its Refunding Mortgage dated
October 1, 1921 ("Mortgage") between the Company and Bankers Trust Company,
as Trustee (as supplemented by 24 supplemental indentures confirming the lien
thereof), its Refunding Mortgage Bonds, Series I, L through R and T through
V, inclusive, in the aggregate principal amount of $1,250,000,000.
Substantially all the property that the Company now owns or hereafter
acquires in the State of New York and all securities (except as specified
therein) that the Company now owns or hereafter acquires, including
securities representing the Company's investment in Empire City Subway
Company (Limited), a wholly owned subsidiary of the Company, and in
Telesector Resources Group, Inc., which is owned by the Company and New
England Telephone and Telegraph Company, are subject to the lien of the
Mortgage. As long as any Securities remain outstanding, the Company will not
issue any additional bonds under the Mortgage except bonds issued, as
provided in the Mortgage, in respect either of bonds surrendered for transfer
or exchange or for substitution for mutilated, destroyed, lost or stolen
bonds. Nothing in the Indenture prevents the Company from subjecting any
property or assets to the lien of the Mortgage, or from taking any action
that it deems necessary to comply with the Mortgage. (Section 4.02.)
8
<PAGE>
<PAGE>
As long as any Securities remain outstanding, the Company will not issue
additional funded debt securities ranking equally with or prior to the
Securities unless, on the date of the proposed issuance of the new funded
debt securities, the earnings of the Company available for payment of
interest charges during the period of any 12 consecutive calendar months out
of the preceding 15 such months were at least 1.75 times the annualized
interest for that 12-month period on the total of the funded debt securities
outstanding during such period plus the funded debt securities proposed to be
issued. "Earnings of the Company available for payment of interest charges"
means income before extraordinary items plus all (i) taxes in respect of
income, (ii) interest charges on funded debt securities and (iii) interest
charges on other indebtedness retired or to be retired by or in anticipation
of funded debt securities issued during the period or in respect of which the
computation is made. Interest charged to construction is to be includable in
income. There will not be included in annualized interest charges the
interest on bonds issued under the Mortgage or on any other funded debt
securities held in any sinking fund or on any funded debt securities retired
or to be retired by or in anticipation of funded debt securities issued
during the period or in respect of which the computation is made. "Funded
debt securities" means securities evidencing indebtedness of the Company for
borrowed money maturing by its terms more than one year after the date of the
issuance of the new funded debt securities. Any computation pursuant to this
provision may, at the Company's option, be based on consolidated figures of
the Company and its consolidated subsidiaries. (Section 4.03.)
If at any time the Company mortgages, pledges or otherwise subjects to any
lien the whole or any part of any property or assets now owned or hereafter
acquired by it, except as heretofore and hereinafter provided, the Company
will secure the outstanding Securities, and any other obligations of the
Company which may then be outstanding and entitled to the benefit of a
covenant similar in effect to this covenant, equally and ratably with the
indebtedness or obligations secured by such mortgage, pledge or lien, for as
long as any such indebtedness or obligation is so secured. The foregoing
covenant does not apply to the creation, extension, renewal or refunding of
purchase-money mortgages or liens, or to the making of any deposit or pledge
to secure public or statutory obligations or with any governmental agency at
any time required by law in order to qualify the Company to conduct its
business or any part thereof or in order to entitle it to maintain
self-insurance or to obtain the benefits of any law relating to workmen's
compensation, unemployment insurance, old age pensions or other social
security, or with any court, board, commission or governmental agency as
security incident to the proper conduct of any proceeding before it. Nothing
contained in the Indenture prevents a person directly or indirectly
controlling or controlled by, or under direct or indirect common control
with, the Company from mortgaging, pledging or subjecting to any lien any
property or assets, whether or not acquired by such person from the Company.
(Section 4.04.)
Amendment and Waiver
Subject to certain exceptions, the Indenture or the Securities may be amended
or supplemented by the Company and the Trustee with the consent of the
holders of a majority in principal amount of the outstanding Securities of
each series affected by the amendment or supplement (with each series voting
as a class), or compliance with any provision may be waived with the consent
of the holders of a majority in principal amount of the outstanding
Securities of each series affected by such waiver (with each series voting as
a class). However, without the consent of each Securityholder affected, an
amendment or waiver may not (i) reduce the amount of Securities whose holders
must consent to an amendment or waiver; (ii) change the rate of or change the
time for payment of interest on any Security; (iii) change the principal of
or change the fixed maturity of any Security; (iv) waive a default in the
payment of the principal of or interest on any Security; (v) make any
Security payable in money other than that stated in the Security; or (vi)
impair the right to institute suit for the enforcement of any payment on or
with respect to any Security. (Section 9.02.) The Indenture may be amended or
supplemented without the consent of any Securityholder (i) to cure any
ambiguity, defect or inconsistency in the Indenture or in the Securities of
any series; (ii) to provide for the assumption of all the obligations of the
Company under the Securities and any coupons related thereto and the
Indenture by any corporation in connection
9
<PAGE>
<PAGE>
with a merger, consolidation, transfer or lease of the Company's property and
assets substantially as an entirety, as provided for in the Indenture; (iii)
to provide for uncertificated Securities in addition to or in place of
certificated Securities; (iv) to make any change that does not adversely
affect the rights of any holder of a Security; (v) to provide for the
issuance of and establish the form and terms and conditions of a series of
Securities or to establish the form of any certifications required to be
furnished pursuant to the terms of the Indenture or any series of Securities;
or (vi) to add to the rights of holders of any series of Securities. (Section
9.01.)
Successor Entity
The Company may not consolidate with, or merge into, or transfer or lease its
property and assets substantially as an entirety to, another entity unless
the successor entity is a corporation and assumes all the obligations of the
Company under the Securities and any coupons related thereto and the
Indenture. Thereafter all such obligations of the Company terminate. (Section
5.01.)
Events of Default
The following events are defined in the Indenture as "Events of Default" with
respect to a series of Securities: (i) default in the payment of interest on
any Security of such series for 90 days; (ii) default in the payment of the
principal of any Security of such series; (iii) failure by the Company for 90
days after notice to it to comply with any of its other agreements in the
Securities of such series, in the Indenture or in any supplemental indenture;
and (iv) certain events of bankruptcy or insolvency. (Section 6.01.) If an
Event of Default occurs with respect to the Securities of any series and is
continuing, the Trustee or the holders of at least 25% in principal amount of
all of the outstanding Securities of that series may declare the principal
(or, if the Securities of that series are original issue discount Securities,
such portion of the principal amount as may be specified in the terms of that
series) of all the Securities of that series to be due and payable. Upon such
declaration, such principal (or, in the case of original issue discount
Securities, such specified amount) shall be due and payable immediately.
(Section 6.02.)
Holders of Securities may not enforce the Indenture or the Securities, except
as provided in the Indenture. The Trustee may require indemnity satisfactory
to it before it enforces the Indenture or the Securities. (Section 6.06.)
Subject to certain limitations, holders of a majority in principal amount of
the Securities of each series affected (with each series voting as a class)
may direct the Trustee in its exercise of any trust power. (Section 6.05.)
The Trustee may withhold from holders of Securities notice of any continuing
default (except a default in payment of principal or interest) if it
determines that withholding notice is in their interests. (Section 7.05.)
Concerning The Trustee
The Company maintains banking relationships in the ordinary course of
business with the Trustee. The Trustee also serves as trustee for the
Company's Thirty-Nine Year 8-1/4% Debentures, due October 15, 2015, issued
under an Indenture dated October 15, 1976, and Thirty-Two Year 7% Debentures,
due August 15, 2025, Five Year 5-1/4% Notes, due September 1, 1998, and Ten
Year 5-7/8% Notes, due September 1, 2003, issued under an Indenture dated as
of June 1, 1993.
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES
In compliance with United States federal tax laws and regulations, bearer
Securities may not be offered or sold during the restricted period (as
defined under "Description of Securities-- Denominations, Registration of
Transfer and Exchange"), or delivered in definitive form in connection with a
sale during the restricted period, in the United States or to a United States
person (each as defined below), except to the extent permitted under Section
1.163-5 (c)(2)(i)(D) of the United States Treasury Regulations (the "D"
Rules). Any underwriters, agents and dealers participating in the offering of
Securities must agree not to offer or sell bearer Securities in the United
States or to United States persons, except to the extent permitted under the
D Rules, nor deliver bearer Securities within the United States.
Bearer Securities and their interest coupons will bear a legend substantially
to the following effect: "Any United States person who holds this obligation
will be subject to limitations under
10
<PAGE>
<PAGE>
the United States income tax laws, including the limitations provided in
Section 165(j) and 1287(a) of the Internal Revenue Code". The sections
referred to in such legend provide that a United States person, with certain
exceptions, will not be entitled to deduct any loss on bearer Securities and
must treat as ordinary income any gain realized on a sale or other
disposition of bearer Securities.
Purchasers of bearer Securities may be affected by certain limitations under
United States tax laws. See "United States Taxation--Backup Withholding".
As used herein, "United States person" means a citizen or resident of the
United States, a corporation, partnership or other entity created or
organized in or under the laws of the United States and an estate or trust
the income of which is subject to United States federal income taxation
regardless of its source, and "United States" means the United States of
America (including the States and the District of Columbia) and its
possessions including Puerto Rico, the United States Virgin Islands, Guam,
American Samoa, Wake Island and the Northern Mariana Islands.
UNITED STATES TAXATION
THE DISCUSSION SET FORTH BELOW IS INTENDED ONLY AS A SUMMARY OF CERTAIN OF
THE UNITED STATES FEDERAL INCOME AND ESTATE TAX CONSEQUENCES APPLICABLE TO
THE OWNERSHIP OF SECURITIES BY UNITED STATES ALIENS AND DOES NOT PURPORT TO
BE A COMPLETE ANALYSIS OR LISTING OF ALL POTENTIAL TAX EFFECTS RELEVANT TO A
DECISION TO PURCHASE SECURITIES. SUCH DISCUSSION DOES NOT ADDRESS ANY TAX
CONSEQUENCES THAT MAY BE RELEVANT TO INVESTORS THAT ARE NOT UNITED STATES
ALIENS OR ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCALITY
OR NON-UNITED STATES JURISDICTION. OTHER SIGNIFICANT UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES THAT MAY BE RELEVANT TO A PARTICULAR OFFERING OF
SECURITIES WILL BE SET FORTH IN THE APPROPRIATE PROSPECTUS SUPPLEMENT.
FURTHERMORE, THE DISCUSSION SET FORTH BELOW IS BASED ON THE CODE,
REGULATIONS, RULINGS AND JUDICIAL DECISIONS AS OF THE DATE HEREOF, AND SUCH
AUTHORITIES MAY BE REPEALED, REVOKED OR MODIFIED SO AS TO MAKE THE FOLLOWING
ANALYSIS INAPPLICABLE. IT IS RECOMMENDED THAT ALL PROSPECTIVE INVESTORS
CONSULT THEIR OWN TAX ADVISORS CONCERNING THE TAX CONSIDERATIONS OF THIS
OFFERING.
Under present United States federal income and estate tax law, and subject to
the discussion below concerning backup withholding:
(a) no withholding of United States federal income tax will be required
with respect to the payment by the Company or any paying agent of principal,
premium, if any, or interest (which for purposes of this discussion includes
original issue discount) on a Security owned by a United States Alien (as
defined below), provided that, in the case of interest (i) the beneficial
owner does not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of the Company entitled to vote
within the meaning of Section 871(h)(3) of the Code and the regulations
thereunder, (ii) the beneficial owner is not a controlled foreign corporation
that is related to the Company through stock ownership and (iii) in the case
of a registered Security, the beneficial owner satisfies the statement
requirement (described generally below) set forth in Section 871(h) and
Section 881(c) of the Code and the regulations thereunder;
(b) no withholding of United States federal income tax will be required
with respect to any gain or income realized by a United States Alien upon the
sale, exchange or retirement of a Security; and
(c) a Security beneficially owned by an individual who at the time of death
is a United States Alien will not be subject to United States federal estate
tax as a result of such individual's death, provided that such individual
does not actually or constructively own 10% or more of
11
<PAGE>
<PAGE>
the total combined voting power of all classes of stock of the Company
entitled to vote within the meaning of Section 871(h)(3) of the Code and
provided that the interest payments with respect to such Security would not
have been, if received at the time of such individual's death, effectively
connected with a United States trade or business of such individual.
To qualify for the exemption from withholding tax in (a)(iii) above, the
beneficial owner of a registered Security, or a financial institution holding
the Security on behalf of such owner, must provide, in accordance with
specified procedures, a paying agent of the Company with a statement to the
effect that the beneficial owner is not a United States person, citizen or
resident. Pursuant to current temporary Treasury regulations, these
requirements will be met if (1) the beneficial owner provides his name and
address and certifies, under penalties of perjury, that he is not a United
States person, citizen or resident (which certification may be made on an
Internal Revenue Service Form W-8 or a successor form) or (2) a financial
institution holding the Security on behalf of the beneficial owner certifies,
under penalties of perjury, that such statement has been received by it and
furnishes a paying agent with a copy thereof.
Payments to United States Aliens not meeting the requirements of paragraph
(a) above and thus subject to withholding of United States federal income tax
may nevertheless be exempt from such withholding if the beneficial owner of
the Security provides the Company with a properly executed (1) Internal
Revenue Service Form 1001 (or a successor form) claiming an exemption from
withholding under the benefit of a tax treaty or (2) Internal Revenue Service
Form 4224 (or a successor form) stating that interest paid on the Security is
not subject to withholding because it is effectively connected with the
owner's conduct of a trade or business in the United States.
As used herein, "United States Alien" means any corporation, partnership,
individual or fiduciary that is, as to the United States, a foreign
corporation, a nonresident alien individual, a nonresident fiduciary of a
foreign estate or trust, or a foreign partnership one or more of the members
of which is, as to the United States, a foreign corporation, a nonresident
alien individual or a nonresident fiduciary of a foreign estate or trust.
Backup Withholding
Under certain circumstances, the Company or its paying agent will have to
report to the United States Internal Revenue Service payments of principal,
interest, original issue discount, if any, and any premium. In addition, the
Company or its paying agent may have to withhold 31% of such payments and
deposit such amounts with the Internal Revenue Service ("backup
withholding").
Generally, no information reporting or backup withholding will be required
with respect to payments by the Company or a paying agent to United States
Aliens (1) if those payments are made outside of the United States on bearer
Securities or (2) on registered Securities with respect to which a statement
described in (a)(iii) above has been received and the payor does not have
actual knowledge that the beneficial owner is a United States person.
In addition, backup withholding and information reporting will not apply if
the principal of, premium, if any, or interest on a Security is paid or
collected by a foreign office of a custodian, nominee or other foreign agent
on behalf of the beneficial owner of such Security, or if a foreign office of
a broker (as defined in applicable Treasury regulations) pays the proceeds of
the sale of a Security to the owner thereof. If, however, such nominee,
custodian, agent or broker is, for United States federal income tax purposes,
a United States person, a controlled foreign corporation or a foreign person
that derives 50% or more of its gross income for certain periods from the
conduct of a United States trade or business, such payments will not be
subject to backup withholding but will be subject to information reporting,
unless (1) such custodian, nominee, agent or broker has documentary evidence
in its records that the beneficial owner is not a United States person and
certain other conditions are met or (2) the beneficial owner otherwise
establishes an exemption. Temporary Treasury regulations provide that the
Treasury is considering whether backup withholding will apply with respect to
such payments of principal, premium, interest or the proceeds of a sale that
are not subject to backup withholding under the current regulations.
12
<PAGE>
<PAGE>
Under proposed Treasury regulations not currently in effect, backup
withholding will not apply to such payments absent actual knowledge that the
payee is a United States person.
Principal of, premium, if any, and interest on a Security paid to the
beneficial owner of such Security by a United States office of a custodian,
nominee or agent, or the payment by the United States office of a broker of
the proceeds of sale of such Security, will be subject to both backup
withholding and information reporting unless the beneficial owner certifies
to its non-United States status under penalties of perjury or otherwise
establishes an exemption.
Any amounts withheld under the backup withholding rules will be allowed as a
refund or a credit against such United States Alien's United States federal
income tax liability provided the required information is furnished to the
Internal Revenue Service.
PLAN OF DISTRIBUTION
General
The Company may sell the Securities being offered hereby: (i) directly to
purchasers, (ii) through agents, (iii) through underwriters, (iv) through
dealers or (v) through a combination of any such methods of sale.
The distribution of the Securities may be effected from time to time in one
or more transactions either: (i) at a fixed price or prices, which may be
changed, (ii) at market prices prevailing at the time of sale, (iii) at
prices related to such prevailing market prices or (iv) at negotiated prices.
Offers to purchase Securities may be solicited directly by the Company or by
agents designated by the Company from time to time. Any such agent, which may
be deemed to be an underwriter as that term is defined in the Securities Act,
involved in the offer or sale of the Securities in respect of which this
Prospectus is delivered will be named, and any commissions payable by the
Company to such agent will be set forth, in the Prospectus Supplement. Unless
otherwise indicated in the Prospectus Supplement, any such agent will be
acting on a best efforts basis for the period of its appointment (ordinarily
five business days or less). Agents may be customers of, engage in
transactions with, or perform services for, the Company in the ordinary
course of business.
If an underwriter or underwriters are utilized in the sale, the Company will
execute an underwriting agreement with such underwriters at the time of sale
to them, and the names of the underwriters and the terms of the transactions
will be set forth in the Prospectus Supplement, which will be used by the
underwriters to make resales of the Securities in respect of which this
Prospectus is delivered to the public.
If a dealer is utilized in the sale of the Securities in respect of which
this Prospectus is delivered, the Company will sell such Securities to the
dealer, as principal. The dealer may then resell such Securities to the
public at varying prices to be determined by such dealer at the time of
resale.
Underwriters, dealers and agents may be customers of, engage in transactions
with, or perform services for, the Company in the ordinary course of
business. Also, underwriters, dealers, agents and other persons may be
entitled, under agreements which may be entered into with the Company, to
indemnification against, or contribution with respect to, certain civil
liabilities, including liabilities under the Securities Act.
Each underwriter, dealer and agent participating in the distribution of any
Securities that are issuable as bearer Securities will agree that it will not
offer, sell or deliver, directly or indirectly, bearer Securities in the
United States or to United States persons (other than qualifying financial
institutions) in connection with the original issuance of such Securities.
Delayed Delivery Arrangements
If so indicated in the Prospectus Supplement, the Company will authorize
agents and underwriters to solicit offers by certain institutions to purchase
Securities from the Company at the public offering
13
<PAGE>
<PAGE>
price set forth in the Prospectus Supplement pursuant to Delayed Delivery
Contracts (the "Contracts") providing for payment and delivery on the date
stated in the Prospectus Supplement. Each Contract will be for an amount not
less than, and unless the Company otherwise agrees, the aggregate principal
amount of Securities sold pursuant to Contracts shall be not less nor more
than, the respective amounts stated in the Prospectus Supplement.
Institutions with whom Contracts, when authorized, may be made include
commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions and other institutions,
but shall in all cases be subject to the approval of the Company. Contracts
will not be subject to any conditions except that the purchase by an
institution of the Securities covered by its Contract shall not at the time
of delivery be prohibited under the laws of any jurisdiction in the United
States to which such institution is subject. A commission indicated in the
Prospectus Supplement will be paid to underwriters and agents soliciting
purchases of Securities pursuant to Contracts accepted by the Company.
The place and time of delivery for the Securities in respect of which this
Prospectus is delivered are set forth in the accompanying Prospectus
Supplement.
EXPERTS
The consolidated financial statements and consolidated financial statement
schedules of the Company included in the Company's Annual Report on Form 10-K
for the year ended December 31, 1992 have been audited by Coopers & Lybrand,
independent accountants, as set forth in their report dated February 5, 1993
accompanying such financial statements and financial statement schedules, and
are incorporated by reference in reliance upon the report of such firm, which
report is given upon their authority as experts in accounting and auditing.
LEGAL MATTERS
The legality of the Securities offered hereby will be passed upon for the
Company by John M. Clarke, Vice President and General Counsel of the Company,
and for the agents or underwriters, if any, by Simpson Thacher & Bartlett (a
partnership which includes professional corporations), 425 Lexington Avenue,
New York, New York 10017. Simpson Thacher & Bartlett from time to time has
acted as counsel in certain matters for NYNEX and certain of its
subsidiaries, including the Company.
14
<PAGE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<PAGE>
[NYNEX BELL LOGO]
