614/223-1630
Securities and Exchange Commission
450 Fifth Street, N.W.
ATTN: Filing Desk, Stop 1-4
Washington, D.C. 20549-1004
June 4, 1999
Re: Ohio Power Company
Registration Statement on Form S-3
File No. 333-75783
Gentlemen:
Pursuant to Rule 424(b)(2) and on behalf of Ohio Power Company (the "Company"),
submitted herewith is the Prospectus, dated April 20, 1999, as supplemented by
the Prospectus Supplement, dated June 2, 1999, to be used in connection with the
anticipated public offering by the Company of $100,000,000 aggregate principal
amount of 6.75% Senior Notes, Series B, in the aggregate principal amount of up
to $100,000,000.
Very truly yours,
/s/ David C. House
David C. House
DCH/mms
PROSPECTUS SUPPLEMENT
(To prospectus dated April 20, 1999)
$100,000,000
OHIO POWER COMPANY
6.75% Senior Notes, Series B, due 2004
Interest on the Senior Notes is payable semi-annually on January 1 and
July 1 of each year, beginning July 1, 1999. The Senior Notes will mature on
July 1, 2004. We may redeem the Senior Notes at our option at any time, upon no
more than 60 and not less than 30 days' notice by mail. We may redeem the Senior
Notes either as a whole or in part at a redemption price equal to the greater of
(i) 100% of the principal amount of the Senior Notes being redeemed and (ii) the
sum of the present values of the remaining scheduled payments of principal and
interest thereon discounted to the redemption date on a semi-annual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Treasury
Rate (as defined below) plus 15 basis points, plus, in each case, accrued
interest thereon to the date of redemption. The Senior Notes do not have the
benefit of any sinking fund.
The Senior Notes are unsecured and rank equally with all of our other
unsecured and unsubordinated indebtedness and will be effectively subordinated
to all of our secured debt, including $327,135,000 of first mortgage bonds as of
June 1, 1999. We will issue the Senior Notes only in registered form in
multiples of $1,000.
Per Note Total
Public offering price (1) . . . . . . . . . . 100.00% $100,000,000
Underwriting discount . . . . . . . . . . . 0.60% $ 600,000
Proceeds, before expenses,
to Ohio Power Company . . . . . . . . . . . 99.40% $ 99,400,000
(1) Plus accrued interest from June 9, 1999, if settlement occurs after that
date.
The Senior Notes will be ready for delivery in book-entry form only
through The Depository Trust Company on or about June 9, 1999.
The Senior Notes have not been approved by the SEC or any state securities
commission, nor have these organizations determined that this prospectus
supplement or the accompanying prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
Salomon Smith Barney
McDonald Investments Inc.
Morgan Stanley Dean Witter
The date of this Prospectus Supplement is June 2, 1999.
You should rely only on the information incorporated by reference or
provided in this Prospectus Supplement or the accompanying Prospectus. We have
not authorized anyone to provide you with different information. We are not
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this Prospectus
Supplement is accurate as of any date other than the date on the front of the
document.
Page
TABLE OF CONTENTS
Prospectus Supplement
SUPPLEMENTAL DESCRIPTION OF THE SENIOR NOTES ............................ S-3
Principal Amount, Maturity and Interest ................................. S-3
Optional Redemption ..................................................... S-3
UNDERWRITING ............................................................ S-4
Prospectus
WHERE YOU CAN FIND MORE
INFORMATION .............................................................. 2
THE COMPANY .............................................................. 2
PROSPECTUS SUPPLEMENTS ................................................... 2
RATIO OF EARNINGS TO
FIXED CHARGES ............................................................ 3
USE OF PROCEEDS .......................................................... 3
DESCRIPTION OF THE NOTES ................................................. 3
General .................................................................. 3
Redemptions .............................................................. 4
Remarketed Notes ......................................................... 4
Book-Entry Notes - Registration,
Transfer, and Payment of Interest and Principal .......................... 4
Note Certificates- Registration, Transfer, and Payment of Interest and
Principal ................................................................ 6
Interest Rate ............................................................ 6
General .................................................................. 6
Fixed Rate Notes ......................................................... 6
Floating Rate Notes: General ............................................. 7
Floating Rate Notes: Date of Interest Rate Change ........................ 7
Floating Rate Notes: When Interest Rate Is Determined .................... 8
Floating Rate Notes: When Interest Is Paid ............................... 8
Floating Rate Notes: Interest Rate Formulas .............................. 9
Events of Default ........................................................15
Modification of Indenture ................................................16
Consolidation, Merger or Sale ............................................16
Legal Defeasance .........................................................16
Covenant Defeasance ......................................................16
Governing Law ............................................................17
Concerning the Trustee ...................................................17
PLAN OF DISTRIBUTION .....................................................17
LEGAL OPINIONS ...........................................................18
EXPERTS ..................................................................18
GLOSSARY .................................................................18
SUPPLEMENTAL DESCRIPTION OF THE SENIOR NOTES
The following description of the particular terms of the Senior Notes
supplements and in certain instances replaces the description of the general
terms and provisions of the Senior Notes under "Description of the Notes" in the
accompanying Prospectus. We will issue the Senior Notes under an Indenture,
dated as of September 1, 1997, between us and Bankers Trust Company, as Trustee,
as supplemented and amended and as to be further supplemented and amended.
Principal Amount, Maturity and Interest
The Senior Notes will be limited in aggregate principal amount to
$100,000,000.
The Senior Notes will mature and become due and payable, together with any
accrued and unpaid interest, on July 1, 2004 and will bear interest at the rate
of 6.75% per annum from June 9, 1999 until July 1, 2004. The Senior Notes are
not subject to any sinking fund provision.
Interest on each Senior Note will be payable semi-annually in arrears on
each January 1 and July 1 and at redemption, if any, or maturity. The initial
interest payment date is July 1, 1999. Each payment of interest shall include
interest accrued through the day before such interest payment date. Interest on
Senior Notes will be computed on the basis of a 360-day year consisting of
twelve 30-day months.
We will pay interest on the Senior Notes (other than interest payable at
redemption, if any, or maturity) in immediately available funds to the owners of
the Senior Notes as of the Regular Record Date (as defined below) for each
interest payment date.
We will pay the principal of the Senior Notes and any premium and interest
payable at redemption, if any, or maturity in immediately available funds at the
office of Bankers Trust Company at Four Albany Street in New York, New York.
If any interest payment date, redemption date or the maturity is not a
Business Day (as defined below), we will pay all amounts due on the next
succeeding Business Day and no additional interest will be paid.
The "Regular Record Date" will be the December 15 or June 15 prior to the
relevant interest payment date.
"Business Day" means any day that is not a day on which banking institutions
in New York City are authorized or required by law or regulation to close.
Optional Redemption
We may redeem the Senior Notes at our option at any time, upon no more than
60 and not less than 30 days' notice by mail. We may redeem the Senior Notes
either as a whole or in part at a redemption price equal to the greater of (i)
100% of the principal amount of the Senior Notes being redeemed and (ii) the sum
of the present values of the remaining scheduled payments of principal and
interest on the Senior Notes being redeemed (excluding the portion of any such
interest accrued to the date of redemption) discounted (for purposes of
determining present value) to the redemption date on a semi-annual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Treasury
Rate (as defined below) plus 15 basis points, plus, in each case, accrued
interest thereon to the date of redemption.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semi-annual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Senior Notes that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of the Senior Notes.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such third Business Day, the
Reference Treasury Dealer Quotation for such redemption date.
"Independent Investment Banker" means one of the Reference Treasury Dealers
appointed by the Company and reasonably acceptable to the Trustee.
"Reference Treasury Dealer" means a primary U.S. Government Securities
Dealer in New York City selected by the Company and reasonably acceptable to the
Trustee.
"Reference Treasury Dealer Quotation" means, with respect to the Reference
Treasury Dealer and any redemption date, the average, as determined by the
Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at or before 5:00 p.m.,
New York City time, on the third Business Day preceding such redemption date.
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, we have
agreed to sell to each of the Underwriters named below (for whom Salomon Smith
Barney is acting as Representative) and each of the Underwriters has severally
agreed to purchase from us the respective principal amount of Senior Notes set
forth opposite its name below:
Principal Amount
Underwriter of Senior Notes
Salomon Smith Barney Inc. $ 40,000,000
McDonald Investments Inc. 30,000,000
Morgan Stanley & Co.
Incorporated 30,000,000
TOTAL $100,000,000
In the Underwriting Agreement, the Underwriters have agreed to the terms and
conditions to purchase all of the Senior Notes offered if any of the Senior
Notes are purchased.
The expenses associated with the offer and sale of the Senior Notes are
expected to be $186,618.
The Underwriters propose to offer the Senior Notes in part directly to the
public at the initial public offering price set forth on the cover page of this
prospectus and in part to certain securities dealers at such price less a
concession not in excess of .35% per Senior Note. The Underwriters may allow,
and such dealers may reallow, a concession not in excess of .25% per Senior Note
to certain brokers and dealers. After the Senior Notes are released for sale to
the public, the offering price and other selling terms may from time to time be
varied by the Representative.
Prior to this offering, there has been no public market for the Senior
Notes. The Senior Notes will not be listed on any securities exchange. The
Representative has advised us that it intends to make a market in the Senior
Notes. The Representative will have no obligation to make a market in the Senior
Notes, however, and may cease market making activities, if commenced, at any
time. There can be no assurance of a secondary market for the Senior Notes, or
that the Senior Notes may be resold.
We have agreed to indemnify the Underwriters against certain liabilities,
including liabilities under the Securities Act of 1933.
In connection with the offering, the Underwriters may purchase and sell the
Senior Notes in the open market. These transactions may include over-allotment
and stabilizing transactions and purchases to cover syndicate short positions
created in connection with the offering. Stabilizing transactions consist of
certain bids or purchases for the purposes of preventing or retarding a decline
in the market price of the Senior Notes and syndicate short positions involve
the sale by the Underwriters of a greater number of Senior Notes than they are
required to purchase from us in the offering. The Underwriters also may impose a
penalty bid, whereby selling concessions allowed to syndicate members or other
broker dealers in respect of the securities sold in the offering for their
account may be reclaimed by the syndicate if such Senior Notes are repurchased
by the syndicate in stabilizing or covering transactions. These activities may
stabilize, maintain or otherwise affect the market price of the Senior Notes,
which may be higher than the price that might otherwise prevail in the open
market; and these activities, if commenced, may be discontinued at any time.
These transactions may be effected in the over-the-counter market or otherwise.
Some of the Underwriters engage in transactions with, and have performed
services for, us and our affiliates in the ordinary course of business.
PROSPECTUS
OHIO POWER COMPANY
301 Cleveland Avenue, S.W.
Canton, Ohio 44702
(330)456-8173
$250,000,000
UNSECURED NOTES
TERMS OF SALE
The following terms may apply to the notes that we may sell at one or more
times. A pricing supplement will include the final terms for each note. If we
decide to list upon issuance any note or notes on a securities exchange, a
pricing supplement will identify the exchange and state when we expect trading
could begin.
- Mature 9 months to 50 years
- Fixed or floating interest rate. The floating interest rate formula
would be based on:
Commercial paper rate LIBOR
Prime rate Treasury rate
CD rate CMT rate
Federal Funds rate Another interest rate index
- Remarketing features
- Certificate or book-entry form
- Subject to redemption
- Not convertible, amortized or subject to a sinking fund
- Interest paid on fixed rate notes quarterly or semi-annually
- Interest paid on floating rate notes monthly, quarterly,
semi-annually, or annually
- Issued in multiples of a minimum denomination
The notes have not been approved by the SEC or any state securities commission,
nor have these organizations determined that this prospectus is accurate or
complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is April 20, 1999.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement we filed with the SEC.
We also file annual, quarterly and special reports and other information with
the SEC. You may read and copy any document we file at the SEC's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call
the SEC at 1-800-SEC-0330 for further information on the Public Reference Room.
You may also examine our SEC filings through the SEC's web site at
http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information that we file
with the SEC will automatically update and supersede this information. We
incorporate by reference the document listed below and any future filings made
with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 until we sell all the notes.
- Annual Report on Form 10-K for the year ended December 31, 1998.
You may request a copy of these filings, at no cost, by writing or telephoning
us at the following address:
Mr. G. C. Dean
American Electric Power Service Corporation
1 Riverside Plaza
Columbus, Ohio 43215
614-223-1000
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. We are not making an offer of
these notes in any state where the offer is not permitted. You should not assume
that the information in this prospectus or any supplement is accurate as of any
date other than the date on the front of those documents.
THE COMPANY
We generate, sell, purchase, transmit and distribute electric power. We
serve approximately 685,000 customers in Ohio. We also sell and transmit power
at wholesale to other electric utilities, municipalities, electric cooperatives
and non-utility entities engaged in the wholesale power market. Our principal
executive offices are located at 301 Cleveland Avenue, S.W., Canton, Ohio 44702
(telephone number 330-456-8173). We are a subsidiary of American Electric Power
Company, Inc., a public utility holding company, and we are a part of the
American Electric Power integrated utility system. The executive offices of
American Electric Power Company, Inc. are located at 1 Riverside Plaza,
Columbus, Ohio 43215 (telephone number 614-223-1000).
PROSPECTUS SUPPLEMENTS
We provide information to you about the notes in three separate documents
that progressively provide more detail: (a) this prospectus provides general
information some of which may not apply to your notes, (b) the accompanying
prospectus supplement provides more specific terms of your notes, and (c) the
pricing supplement provides the final terms of your notes. It is important for
you to consider the information contained in this prospectus, the prospectus
supplement and the pricing supplement in making your investment decision.
RATIO OF EARNINGS TO FIXED CHARGES
The Ratio of Earnings to Fixed Charges for each of the periods indicated
is as follows:
Twelve Months
Period Ended Ratio
December 31, 1994 3.28
December 31, 1995 2.95
December 31, 1996 3.40
December 31, 1997 3.42
December 31, 1998 3.28
For current information on the Ratio of Earnings to Fixed Charges,
please see our most recent Form 10-K and 10-Q. See Where You Can Find More
Information.
USE OF PROCEEDS
The net proceeds from the sale of the notes will be used for general
corporate purposes relating to our utility business. These purposes include
redeeming or repurchasing outstanding debt or preferred stock and replenishing
working capital. If we do not use the net proceeds immediately, we temporarily
invest them in short-term, interest-bearing obligations. We estimate that our
construction costs in 1999 will approximate $201,000,000. At March 24, 1999, our
outstanding short-term debt was $164,357,000.
DESCRIPTION OF THE NOTES
General
We will issue the notes under the Indenture dated September 1, 1997 (as
previously supplemented and amended) between us and the Trustee, Bankers Trust
Company. This prospectus briefly outlines some provisions of the Indenture. If
you would like more information on these provisions, review the Indenture and
any supplemental indentures or company orders that we have filed or will file
with the SEC. See Where You Can Find More Information on how to locate these
documents. You may also review these documents at the Trustee's offices at Four
Albany Street, New York, New York.
The Indenture does not limit the amount of notes that may be issued. The
Indenture permits us to issue notes in one or more series or tranches upon the
approval of our board of directors and as described in one or more company
orders or supplemental indentures. Each series of notes may differ as to their
terms.
The notes are unsecured and will rank equally with all our unsecured
unsubordinated debt. Substantially all of our fixed properties and franchises
are subject to the lien of our first mortgage bonds issued under and secured by
a Mortgage and Deed of Trust, dated as of October 1, 1938 (as previously
supplemented and amended) between us and The Chase Manhattan Bank, formerly
Central Hanover Bank and Trust Company, as trustee. For current information on
our debt outstanding see our most recent Form 10-K and 10-Q.
See Where You Can Find More Information.
The notes will be denominated in U.S. dollars and we will pay principal
and interest in U.S. dollars. Unless an applicable pricing or prospectus
supplement states otherwise, the notes will not be subject to any conversion,
amortization, or sinking fund. We expect that the notes will be "book-entry,"
represented by a permanent global note registered in the name of The Depository
Trust Company, or its nominee. We reserve the right, however, to issue note
certificates registered in the name of the noteholders.
In the discussion that follows, whenever we talk about paying principal on
the notes, we mean at maturity or redemption. Also, in discussing the time for
notices and how the different interest rates are calculated, all times are New
York City time and all references to New York mean the City of New York, unless
otherwise noted.
The following terms may apply to each note as specified in the applicable
pricing or prospectus supplement and the note.
Redemptions
If we issue redeemable notes, we may redeem such notes at our option
unless an applicable pricing or prospectus supplement states otherwise. The
pricing or prospectus supplement will state the terms of redemption. We may
redeem notes in whole or in part by delivering written notice to the noteholders
no more than 60, and not less than 30, days prior to redemption. If we do not
redeem all the notes of a series at one time, the Trustee selects the notes to
be redeemed in a manner it determines to be fair.
Remarketed Notes
If we issue notes with remarketing features, an applicable pricing or
prospectus supplement will describe the terms for the notes including: interest
rate, remarketing provisions, our right to redeem notes, the holders' right to
tender notes, and any other provisions.
Book-Entry Notes - Registration, Transfer, and Payment of Interest and
Principal
Book-entry notes of a series will be issued in the form of a global note
that the Trustee will deposit with The Depository Trust Company, New York, New
York ("DTC"). This means that we will not issue note certificates to each
holder. One or more global notes will be issued to DTC who will keep a
computerized record of its participants (for example, your broker) whose clients
have purchased the notes. The participant will then keep a record of its clients
who purchased the notes. Unless it is exchanged in whole or in part for a note
certificate, a global note may not be transferred; except that DTC, its
nominees, and their successors may transfer a global note as a whole to one
another.
Beneficial interests in global notes will be shown on, and transfers of
global notes will be made only through, records maintained by DTC and its
participants.
DTC has provided us the following information: 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 United States
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency" registered under the
provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds
securities that its participants ("Direct Participants") deposit with DTC. DTC
also records the settlement among Direct Participants of securities
transactions, such as transfers and pledges, in deposited securities through
computerized records for Direct Participant's accounts. This eliminates the need
to exchange note certificates. Direct Participants include securities brokers
and dealers, banks, trust companies, clearing corporations and certain other
organizations.
Other organizations such as securities brokers and dealers, banks and
trust companies that work through a Direct Participant also use DTC's book-entry
system. The rules that apply to DTC and its participants are on file with the
SEC.
A number of its Direct Participants and the New York Stock Exchange,
Inc., The American Stock Exchange, Inc. and the National Association of
Securities Dealers, Inc. own DTC.
We will wire principal and interest payments to DTC's nominee. We and the
Trustee will treat DTC's nominee as the owner of the global notes for all
purposes. Accordingly, we, the Trustee and any paying agent will have no direct
responsibility or liability to pay amounts due on the global notes to owners of
beneficial interests in the global notes.
It is DTC's current practice, upon receipt of any payment of principal or
interest, to credit Direct Participants' accounts on the payment date according
to their respective holdings of beneficial interests in the global notes as
shown on DTC's records. In addition, it is DTC's current practice to assign any
consenting or voting rights to Direct Participants whose accounts are credited
with notes on a record date. The customary practices between the participants
and owners of beneficial interests will govern payments by participants to
owners of beneficial interests in the global notes and voting by participants,
as is the case with notes held for the account of customers registered in
"street name." However, payments will be the responsibility of the participants
and not of DTC, the Trustee or us.
DTC management is aware that some computer applications, systems and the
like for processing data ("Systems") that are dependent upon calendar dates,
including dates before, on and after January 1, 2000, may encounter "Year 2000
problems". DTC has informed its Participants and other members of the financial
community (the "Industry") that it has developed and is implementing a program
so that its Systems, as the same relate to the timely payment of distributions
(including principal and income payments) to securityholders, book-entry
deliveries and settlement of trades within DTC ("DTC Services"), continue to
function appropriately. This program includes a technical assessment and a
remediation plan, each of which is complete. Additionally, DTC's plan includes a
testing phase, which is expected to be completed within appropriate time frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as third party vendors from whom DTC licenses software and hardware, and
third party vendors on whom DTC relies for information or the provision of
services, including telecommunication and electrical utility service providers,
among others. DTC has informed the Industry that it is contacting (and will
continue to contact) third party vendors from whom DTC acquires services to: (i)
impress upon them the importance of such services being Year 2000 compliant; and
(ii) determine the extent of their efforts for Year 2000 remediation (and, as
appropriate, testing) of their services. In addition, DTC is in the process of
developing such contingency plans as it deems appropriate.
According to DTC, the foregoing information with respect to DTC has been
provided to the Industry for informational purposes only and is not intended to
serve as a representation, warranty or contract modification of any kind.
Notes represented by a global note will be exchangeable for note
certificates with the same terms in authorized denominations only if:
- DTC notifies us that it is unwilling or unable to continue as depositary
or if DTC ceases to be a clearing agency registered under applicable law
and a successor depositary is not appointed by us within 90 days; or
- we determine not to require all of the notes of a series to be
represented by a global note and notify the Trustee of our decision.
Note Certificates-Registration, Transfer, and Payment of Interest and
Principal
If we issue note certificates, they will be registered in the name of the
noteholder. The notes may be transferred or exchanged, pursuant to
administrative procedures in the indenture, without the payment of any service
charge (other than any tax or other governmental charge) by contacting the
paying agent. Payments on note certificates will be made by check.
Interest Rate
General
We have provided a Glossary at the end of this prospectus to define the
capitalized terms used in discussing the interest rates payable on the notes.
The interest rate on the notes will either be fixed or floating. The
interest paid will include interest accrued to, but excluding, the date of
maturity or redemption. Interest is generally payable to the person in whose
name the note is registered at the close of business on the record date before
each interest payment date. Interest payable at maturity or redemption, however,
will be payable to the person to whom principal is payable.
If we issue a note after a record date but on or prior to the related
interest payment date, we will pay the first interest payment on the interest
payment date after the next record date. We will pay interest payments by check
or wire transfer, at our option.
Fixed Rate Notes
A pricing or prospectus supplement will designate the record dates,
payment dates and the fixed rate of interest payable on a note. We will pay
interest quarterly or semi-annually, and upon maturity or redemption. Unless an
applicable pricing or prospectus supplement states otherwise, if any payment
date falls on a day that is not a Business Day, we will pay interest on the next
Business Day and no additional interest will be paid. Interest payments will be
the amount of interest accrued to, but excluding, each payment date. Interest
will be computed using a 360-day year of twelve 30-day months.
Floating Rate Notes: General
Each floating rate note will have an interest rate formula. The formula
may be based on:
- the commercial paper rate; - the prime rate; - the CD rate; - the
federal funds effective rate; - the LIBOR; - the Treasury rate; - the CMT
rate; or - another interest rate index.
The applicable pricing supplement will also indicate the Spread and/or
Spread Multiplier, if any. In addition, any floating rate note may have a
maximum or minimum interest rate limitation.
Upon request, the Calculation Agent will provide the current interest rate
and, if different, the interest rate which will become effective on the next
Interest Reset Date.
Floating Rate Notes: Date of Interest Rate Change
The interest rate on each floating rate note may be reset daily,
weekly, monthly, quarterly, semi-annually, or annually. The Interest Reset
Date will be:
- for notes which reset daily, each Business Day; - for notes (other than
Treasury rate notes) which reset weekly, the Wednesday of each week;
- for Treasury rate notes which reset weekly, the Tuesday of each week;
- for notes which reset monthly, on the third Wednesday of each month;
- for notes which reset quarterly, the third Wednesday of March, June,
September and December;
- for notes which reset semi-annually, the third Wednesday of the two
months of each year indicated in the applicable pricing supplement; and
- for notes which reset annually, the third Wednesday of the month of each
year indicated in the applicable pricing supplement.
The applicable pricing supplement will state the initial interest rate or
interest rate formula on each note effective until the first Interest Reset
Date. After that, the interest rate will be the rate determined on the next
Interest Determination Date, as explained below. Each time a new interest rate
is determined, it will become effective on the subsequent Interest Reset Date.
If any Interest Reset Date is not a Business Day, then the Interest Reset Date
will be postponed to the next Business Day. However, in the case of a LIBOR
note, if the next Business Day is in the next calendar month, the Interest Reset
Date will be the immediately preceding Business Day.
Floating Rate Notes: When Interest Rate Is Determined
The Interest Determination Date for all notes (except Treasury rate notes)
is the second Business Day before the Interest Reset Date (second London
Business Day before the Interest Reset Date for LIBOR notes).
The Interest Determination Date for Treasury rate notes will be the day of
the week in which the Interest Reset Date falls on which Treasury bills would
normally be auctioned. Treasury bills are usually sold at auction on Monday of
each week, unless that day is a legal holiday, in which case the auction is
usually held on Tuesday. However, the auction may be held on the preceding
Friday. If an auction is held on the preceding Friday, that day will be the
Interest Determination Date pertaining to the Interest Reset Date occurring in
the next week. If an auction date falls on any Interest Reset Date then the
Interest Reset Date will instead be the first Business Day immediately following
the auction date.
Floating Rate Notes: When Interest Is Paid
Interest is paid as follows:
- for notes which reset daily, weekly or monthly, on the third Wednesday
of each month or on the third Wednesday of March, June, September and
December (as indicated in the applicable pricing supplement);
- for notes which reset quarterly, on the third Wednesday of March, June,
September, and December; - for notes which reset semi-annually, on the
third Wednesday of the two months specified in the applicable pricing
supplement;
- for notes which reset annually, on the third Wednesday of the month
specified in the applicable pricing supplement; and
- at maturity or redemption .
If interest is payable on a day which is not a Business Day, payment will
be postponed to the next Business Day and no additional interest shall be due.
However, for LIBOR notes, if the next Business Day is in the next calendar
month, interest will be paid on the preceding Business Day.
Unless an applicable pricing supplement states otherwise, the record date
will be 15 calendar days prior to each day interest is paid, whether or not such
day is a Business Day.
The interest payable will be the amount of interest accrued to, but
excluding, the interest payment date. However, for notes on which the interest
resets daily or weekly, the interest payable will include interest accrued to
and including the record date prior to the interest payment date. If the
interest payment date is also a day that principal is due, the interest payable
will include interest accrued to, but excluding, the date of maturity or
redemption.
The accrued interest for any period is calculated by multiplying the
principal amount of a note by an accrued interest factor. The accrued interest
factor is computed by adding the interest factor calculated for each day in the
period to the date for which accrued interest is being calculated. The interest
factor (expressed as a decimal rounded upwards if necessary) is computed by
dividing the interest rate (expressed as a decimal rounded upwards if necessary)
applicable to such date by 360, unless the applicable pricing supplement states
otherwise, or the notes are Treasury rate notes or CMT rate notes, in which case
it will be divided by the actual number of days in the year.
All percentages resulting from any calculation of floating rate notes will
be rounded, if necessary, to the nearest one-hundred thousandth of a percentage
point, with five one-millionths of a percentage point rounded upwards (e.g.,
9.876545% (or .09876545) being rounded to 9.87655% (or .0987655) and 9.876544%
(or .09876544) being rounded to 9.87654% (or .0987654)), and all dollar amounts
used in or resulting from such calculation will be rounded to the nearest cent
(with one-half cent being rounded upwards).
Floating Rate Notes: Interest Rate Formulas
Commercial Paper Rate Notes.
Each commercial paper rate note will bear interest at the rate (calculated
with reference to the Commercial Paper Rate and the Spread and/or Spread
Multiplier, if any) specified on the commercial paper rate note and in the
applicable pricing supplement.
"Commercial Paper Rate" means, with respect to any Commercial Paper Rate
Interest Determination Date, the Money Market Yield (calculated as described
below) of the rate on such date for commercial paper having the Index Maturity
specified in the applicable pricing supplement as published in Federal Reserve
Statistical Release H.15(519) under the heading "Commercial
Paper--Nonfinancial."
The following procedures will occur if the rate cannot be set as described
above:
(a) If that rate is not published in H.15 (519) prior to 3:00 P.M. on
the Calculation Date, then the Commercial Paper Rate will be the Money
Market Yield of the rate on the Commercial Paper Rate Interest
Determination Date for commercial paper having the Index Maturity specified
in the applicable pricing supplement as published in Composite Quotations
under the heading "Commercial Paper."
(b) If the rate is not published in either H.15 (519) or in Composite
Quotations by 3:00 P.M. on the Calculation Date, the Commercial Paper Rate
for that Commercial Paper Rate Interest Determination Date will then be
calculated by the Calculation Agent in the following manner.
The Commercial Paper Rate will be calculated as the Money Market
Yield of the average for the offered rates, as of 11:00 A.M. on that date,
of three leading dealers of commercial paper in New York selected for
commercial paper having the applicable Index Maturity placed for an
industrial issuer whose bond rating is "Aa," or the equivalent, from a
nationally recognized rating agency.
(c) Finally, if fewer than three dealers are quoting as mentioned,
the rate of interest in effect for the applicable period will be the same
as the rate of interest in effect for the prior interest reset period.
Prime Rate Notes. Each prime rate note will bear interest at the rate
(calculated with reference to the Prime Rate and the Spread and/or Spread
Multiplier, if any) specified on the prime rate note and in the applicable
pricing supplement.
"Prime Rate" means, with respect to any Prime Rate Interest Determination
Date, the rate set forth on such date in H.15(519) under the heading "Bank Prime
Loan."
The following procedures will occur if the rate cannot be set as described
above:
(a) If that rate is not published in H.15(519) prior to 3:00 P.M. on
the Calculation Date, then the Prime Rate will be the average of the rates
of interest publicly announced by each bank that appear on the Reuters
Screen USPRIME1 Page as its prime rate or base lending rate as in effect
for that Prime Rate Interest Determination Date.
(b) If fewer than four rates appear on the Reuters Screen USPRIME1
Page, the Prime Rate will be the average of the prime rates or base lending
rates quoted on the basis of the actual number of days in the year divided
by a 360-day year as of the close of business on the Prime Rate Interest
Determination Date by four major money center banks in New York selected by
the Calculation Agent.
(c) If fewer than four banks are quoting as mentioned, the Prime Rate
shall be determined on the basis of the rates furnished in New York by the
major money center banks, if any, that have provided such quotations, and
by an appropriate number of substitute banks or trust companies organized
and doing business under the laws of the United States, or any State
thereof, having total equity capital of at least $500 million and being
subject to supervision or examination by a Federal or State authority, as
selected by the Calculation Agent.
(d) Finally, if the banks are not quoting as mentioned above, the rate
of interest in effect for the applicable period will be the same as the
rate of interest in effect for the prior interest reset period.
CD Rate Notes. Each CD rate note will bear interest at the rate
(calculated with reference to the CD Rate and the Spread and/or Spread
Multiplier, if any) specified on the CD rate note and in the applicable pricing
supplement.
"CD Rate" means, with respect to any CD Rate Interest Determination Date,
the rate on that date for negotiable U.S. dollar certificates of deposit having
the Index Maturity specified in the applicable pricing supplement as published
in H.15(519) under the heading "CDs (Secondary Market)."
The following procedures will occur if the rate cannot be set as described
above:
(a) If that rate is not published in H.15(519) prior to 3:00 P.M. on
the Calculation Date, then the CD Rate will be the rate on that CD Rate
Interest Determination Date for negotiable U.S. Dollar certificates of
deposit having the applicable Index Maturity as published in Composite
Quotations under the heading "Certificates of Deposit."
(b) If that rate is not published in either H.15 (519) or in
Composite Quotations by 3:00 P.M. on that Calculation Date, the CD Rate for
that CD Rate Interest Determination Date shall be calculated by the
Calculation Agent as follows:
The CD Rate will be calculated as the average of the secondary market
offered rates, as of 10:00 A.M., of three leading nonbank dealers of
negotiable U.S. dollar certificates of deposit in New York selected by the
Calculation Agent for negotiable U.S. dollar certificates of deposit of
major United States money market banks with a remaining maturity closest to
the Index Maturity specified in the applicable pricing supplement in a
representative amount.
(c) Finally, if fewer than three dealers are quoting as mentioned,
the rate of interest in effect for the applicable period will be the same
as the rate of interest in effect for the prior interest reset period.
Federal Funds Rate Notes. Each federal funds rate note will bear interest
at the rate (calculated with reference to the Federal Funds Rate and the Spread
and/or Spread Multiplier, if any) specified on the federal funds rate note and
in the applicable pricing supplement.
"Federal Funds Rate" means, with respect to any Federal Funds Rate
Interest Determination Date, the rate on such date for U.S. dollar federal funds
as published in H.15(519) under the heading "Federal Funds (Effective)."
The following procedures will occur if the rate cannot be set as described
above:
(a) If that rate is not published in H.15(519) prior to 3:00 P.M. on
the Calculation Date, then the Federal Funds Rate will be the rate on that
Federal Funds Rate Interest Determination Date as published in Composite
Quotations under the heading "Federal Funds/Effective Rate."
(b) If that rate is not published in either H.15 (519) or in
Composite Quotations by 3:00 P.M. on the Calculation Date, the Federal
Funds Rate for that Federal Funds Rate Interest Determination Date will be
calculated by the Calculation Agent as follows:
The Federal Funds Rate will be the average of the rates, as of 9:00
A.M. on that date, for the last transaction in overnight federal funds
arranged by three leading brokers of federal funds transactions in New York
selected by the Calculation Agent.
(c) Finally, if fewer than three brokers are quoting as mentioned
above, the rate of interest in effect for the applicable period will be the
same as the rate of interest in effect for the prior interest reset period.
LIBOR Notes. Each LIBOR note will bear interest at the rate (calculated
with reference to LIBOR and the Spread and/or Spread Multiplier, if any)
specified on the LIBOR note and in the applicable pricing supplement.
"LIBOR" means the London interbank offered rate for deposits in U.S.
dollars and will be determined by the Calculation Agent as follows:
(a) With respect to any LIBOR Interest Determination Date, LIBOR will
be determined by either:
(1) the average of the offered rates for deposits in U.S. dollars
having the Index Maturity specified in the applicable pricing
supplement, beginning on the second Business Day immediately after that
date, that appear on the Reuters Screen LIBO Page as of 11:00 A.M.,
London time, on that date, if at least two offered rates appear on the
Reuters Screen LIBO Page; or
(2) the rate for deposits in U.S. dollars having the Index
Maturity designated in the applicable pricing supplement, beginning on
the second London Business Day immediately after such date, that appears
on the Telerate Page 3750 as of 11:00 A.M., London time, on that date.
If neither Reuters Screen LIBO Page nor Telerate Page 3750 is
specified in the applicable pricing supplement, LIBOR will be determined as
if Telerate Page 3750 had been specified.
In the case where (1) above applies, if fewer than two offered rates
appear on the Reuters Screen LIBO Page, or, in the case where (2) above
applies, if no rate appears on the Telerate Page 3750, LIBOR for that date
will be determined as follows:
(b) LIBOR will be determined based on the rates at approximately
11:00 A.M., London time, on that LIBOR Interest Determination Date at which
deposits in U.S. dollars having the applicable Index Maturity are offered
to prime banks in the London interbank market by four major banks in the
London interbank market selected by the Calculation Agent that in the
Calculation Agent's judgment is representative for a single transaction in
such market at such time (a "Representative Amount"). The offered rates
must begin on the second Business Day immediately after that LIBOR Interest
Determination Date.
The Calculation Agent will request the principal London office of
each such bank to provide a quotation of its rate. If at least two such
quotations are provided, LIBOR for such date will be the average of such
quotations.
(c) If fewer than two quotations are provided, LIBOR for that date
will be the average of the rates quoted at approximately 11:00 A.M. on such
date by three major banks in New York, selected by the Calculation Agent.
The rates will be for loans in U.S. dollars to leading European banks
having the specified Index Maturity beginning on the second Business Day
after that date and in a Representative Amount.
(d) Finally, if fewer than three banks are quoting as mentioned, the
rate of interest in effect for the applicable period will be the same as
the rate of interest in effect for the prior interest reset period.
Treasury Rate Notes. Each Treasury rate note will bear interest at the
rate (calculated with reference to the Treasury Rate and the Spread and/or
Spread Multiplier, if any) specified on the Treasury rate note and in the
applicable pricing supplement.
"Treasury Rate" means, with respect to any Treasury Rate Interest
Determination Date, the rate for the most recent auction of direct obligations
of the United States ("Treasury Bills") having the Index Maturity specified in
the applicable pricing supplement as published in H.15(519) under the heading
"U.S. Government Securities/Treasury Bills/Auction Average (Investment)."
The following procedures will occur if the rate cannot be set as described
above:
(a) If that rate is not published in H.15(519) by 3:00 P.M. on the
applicable Calculation Date, the rate will be the auction average rate
(expressed as a bond equivalent, on the basis of a year of 365 or 366 days,
as applicable, and applied on a daily basis) for such auction as otherwise
announced by the United States Department of the Treasury.
(b) If the results of the auction of Treasury Bills having the
applicable Index Maturity are not published in H.15(519) by 3:00 P.M., or
otherwise published or reported as provided above by 3:00 P.M. on the
Calculation Date, or if no auction is held in a particular week, then the
Treasury Rate shall be calculated by the Calculation Agent as follows:
The rate will be calculated as a yield to maturity (expressed as a
bond equivalent, on the basis of a year of 365 or 366 days, as applicable,
and applied on a daily basis) of the average of the secondary market bid
rates as of approximately 3:30 P.M. on the Treasury Rate Interest
Determination Date, of three leading primary United States government
securities dealers in New York selected by the Calculation Agent for the
issue of Treasury Bills with a remaining maturity closest to the specified
Index Maturity.
(c) Finally, if fewer than three dealers are quoting as mentioned,
the rate of interest in effect for the period will be the same as the rate
of interest in effect for the prior interest reset period.
CMT Rate Notes. Each CMT rate note will bear interest at the rate
(calculated with reference to the CMT Rate and the Spread or Spread Multiplier,
if any) specified on such CMT rate note and in the applicable pricing
supplement.
"CMT Rate" means, with respect to any CMT Rate Interest Determination
Date, the rate displayed on the Designated CMT Telerate Page under the caption
"... Treasury Constant Maturities... Federal Reserve Board Release H.15...
Mondays Approximately 3:45 P.M.," under the column for the applicable Index
Maturity designated in the applicable pricing supplement for:
(1) if the Designated CMT Telerate Page is 7055, the rate for the
applicable CMT Rate Interest Determination Date; or
(2) if the Designated CMT Telerate Page is 7052, the week, or the month,
as applicable, ended immediately preceding the week in which the CMT Rate
Interest Determination Date occurs.
The following procedures will occur if the rate cannot be set as described
above:
(a) If no page is specified in the applicable pricing supplement and
on the face of such CMT Rate note, the Designated CMT Telerate Page shall
be 7052 for the most recent week. If such rate is no longer displayed on
the relevant page, or if it is not displayed by 3:00 P.M. on the related
Calculation Date, then the CMT Rate will be the Treasury constant maturity
rate for the applicable Index Maturity as published in the relevant H.15
(519).
(b) If that rate is no longer published in H.15(519), or is not
published by 3:00 P.M. on the related Calculation Date, then the CMT Rate
for such CMT Rate Interest Determination Date will be the Treasury constant
maturity rate for the applicable Index Maturity (or other United States
Treasury rate for such Index Maturity for that CMT Rate Interest
Determination Date with respect to such Interest Reset Date) as may then be
published by either the Federal Reserve Board or the United States
Department of the Treasury that the Calculation Agent determines to be
comparable to the rate formerly displayed on the Designated CMT Telerate
Page and published in the relevant H.15(519).
(c) If that information is not provided by 3:00 P.M. on the related
Calculation Date, then the CMT Rate for that CMT Rate Interest
Determination Date will be calculated by the Calculation Agent as follows:
The rate will be calculated as a yield to maturity, based on the
average of the secondary market closing offer side prices as of
approximately 3:30 P.M. on that CMT Rate Interest Determination Date
reported, according to their written records, by three leading primary
United States government securities dealers (each, a "Reference Dealer") in
New York selected by the Calculation Agent. These dealers will be selected
from five such Reference Dealers.
The Calculation Agent will eliminate the highest quotation (or, in
the event of equality, one of the highest) and the lowest quotation (or, in
the event of equality, one of the lowest), for the most recently issued
direct noncallable fixed rate obligations of the United States ("Treasury
Notes") with an original maturity of approximately the applicable Index
Maturity and a remaining term to maturity of not less than such Index
Maturity minus one year.
If two Treasury Notes with an original maturity as described in the
preceding sentence have remaining terms to maturity equally close to the
applicable Index Maturity, the quotes for the Treasury Note with the
shorter remaining term to maturity will be used.
(d) If the Calculation Agent cannot obtain three such Treasury Note
quotations, the CMT Rate for that CMT Rate Interest Determination Date will
be calculated by the Calculation Agent as follows:
The rate will be calculated as a yield to maturity based on the
average of the secondary market offer side prices as of approximately 3:30
P.M. on that CMT Rate Interest Determination Date of three Reference
Dealers in New York selected by the Calculation Agent using the same method
described above, for Treasury Notes with an original maturity of the number
of years that is the next highest to the applicable Index Maturity with a
remaining term to maturity closest to such Index Maturity and in an amount
of at least $100 million.
If three or four (and not five) of the Reference Dealers are quoting
as described above, then the CMT Rate will be based on the average of the
offer prices obtained and neither the highest nor the lowest of such quotes
will be eliminated.
(e) Finally, if fewer than three Reference Dealers are quoting as
mentioned, the rate of interest in effect for the applicable period will be
the same as the rate of interest in effect for the prior interest reset
period.
Events of Default
"Event of Default" means any of the following:
- failure to pay for three Business Days the principal of (or
premium, if any, on) any note of a series when due and payable;
- failure to pay for 30 days any interest on any note of any series
when due and payable;
- failure to perform any other requirements in such notes, or in the
Indenture in regard to such notes, for 90 days after notice;
- certain events of bankruptcy or insolvency; or
- any other event of default specified in a series of notes.
An Event of Default for a particular series of notes does not necessarily
mean that an Event of Default has occurred for any other series of notes issued
under the Indenture. If an Event of Default occurs and continues, the Trustee or
the holders of at least 33% of the principal amount of the notes of the series
affected may require us to repay the entire principal of the notes of such
series immediately ("Repayment Acceleration"). In most instances, the holders of
at least a majority in aggregate principal amount of the notes of the affected
series may rescind a previously triggered Repayment Acceleration. However, if we
cause an Event of Default because we have failed to pay (unaccelerated)
principal, premium, if any, or interest, Repayment Acceleration may be rescinded
only if we have first cured our default by depositing with the Trustee enough
money to pay all (unaccelerated) past due amounts and penalties, if any.
The Trustee must within 90 days after a default occurs, notify the holders
of the notes of the series of default unless such default has been cured or
waived. We are required to file an annual certificate with the Trustee, signed
by an officer, concerning any default by us under any provisions of the
Indenture.
Subject to the provisions of the Indenture relating to its duties in case
of default, the Trustee shall be under no obligation to exercise any of its
rights or powers under the Indenture at the request, order or direction of any
holders unless such holders offer the Trustee reasonable indemnity. Subject to
the provisions for indemnification, the holders of a majority in principal
amount of the notes of any series may direct the time, method and place of
conducting any proceedings for any remedy available to, or exercising any trust
or power conferred on, the Trustee with respect to such notes.
Modification of Indenture
Under the Indenture, our rights and obligations and the rights of the
holders of any notes may be changed. Any change affecting the rights of the
holders of any series of notes requires the consent of the holders of not less
than a majority in aggregate principal amount of the outstanding notes of all
series affected by the change, voting as one class. However, we cannot change
the terms of payment of principal or interest, or a reduction in the percentage
required for changes or a waiver of default, unless the holder consents. We may
issue additional series of notes and take other action that does not affect the
rights of holders of any series by executing supplemental indentures without the
consent of any noteholders. Consolidation, Merger or Sale
We may merge or consolidate with any corporation or sell substantially all
of our assets as an entirety as long as the successor or purchaser expressly
assumes the payment of principal, and premium, if any, and interest on the
notes.
Legal Defeasance
We will be discharged from our obligations on the notes of any series at
any time if:
- we deposit with the Trustee sufficient cash or government securities to
pay the principal, interest, any premium and any other sums due to the
stated maturity date or a redemption date of the note of the series, and
- we deliver to the Trustee an opinion of counsel stating that the federal
income tax obligations of noteholders of that series will not change as a
result of our performing the action described above.
If this happens, the noteholders of the series will not be entitled to
the benefits of the Indenture except for registration of transfer and
exchange of notes and replacement of lost, stolen or mutilated notes.
Covenant Defeasance
We will be discharged from our obligations under any restrictive covenant
applicable to the notes of a particular series if we perform both actions
described above. See Legal Defeasance. If this happens, any later breach of that
particular restrictive covenant will not result in Repayment Acceleration. If we
cause an Event of Default apart from breaching that restrictive covenant, there
may not be sufficient money or government obligations on deposit with the
Trustee to pay all amounts due on the notes of that series. In that instance, we
would remain liable for such amounts.
Governing Law
The Indenture and notes of all series will be governed by the laws of the
State of New York.
Concerning the Trustee
We and our affiliates use or will use some of the banking services of the
Trustee in the normal course of business.
PLAN OF DISTRIBUTION
We may sell the notes (a) through agents; (b) through underwriters or
dealers; or (c) directly to one or more purchasers.
By Agents
Notes may be sold on a continuing basis through agents designated by us.
The agents will agree to use their reasonable efforts to solicit purchases for
the period of their appointment.
Unless the pricing supplement states otherwise, the notes will be sold to
the public at 100% of their principal amount. Agents will receive commissions
from .125% to .750% of the principal amount per note depending on the maturity
of the note they sell.
The Agents will not be obligated to make a market in the notes. We cannot
predict the amount of trading or liquidity of the notes.
By Underwriters
If underwriters are used in the sale, the underwriters will acquire the
notes for their own account. The underwriters may resell the notes in one or
more transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale. The obligations of
the underwriters to purchase the notes will be subject to certain conditions.
The underwriters will be obligated to purchase all the notes of the series
offered if any of the notes are purchased. Any initial public offering price and
any discounts or concessions allowed or re-allowed or paid to dealers may be
changed from time to time.
Direct Sales
We may also sell notes directly. In this case, no underwriters or agents
would be involved.
General Information
Underwriters, dealers, and agents that participate in the distribution of
the notes may be underwriters as defined in the Securities Act of 1933 (the
"Act"), and any discounts or commissions received by them from us and any profit
on the resale of the notes by them may be treated as underwriting discounts and
commissions under the Act.
We may have agreements with the underwriters, dealers and agents to
indemnify them against certain civil liabilities, including liabilities under
the Act.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, us or our affiliates in the ordinary course of their
businesses.
LEGAL OPINIONS
Our counsel, Simpson Thacher & Bartlett, New York, NY, and one of our
lawyers will each issue an opinion about the legality of the notes for us. Dewey
Ballantine LLP, New York, NY will issue an opinion for the agents or
underwriters. From time to time, Dewey Ballantine LLP acts as counsel to our
affiliates for some matters.
EXPERTS
The financial statements and related financial statement schedule
incorporated in this prospectus by reference from the Company's Annual Report on
Form 10-K have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their reports, which are incorporated herein by reference, and have
been so incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
GLOSSARY
Set forth below are definitions of some of the terms used in this
Prospectus.
"Business Day" means any day other than a Saturday or Sunday that (a) is
not a day on which banking institutions in New York, New York, are authorized or
obligated by law or executive order to be closed, and (b) with respect to LIBOR
Notes only, is a day on which dealings in deposits in U.S. dollars are
transacted in the London interbank market.
"Calculation Agent" means the entity we choose to perform the duties
related to interest rate calculation and resets for floating rate notes. The
applicable pricing supplement will identify the Calculation Agent.
"Calculation Date" means the date on which the Calculation Agent
calculates an interest rate for a floating rate note, which will be one of the
following:
"Prime Rate" - tenth day after the related Prime Rate Interest Determination
Date or, if such day is not a Business Day, the next Business Day.
"CD Rate" - tenth day after the related CD Rate Interest Determination Date
or, if such day is not a Business Day, the next Business Day.
"CMT Rate" - tenth day after the related CMT Rate Interest Determination
Date or, if such day is not a Business Day, the next Business Day.
"Commercial Paper Rate" - tenth day after the related Commercial Paper Rate
Interest Determination Date or, if such day is not a Business Day, the next
Business Day.
"LIBOR" - the LIBOR Interest Determination Date.
"Treasury Rate" - tenth day after the related Treasury Rate Interest
Determination Date or, if such day is not a Business Day, the next Day.
"Federal Funds Rate" - tenth day after the related Federal Funds Rate
Interest Determination Date or, if such day is not a Business Day, the next
Business Day.
"Composite Quotations" means the successor publication to the daily
statistical release entitled "Composite 3:30 P.M. Quotations for U.S.
Government Securities," published by The Federal Reserve Bank of New York.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page designated in the applicable pricing supplement and on the
face of such CMT Rate note (or any other page as may replace such page on that
service) for the purpose of displaying Treasury Constant Maturities as reported
in H.15(519).
"H.15 (519)" means the weekly statistical release entitled "Statistical
Release H.15 (519), Selected Interest Rates," or any successor publication,
published by the Board of Governors of the Federal Reserve System.
"Index Maturity" means, with respect to a floating rate note, the period
to maturity of the note on which the interest rate formula is based, as
indicated in the applicable pricing supplement.
"Interest Determination Date" means the date as of which the interest rate
for a floating rate note is to be calculated, to be effective as of the
following Interest Reset Date and calculated on the related Calculation Date
(except in the case of LIBOR which is calculated on the related LIBOR Interest
Determination Date). The Interest Determination Dates will be indicated in the
applicable pricing supplement and in the note.
"Interest Reset Date" means the date on which a floating rate note will
begin to bear interest at the variable interest rate determined on any Interest
Determination Date. The Interest Reset Dates will be indicated in the applicable
pricing supplement and in the note.
"Money Market Yield" is the yield (expressed as a percentage rounded
upwards, if necessary, to the next higher one-hundred thousandth of a percentage
point) calculated in accordance with the following formula:
Money Market Yield = D X 360 X 100 360 - (D X M)
where "D" refers to the per annum rate for commercial paper quoted on a bank
discount basis and expressed as a decimal; and "M" refers to the actual number
of days in the period for which interest is being calculated.
"Reuters Screen LIBO Page" means the display designated as page "LIBO" on
the Reuters Monitor Money Rates Service (or such other page as may replace the
LIBO page on that service for the purpose of displaying London interbank offered
rates of major banks).
"Reuters Screen USPRIME1 Page" means the display designated as page
USPRIME1 on the Reuters Monitor Money Rates Service (or such other page as may
replace the USPRIME1 page on that service for the purpose of displaying prime
rates or base lending rates of major U.S. banks).
"Spread" means the number of basis points specified in the applicable
pricing supplement as being applicable to the interest rate for a floating rate
note.
"Spread Multiplier" means the percentage specified in the applicable
pricing supplement as being applicable to the interest rate for a floating rate
note.
"Telerate Page 3750" means the display designated as page "3750" on the
Dow Jones Telerate Service (or such other page as may replace the 3750 page on
that service or such other service or services as may be nominated by the
British Bankers Association for the purpose of displaying London interbank
offered rates of major banks for U.S. dollar deposits).
