614/223-1630
Securities and Exchange Commission
450 Fifth Street, N.W.
ATTN: Filing Desk, Stop 1-4
Washington, D.C. 20549-1004
August 26, 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 August 25, 1999, to be used
in connection with the anticipated public offering by the Company of
$75,000,000 aggregate principal amount of 7% Senior Notes, Series C.
Very truly yours,
/s/ David C. House
David C. House
DCH/mms
PROSPECTUS SUPPLEMENT
(To prospectus dated April 20, 1999)
$75,000,000
OHIO POWER COMPANY
7% Senior Notes, Series C, due 2004
Interest on the Senior Notes is payable semi-annually on January 1 and
July 1 of each year, beginning January 1, 2000. 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 20 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 $325,135,000 of first
mortgage bonds as of August 15, 1999. We will issue the Senior Notes only in
registered form in multiples of $1,000.
Per Note Total
Public offering price (1) 99.578% $74,683,500
Underwriting discount .6% $450,000
Proceeds, before expenses,
to Ohio Power Company 98.978% $74,233,500
(1) Plus accrued interest from September 1, 1999, if settlement occurs after
that date
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.
The Senior Notes will be ready for delivery in book-entry form only
through The Depository Trust Company on or about September 1, 1999.
Merrill Lynch & Co. McDonald Investments Inc.
The date of this prospectus supplement is August 25, 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 $75,000,000.
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 7% per annum from September
1, 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 January 1,
2000. 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 20 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 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
Merrill Lynch, Pierce, Fenner
& Smith Incorporated $37,500,000
McDonald Investments Inc. 37,500,000
$75,000,000
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 $140,000.
The Underwriters propose to offer the Senior Notes to the
public at the initial public offering price set forth on the
cover page of this prospectus supplement and to certain 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 discount not in excess of .25% per Senior Note to certain other
dealers. After the initial public offering, the public offering
price, concession and discount may be changed.
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).
