PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED NOVEMBER 29, 1993)
$125,000,000
PAINE WEBBER GROUP INC.
8 1/4% NOTES DUE 2002
------------
Interest on the Notes will accrue from May 1, 1995 and will be payable
semi-annually on May 1 and November 1, beginning November 1, 1995.
The Notes will mature on May 1, 2002 and are not redeemable prior to
maturity.
------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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Price Underwriting Proceeds
to Discounts and to
Public(1) Commissions Company(1)(2)
Per Note............. 100% .55% 99.45%
Total................ $125,000,000 $687,500 $124,312,500
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(1) Plus accrued interest from May 1, 1995 to date of delivery.
(2) Before deducting expenses payable by Paine Webber Group Inc. (the "Company")
estimated to be $90,000. See "Underwriting."
------------
The Notes are offered subject to receipt and acceptance by the Underwriter,
to prior sale and to the Underwriter's right to reject any order in whole or in
part and to withdraw, cancel or modify the offer without notice. It is expected
that delivery of the Notes will be made in New York, New York, on or about May
9, 1995.
This Prospectus Supplement and the accompanying Prospectus may be used by
the Company, PaineWebber Incorporated ("PaineWebber") or other affiliates of the
Company in connection with offers and sales related to secondary market
transactions in the Notes at negotiated prices related to prevailing market
prices at the time of sale or otherwise. PaineWebber or such other Company
affiliates may act as principal or agent in such transactions.
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PAINEWEBBER INCORPORATED
-------------------
The date of this Prospectus Supplement is May 2, 1995.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY OR OTHER SECURITIES OF PAINE WEBBER GROUP INC. AT LEVELS ABOVE THOSE
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE
EFFECTED IN ANY OVER-THE-COUNTER MARKET OR OTHERWISE AND, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
THE COMPANY
Paine Webber Group Inc. is a holding company which, together with its
operating subsidiaries, forms one of the largest full-service securities and
commodities firms in the industry. Founded in 1879, the Company employs
approximately 16,600 people in 338 offices worldwide after giving effect to the
recent acquisition of certain net assets and specific businesses of Kidder,
Peabody Group Inc., which was consummated in a series of transactions in late
1994 and early 1995.
The Company's principal line of business is to serve the investment and
capital needs of individual, corporate, institutional and public agency clients
through its broker-dealer subsidiary, PaineWebber, and other specialized
subsidiaries. The Company holds memberships in all major securities and
commodities exchanges in the United States, and makes a market in many
securities traded on Nasdaq National Market or on other over-the-counter
markets. Additionally, PaineWebber is a primary dealer in U.S. government
securities.
The Company is comprised of interrelated business groups, including the
Private Client Group, International, Institutional Fixed Income Sales and
Trading, Institutional Equity Sales and Trading, Municipal Securities Group,
Investment Banking, Asset Management, Real Estate, Research and Transaction
Services, which utilize common operational and administrative personnel and
facilities.
The Private Client Group consists primarily of a domestic branch office
system and consumer product groups through which PaineWebber and certain other
subsidiaries provide clients with financial services and products, including the
purchase and sale of securities, option contracts, commodity and financial
futures contracts, direct investments, selected insurance products, fixed income
instruments and mutual funds. The Company may act as a principal or agent in
providing these services. Fees charged vary according to the size and complexity
of a transaction, and the activity level of a client's account.
Through the International, Institutional Fixed Income Sales and Trading and
Institutional Equity Sales and Trading groups, the Company places securities
for, and executes trades on behalf of, institutional clients both domestically
and internationally. In addition, the Company takes positions in both listed and
unlisted equity and fixed income securities to facilitate client transactions or
for the Company's own account.
The Municipal Securities Group originates, underwrites, sells and trades
taxable and tax-exempt issues for municipal and public agency clients.
Through the Investment Banking group, the Company provides financial advice
to, and raises capital for, a broad range of domestic and international
corporate clients. Investment Banking manages and underwrites public and private
offerings, participates as an underwriter in syndicates of public offerings
managed by others, and provides advice in connection with mergers and
acquisitions, lease financings and debt restructurings.
The Asset Management group is comprised of Mitchell Hutchins Asset
Management Inc. ("MHAM"), Mitchell Hutchins Institutional Investors Inc.
("MHII") and Mitchell Hutchins Investment Advisory division ("MHIA"). MHAM and
MHII provide investment advisory and portfolio management services to pension
and endowment funds. MHAM also provides investment advisory and portfolio
management services to individuals and mutual funds. MHIA provides portfolio
management services to individuals, trusts and institutions.
The Real Estate group provides a full range of capital market services to
real estate clients, including underwriting of debt and equity securities,
principal lending activity, debt restructuring, property sales and bulk sales
services, and a broad range of other advisory services.
S-2
<PAGE>
The Research group provides investment advice to institutional and
individual investors, and other business areas of the Company, on approximately
890 companies in 62 industry sectors.
The Transaction Services group includes correspondent services, prime
brokerage and securities lending businesses, and specialist trading. Through
Correspondent Services Corporation, the Company provides execution and clearing
services to broker-dealers in the U.S. and overseas. The Company also acts as a
specialist responsible for executing transactions and maintaining an orderly
market in certain securities.
The Company's businesses operate in one of the nation's most highly
regulated industries. Violations of applicable regulations can result in the
revocation of broker-dealer licenses, the imposition of censures or fines, and
the suspension or expulsion of a firm, its officers or employees. The Company's
business is regulated by various agencies, including the Securities and Exchange
Commission, the New York Stock Exchange Inc., the Commodity Futures Trading
Commission and the National Association of Securities Dealers, Inc.
The Company's principal executive offices are located at 1285 Avenue of the
Americas, New York, New York 10019 (Telephone: (212) 713-2000).
For purposes of the foregoing description, all references to the "Company"
refer collectively to Paine Webber Group Inc. and its operating subsidiaries,
unless the context otherwise requires.
RECENT DEVELOPMENTS
On April 20, 1995, the Company announced operating results for the quarter
ended March 31, 1995. Those results and the results for the comparable quarter
of the prior year are as follows:
QUARTER ENDED MARCH 31,
---------------------------------
1995 1994
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(IN THOUSANDS EXCEPT PER SHARE
AMOUNTS)
(UNAUDITED)
Total Revenues............................. $1,233,910 $1,082,448
Net Revenues............................... 725,784 752,077
Earnings Before Income Taxes............... 52,785 92,747
Net Earnings............................... 34,310 55,648
Earnings Per Share:
Primary................................ $0.27 $0.71
Fully Diluted.......................... $0.27 $0.70
On April 19, 1995, in an unrelated development, Moody's Investors Service,
Inc. announced that it lowered its ratings on the Company's senior debt from A3
to Baa1 and on its subordinated debt from Baa1 to Baa2. Moody's confirmed the
Company's Prime-2 commercial paper rating.
USE OF PROCEEDS
The net proceeds, after payment of underwriting discounts and expenses, from
the sale of the Notes offered hereby, estimated to be approximately
$124,222,500, will be used by the Company for general corporate purposes.
S-3
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company at December 31, 1994 and as adjusted to give effect to (i) the sale of
the Notes offered hereby (ii) the issuance of the Company's 8 7/8% Notes due
March 15, 2005 on March 20, 1995 and (iii) the retirement at maturity of the
Company's 9 5/8% Notes due May 1, 1995.
<TABLE>
<CAPTION>
ACTUAL AS ADJUSTED
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(IN THOUSANDS EXCEPT SHARES)
<S> <C> <C>
Long-Term Debt*:
Medium-Term Subordinated Notes................................... $ 308,150 $ 308,150
Medium-Term Senior Notes......................................... 618,070 618,070
7% Notes Due March 1, 2000....................................... 199,594 199,594
6 1/4% Notes Due June 15, 1998................................... 199,542 199,542
6 1/2% Notes Due November 1, 2005................................ 199,333 199,333
7 5/8% Notes Due February 15, 2014............................... 178,725 178,725
7 3/4% Subordinated Notes Due September 1, 2002.................. 174,324 174,324
9 1/4% Notes Due December 15, 2001............................... 150,000 150,000
9 5/8% Notes Due May 1, 1995..................................... 150,000 --
8 7/8% Notes Due March 15, 2005.................................. -- 124,491
7 7/8% Notes Due February 15, 2003............................... 99,965 99,965
Convertible Debentures........................................... 18,627 18,627
Zero Coupon Bonds................................................ 19,085 19,085
8 1/4% Notes Due May 1, 2002 offered hereby...................... -- 125,000
Redeemable Preferred Stock......................................... 185,969 185,969
Stockholders' Equity:
Convertible Preferred Stock...................................... 100,000 100,000
Common Stock, $1 par value, 200,000,000 shares authorized;
issued 100,613,737 shares at December 31, 1994.................. 100,614 100,614
Additional Paid-in Capital....................................... 784,974 784,974
Retained Earnings................................................ 715,052 715,052
Common Stock held in Treasury, at cost: 1,297,081 shares at
December 31, 1994.............................................. (21,981) (21,981)
Unamortized Cost of Restricted Stock Awards...................... (51,803) (51,803)
Foreign Currency Translation Adjustment.......................... 3,643 3,643
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Total Capitalization............................................... $4,131,883 $ 4,231,374
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</TABLE>
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* In addition to the indebtedness shown in the foregoing table, the Company and
its consolidated subsidiaries had outstanding at December 31, 1994, short-term
bank loans totalling $972,959, commercial paper totalling $906,650 and
medium-term notes with maturities of less than one year totalling $10,000.
S-4
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the Company for the five-year period ended December 31, 1994.
FISCAL YEAR ENDED
DECEMBER 31,
- ----------------------------------------
1990 1991 1992 1993 1994
- ---- ---- ---- ---- ----
* 1.2 1.4 1.3 1.0
* For 1990, earnings were inadequate to cover fixed charges and would have had
to increase approximately $102,633,000 in order to cover the deficiency.
For purposes of computing the ratio of earnings to fixed charges, "earnings"
consist of income (loss) before taxes and fixed charges and "fixed charges"
consist of interest expense incurred on securities sold under agreements to
repurchase, short-term borrowings, long-term borrowings and that portion of
rental expense estimated to be representative of the interest factor.
DESCRIPTION OF NOTES
The Notes are entitled 8 1/4% Notes Due 2002, are unsecured, and will be
issued as a series of Senior Securities under an Indenture dated as of March 15,
1988, as amended by a supplemental indenture dated as of September 22, 1989, and
by a supplemental indenture dated as of March 22, 1991, between the Company and
Chemical Bank, as Trustee (the "Trustee"), which is more fully described in the
accompanying Prospectus (as so amended, the "Indenture"). The statements under
this caption are brief summaries of certain provisions of the Notes, do not
purport to be complete, and are qualified in their entirety by reference to the
Notes and the description of the general terms and provisions of the Securities
set forth under the caption "Description of Securities" in the accompanying
Prospectus.
GENERAL
The Notes will be limited to $125,000,000 aggregate principal amount, will
be issued in fully registered form only in denominations of $1,000 and any
integral multiple thereof, and will mature on May 1, 2002. The Notes are not
redeemable by the Company prior to maturity.
The principal and interest on the Notes will be payable and the Notes may be
transferred or exchanged at the principal corporate trust office of the Trustee
in the Borough of Manhattan, The City of New York, or at such other places as
may be designated pursuant to the Indenture, provided that payment of interest
may be made at the option of the Company by check mailed to registered holders.
The Notes may be transferred or exchanged, subject to the limitations provided
in the Indenture, without the payment of any service charge, other than any tax
or other governmental charge payable in connection therewith.
INTEREST
Interest on the Notes will accrue from May 1, 1995 at the rate of 8 1/4% per
annum and will be payable semi-annually on May 1 and November 1 of each year,
beginning November 1, 1995, to the persons in whose names the Notes are
registered at the close of business on the next preceding April 15 and October
15, and may be paid by checks mailed to such persons.
CERTAIN RESTRICTIVE PROVISIONS
The provisions set forth under the caption "Description of
Securities--Certain Restrictive Provisions" in the accompanying Prospectus will
apply to the Notes.
DEFEASANCE
The Notes will be subject to defeasance as set forth under the caption
"Description of Securities-- Defeasance" in the accompanying Prospectus.
S-5
<PAGE>
INFORMATION CONCERNING THE TRUSTEE
Chemical Bank, Trustee under the Indenture, is a depositary for funds and
performs other services for, and transacts other banking business with, the
Company in the normal course of business.
UNDERWRITING
Subject to the terms and conditions contained in the Underwriting Agreement,
the Company has agreed to sell to PaineWebber, the sole Underwriter, and the
Underwriter has agreed to purchase from the Company the entire $125,000,000
aggregate principal amount of the Notes. The Company has been advised by the
Underwriter that it proposes initially to offer the Notes to the public at the
public offering price set forth on the cover page of this Prospectus Supplement,
and to certain dealers at such price less a concession not in excess of 0.35% of
the principal amount of the Notes. The Underwriter may allow and such dealers
may reallow a concession not in excess of 0.25% of such principal amount. After
the initial public offering, the public offering price and such concessions may
be changed.
The Notes are a new issue of securities with no established trading market.
The Company does not intend to apply for listing of the Notes on a national
securities exchange, but has been advised by the Underwriter that it presently
intends to make a market in the Notes, as permitted by applicable laws and
regulations. The Underwriter is not obligated, however, to make a market in the
Notes and any such market making may be discontinued at any time at the sole
discretion of the Underwriter. No assurance can be given as to whether a trading
market for the Notes will develop or as to the liquidity of any such trading
market.
The Underwriter is a wholly owned subsidiary of the Company. The
underwriting of the Notes offered hereby will conform to the requirements set
forth in applicable sections of Schedule E of the By-laws of the National
Association of Securities Dealers, Inc.
The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, or
contribute to payments which the Underwriter may be required to make in respect
thereof.
EXPERTS
The consolidated financial statements of the Company for the year ended
December 31, 1994, incorporated by reference in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1994, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
The combined statements of assets acquired and liabilities assumed of the
Real Estate, Eurobond, Retail Brokerage and Asset Management businesses (the
"Purchased Businesses") of Kidder, Peabody Group Inc. as of December 26, 1994,
or prior date of transfer (the Real Estate and Eurobond businesses are combined
on their respective closing dates--December 9 and December 16, 1994) and the
combined statement of operations of the Purchased Businesses for the years ended
December 27, 1993, December 28, 1992 and December 30, 1991, in the Company's
Current Report on Form 8-K dated December 27, 1994, as amended by Form 8-K/A
dated February 24, 1995, have been audited by KPMG Peat Marwick LLP, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. Such combined statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
S-6
<PAGE>
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NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY PAINE WEBBER
GROUP INC. OR THE UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. THE DELIVERY
OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT
THE INFORMATION THEY CONTAIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THEIR
RESPECTIVE DATES.
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TABLE OF CONTENTS
PAGE
----
Prospectus Supplement
The Company......................... S-2
Recent Developments................. S-3
Use of Proceeds..................... S-3
Capitalization...................... S-4
Ratio of Earnings to Fixed
Charges........................... S-5
Description of Notes................ S-5
Underwriting........................ S-6
Experts............................. S-6
Prospectus
Available Information............... 2
Documents Incorporated
by Reference...................... 2
The Company......................... 3
Use of Proceeds..................... 4
Ratio of Earnings to Fixed
Charges........................... 4
Description of Securities........... 4
ERISA Matters....................... 16
Plan of Distribution................ 16
Limitations on Issuance of Bearer
Securities........................ 17
Legal Matters....................... 18
Experts............................. 18
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[INSERT LOGO]
$125,000,000
PAINE WEBBER GROUP INC.
8 1/4% NOTES DUE 2002
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PROSPECTUS SUPPLEMENT
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PAINEWEBBER INCORPORATED
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May 2, 1995
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