<PAGE> 1
Filed Pursuant to Rule 424(b)(2)
Registration No. 333-62861
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED OCTOBER 15, 1998)
$1,500,000,000
[ASSOCIATES LOGO]
5.80% SENIOR NOTES DUE APRIL 20, 2004
---------------------
The Company will pay interest on the 5.80% Senior Notes due April 20, 2004
(the "Notes") semiannually on April 20 and October 20 of each year, starting
October 20, 1999, and at maturity. The Company may not redeem the Notes prior to
maturity unless certain events occur involving United States taxation.
Application has been made to list the Notes on the Luxembourg Stock
Exchange.
Neither the Securities and Exchange Commission nor any State Securities
Commission has approved or disapproved these securities or determined if this
Prospectus Supplement or Prospectus to which it relates is truthful and
complete. Any representation to the contrary is a criminal offense.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT COMPANY(1)(2)
<S> <C> <C> <C>
Per Note.......................... 99.953% 0.350% 99.603%
Total............................. $1,499,295,000 $5,250,000 $1,494,045,000
</TABLE>
- ---------------------
(1) Plus accrued interest, if any, from April 20, 1999.
(2) Before deduction of expenses payable by the Company estimated at $900,000.
---------------------
Delivery of the Notes in book-entry form only will be made through The
Depository Trust Company on or about April 20, 1999, against payment in
immediately available funds. The Notes have been approved for clearance through
the Cedelbank and Euroclear systems.
---------------------
Joint Book Managers:
BEAR, STEARNS & CO. INC. GOLDMAN, SACHS & CO.
---------------------
<TABLE>
<S> <C> <C>
ABN AMRO DEUTSCHE BANK NATIONSBANC MONTGOMERY SECURITIES LLC
BNP DRESDNER KLEINWORT BENSON SALOMON SMITH BARNEY
CHASE SECURITIES INC. HSBC MARKETS SOCIETE GENERALE
COMMERZBANK AKTIENGESELLSCHAFT J.P. MORGAN & CO. WARBURG DILLON READ LLC
CREDIT SUISSE FIRST BOSTON MERRILL LYNCH & CO. WESTDEUTSCHE LANDESBANK GIRONZENTRALE
</TABLE>
---------------------
The date of this Prospectus Supplement is April 14, 1999.
<PAGE> 2
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY ONLY BE ACCURATE
ON THE DATE OF THIS DOCUMENT.
THE LUXEMBOURG STOCK EXCHANGE TAKES NO RESPONSIBILITY FOR THE CONTENTS OF
THIS DOCUMENT, MAKES NO REPRESENTATION AS TO ITS ACCURACY OR COMPLETENESS AND
EXPRESSLY DISCLAIMS ANY LIABILITY WHATSOEVER FOR ANY LOSS ARISING FROM OR IN
RELIANCE UPON THE WHOLE OR ANY PART OF THE CONTENTS OF THIS DOCUMENT.
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE LUXEMBOURG STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
This Prospectus Supplement and the accompanying Prospectus include
particulars given in compliance with the rules governing the listing of
securities on the Luxembourg Stock Exchange for the purpose of giving
information with regard to the Company. The Company accepts full responsibility
for the accuracy of the information contained or incorporated by reference in
this Prospectus Supplement and the accompanying Prospectus and confirms, having
made all reasonable inquiries, that to the best of its knowledge and belief
there are no other facts the omission of which would make any statement
contained or incorporated by reference herein misleading in any material
respect.
In this Prospectus Supplement and accompanying Prospectus, unless otherwise
specified or the context otherwise requires, references to "dollars", "$" and
"U.S.$" are to United States dollars.
DOCUMENTS INCORPORATED BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 31,
1998 (the "1998 10-K Report") and its Current Reports on Form 8-K filed as of
January 21, 1999, February 5, 1999, February 8, 1999, February 12, 1999, March
17, 1999, March 18, 1999 and April 13, 1999 are incorporated in this Prospectus
Supplement by reference. All documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date
of this Prospectus Supplement and prior to the termination of the offering of
the Notes shall be incorporated by reference into this Prospectus Supplement and
shall be deemed a part of this Prospectus Supplement from the date of the filing
of such documents.
The financial statements in this Prospectus Supplement and accompanying
Prospectus, incorporated by reference to the 1998 10-K Report, have been
incorporated herein in reliance on the report of PricewaterhouseCoopers LLP
("PricewaterhouseCoopers"), independent accountants, given on the authority of
that firm as experts in accounting and auditing and have been audited by
PricewaterhouseCoopers to the extent indicated in their report.
PricewaterhouseCoopers have given and not withdrawn their written consent
to the issue of this Prospectus Supplement and the accompanying Prospectus with
the incorporation by reference herein of their report in the 1998 10-K Report on
the audited financial statements of the Company for the financial years ended
December 31, 1998.
This Prospectus Supplement and accompanying Prospectus, together with the
documents incorporated by reference herein, will be available free of charge at
the main office of Banque Internationale a Luxembourg S.A., 69 route d'Esch
L-2953, Luxembourg.
S-2
<PAGE> 3
THE COMPANY
GENERAL
Associates Corporation of North America, a Delaware corporation (the
"Company"), is a wholly-owned subsidiary and the principal operating unit of
Associates First Capital Corporation ("AFCC").
The Company is a leading, diversified finance organization providing
finance, leasing and related services to individual consumers and businesses in
the United States and Puerto Rico. At December 31, 1998, the Company had
aggregate net finance receivables of $46.0 billion, total assets of $56.6
billion, and stockholders' equity of $6.8 billion. The Company is one of the
largest independent finance companies in the United States. The Company's
finance receivables are geographically dispersed across the United States and
Puerto Rico. At December 31, 1998, 11% of such receivables were in California,
9% in Texas, 7% in Florida, and no other individual state had more than 5%.
Although the Company's finance operations are confined to the United States
and Puerto Rico, certain subsidiaries of AFCC which are also affiliates of the
Company operate outside the United States, including in Japan, Canada, the
United Kingdom, Mexico, Costa Rica and Taiwan. As a result of AFCC's acquisition
of Avco Financial Services, Inc. ("Avco") described below, AFCC also has
operations in Australia, Hong Kong, France, Sweden, Spain, New Zealand, Ireland
and India. The Company provides certain management and other services relating
to these foreign operations. The results of such foreign operations are not
included in the financial or statistical information of the Company presented
herein.
At December 31, 1998, the Company had 1,485 branch offices geographically
dispersed throughout the United States and Puerto Rico and employed
approximately 18,300 persons.
RECENT DEVELOPMENTS
On January 6, 1999, AFCC purchased the assets and assumed the liabilities
of Avco. AFCC subsequently transferred substantially all of the domestic and
Puerto Rico consumer finance operations of Avco to the Company, which included
approximately $4 billion in finance receivables. Prior to the acquisition, Avco
had the fourth largest U.S. consumer finance branch network, with over 2 million
customers and over 4,000 dealer and merchant agreements. Avco's domestic and
Puerto Rico consumer finance product offerings include home equity lending,
retail sales finance and consumer loans. On March 31, 1999, AFCC sold certain of
the domestic consumer branch locations and related receivables.
PRODUCT INFORMATION
The Company offers a variety of consumer financing products and services,
including home equity and personal loans, retail sales finance and private label
credit cards, and purchases participations in private label credit card
receivables originated by an affiliate. The Company also offers retail and
wholesale financing, and leasing for heavy-duty and medium-duty trucks and truck
trailers, construction, material handling and other industrial and
communications equipment, auto fleet leasing and other products and services to
commercial customers. As part of these finance activities, the Company makes
available to its customers credit-related and other insurance products. In
addition, prior to December 31, 1997, the Company participated in AFCC's
manufactured housing finance activities. On December 31, 1997 this participation
was terminated and substantially all manufactured housing related assets and
liabilities were transferred, at book value, to AFCC.
S-3
<PAGE> 4
The following table shows net finance receivables outstanding attributable
to the various types of financing products (in millions):
NET FINANCE RECEIVABLES OUTSTANDING
<TABLE>
<CAPTION>
AT DECEMBER 31
-------------------------------------------------------------
1998 1997 1996 1995 1994
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Home Equity Lending(1)...................... $20,435.8 $17,437.3 $15,435.9 $13,190.4 $11,455.2
Truck and Truck Trailer..................... 10,038.0 9,011.1 8,077.6 7,415.7 6,553.0
Personal Lending/Retail Sales Finance....... 6,566.2 6,920.6 5,786.5 4,752.7 4,188.9
Equipment(2)................................ 4,882.1 4,899.8 4,261.4 3,729.1 2,909.3
Auto Fleet Leasing.......................... 1,471.4 1,418.9 1,087.4 327.1 299.4
Credit Card(3).............................. 1,398.0 7,333.6 5,517.1 4,616.8 3,834.6
Manufactured Housing(4)..................... 20.7 24.1 1,257.6 2,049.3 1,681.1
Warehouse Lending and Other(5).............. 1,226.3 809.1 355.4 287.2 54.2
--------- --------- --------- --------- ---------
Total.............................. $46,038.5 $47,854.5 $41,778.9 $36,368.3 $30,975.7
========= ========= ========= ========= =========
</TABLE>
- ---------------
(1) In March 1998, the Company securitized and sold approximately $235 million
of home equity lending receivables.
(2) In March 1998, approximately $650 million of equipment finance receivables
were sold, at book value, to AFCC.
(3) In April 1998, the Company sold, at book value, approximately $5.2 billion
of the Company's participation interest in the U.S. bankcard credit card
receivables of AFCC in connection with a securitization transaction by AFCC.
(4) During 1997 and 1996, AFCC or the Company securitized and sold approximately
$800 million and $1.3 billion, respectively, of manufactured housing retail
finance receivables which reduced the dollar amount of participation owned
by the Company in such receivables. In 1996, the servicing rights to such
securitization were transferred to Associates Housing Finance Services, Inc.
("AHFS"), an affiliate of the Company and a subsidiary of AFCC. During 1997,
the Company sold, at net book value, substantially all of its outstanding
manufactured housing finance receivables to AHFS. Immediately subsequent to
the sale, the Company repurchased a participation interest, at net book
value, in substantially all of such receivables. Such participation was
included in the net finance receivables of the Company until December 31,
1997 when the participation agreement was terminated. As of December 31,
1998 and 1997, the receivables of the manufactured housing business were
included in the consolidated accounts of AFCC and $20.7 million and $24.1
million, respectively, of manufactured housing receivables (which were not
included in the AFCC participation agreement) were included in the accounts
of the Company.
(5) Includes warehouse lending, government guaranteed lending and municipal
finance (prior to 1997, municipal finance was included in truck and truck
trailer and equipment net finance receivables).
RELATED INSURANCE
The Company, through certain of its subsidiaries and other third party
insurance providers, makes available various credit-related and non-credit
insurance products to its finance customers. Insurance products offered to the
Company's consumer finance customers include credit life, credit accident and
health, accidental death and dismemberment, involuntary unemployment and
personal property insurance. Insurance products offered to the Company's
commercial finance customers include commercial auto and dealers' open lot
physical damage, credit life and motor truck cargo insurance. In addition to
insurance underwriting, the Company also receives compensation for certain
insurance programs underwritten by other companies. The Company underwrites
liability insurance in certain states for its commercial auto physical damage
customers.
BOARD OF DIRECTORS
Set forth below are the names, the principal occupations and directorships
in non-affiliated companies (if any) of the current members of the Board of
Directors of the Company, each of whose business address in his capacity as a
Director of the Company is at the Company's principal executive office.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
AND PRINCIPAL
NAME EXTERNAL DIRECTORSHIPS
- ---- ----------------------
<S> <C>
Keith W. Hughes...................... Chairman of the Board, Chief Executive Officer and Director
of the Company; Director of VISA USA, Inc. and VISA
International Service Association
Roy A. Guthrie....................... Senior Executive Vice President, Chief Financial Officer and
Director of the Company
</TABLE>
S-4
<PAGE> 5
SUMMARY FINANCIAL INFORMATION
The following summary of certain financial information of the Company and
its consolidated subsidiaries has been derived principally from information
contained in the Company's 1998 10-K Report, available as described under
"General Information" in this Prospectus Supplement and under "Available
Information" in the accompanying Prospectus, and is qualified in its entirety by
the detailed information and financial statements set forth therein.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31
----------------------------------------------------
1994 1995 1996 1997 1998
-------- -------- -------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
REVENUE AND EARNINGS
Revenue --
Finance charges..................................... $3,866.7 $4,805.3 $5,580.3 $6,428.5 $5,841.5
Insurance premiums.................................. 293.5 325.1 354.8 370.1 383.9
Investment and other income......................... 227.7 254.0 286.3 352.5 873.9
-------- -------- -------- -------- --------
4,387.9 5,384.4 6,221.4 7,151.1 7,099.3
Expenses --
Interest expense.................................... 1,509.7 1,979.8 2,206.7 2,543.9 2,842.2
Operating expenses.................................. 1,191.6 1,417.8 1,603.3 1,842.5 1,660.7
Provision for losses on finance receivables......... 569.9 729.7 963.4 1,195.6 949.4
Insurance benefits paid or provided................. 144.1 135.7 142.9 142.1 144.0
-------- -------- -------- -------- --------
3,415.3 4,263.0 4,916.3 5,724.1 5,596.3
-------- -------- -------- -------- --------
Earnings Before Provision for Income Taxes............ 972.6 1,121.4 1,305.1 1,427.0 1,503.0
Provision for Income Taxes............................ 369.1 413.3 482.0 524.5 551.0
-------- -------- -------- -------- --------
Net Earnings.......................................... $ 603.5 $ 708.1 $ 823.1 $ 902.5 952.0
======== ======== ======== ======== ========
Ratio of Earnings to Fixed Charges(a)................. 1.64 1.56 1.59 1.56 1.53
--- --- --- --- ---
--- --- --- --- ---
</TABLE>
- ---------------
(a) For purposes of computing the Ratio of Earnings to Fixed Charges, "earnings"
represent earnings before provision for income taxes, plus fixed charges.
"Fixed charges" represent interest expense and a portion of rentals
representative of an implicit interest factor for such rentals.
S-5
<PAGE> 6
SUMMARY FINANCIAL INFORMATION -- (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31 DECEMBER 31
1997 1998
----------- -----------
(IN MILLIONS)
<S> <C> <C>
BALANCE SHEET DATA
Assets:
Cash and Cash Equivalents................................. $ 294.8 $ 2,619.7
Investments in Debt and Equity Securities
Bonds and Notes........................................ 1,022.5 1,845.1
Stocks................................................. 131.0 20.8
--------- ---------
Total Investments in Debt and Equity Securities... 1,153.5 1,865.9
Finance Receivables, net of unearned finance income....... 47,854.5 46,038.5
Allowance for Losses on Finance Receivables............... (1,661.9) (1,378.9)
Insurance Policy and Claims Reserves...................... (762.4) (763.8)
Other Assets.............................................. 3,652.6 8,195.9
--------- ---------
Total Assets...................................... $50,531.1 $56,577.3
========= =========
Liabilities and Stockholders' Equity:
Notes Payable, unsecured short-term
Commercial paper....................................... $17,184.5 $15,357.2
Bank loans............................................. 1,202.1 1,070.7
Long-Term Debt, unsecured due within one year
Senior................................................. 4,190.5 6,547.9
Subordinated........................................... -- --
Capital................................................ 0.1 0.1
Accounts Payable and Accruals............................. 960.4 1,187.7
Long-Term Debt, unsecured
Senior................................................. 20,519.5 25,232.3
Subordinated........................................... 425.0 425.0
Capital................................................ 0.3 0.2
--------- ---------
Total Long-Term Debt.............................. 20,944.8 25,657.5
Stockholders' Equity...................................... 6,048.7 6,756.2
--------- ---------
Total Liabilities and Stockholders' Equity........ $50,531.1 $56,577.3
========= =========
</TABLE>
---------------------
On April 13, 1999, the Company reported unaudited results for the three
months ended March 31, 1999. Such results, compared to the unaudited results of
operations for the similar period of the prior fiscal year, were as follows:
Revenue -- $1.8 billion (1999), $1.9 billion (1998); Earnings Before Provision
for Income Taxes -- $375.5 million (1999), $366.9 million (1998); and Net
Earnings -- $236.7 million (1999), $235.5 million (1998).
S-6
<PAGE> 7
CAPITALIZATION
The following table sets forth the audited consolidated capitalization of
the Company and its subsidiaries at December 31, 1998, derived without material
adjustment from the audited financial statements of the Company included in its
1998 10-K Report, and is qualified in its entirety by the detailed information
set forth therein:
<TABLE>
<CAPTION>
AMOUNT OUTSTANDING
----------------------------
DECEMBER 31 AS
1998 ADJUSTED(1)
----------- --------------
(IN MILLIONS)
<S> <C> <C>
DEBT:
Commercial Paper and other borrowings(2)................. $22,975.9 $21,475.9
Senior and Senior Subordinated debt (with maturities over
one year)............................................. 25,657.5 27,157.5
--------- ---------
Total Debt....................................... $48,633.4 $48,633.4
STOCKHOLDERS' EQUITY:
Class B Common Stock, $100 Par Value, 2,000,000 shares
authorized, 1,000,000 shares issued and outstanding... 100.0 100.0
Common Stock, no par value, 5,000 shares authorized, 260
shares issued and outstanding, at stated value........ 47.0 47.0
Paid-in Capital.......................................... 1,667.8 1,667.8
Retained Earnings........................................ 4,951.5 4,951.5
Accumulated Other Comprehensive Income................... (10.1) (10.1)
--------- ---------
Total Stockholders' Equity....................... 6,756.2 6,756.2
--------- ---------
TOTAL CAPITALIZATION....................................... $55,389.6 $55,389.6
========= =========
</TABLE>
- ---------------
(l) The information in the column "Amount Outstanding -- As Adjusted" is based
upon the amounts outstanding at December 31, 1998, as adjusted to give
effect to the proposed issuance of the Notes offered hereby and the
application of the proceeds from the sale thereof (without deducting
underwriting discount and expenses) to the reduction of Commercial Paper and
other borrowings. See "Application of Proceeds" below. There has been no
material change in the consolidated capitalization of the Company considered
as a whole since December 31, 1998. Accordingly, no adjustments have been
made for debt issuances and retirements in the ordinary course of the
Company's financing activities subsequent to December 31, 1998.
(2) Includes $6.5 billion of long-term debt due within one year. The Company
maintains credit facilities in support of its short-term borrowings. At
December 31, 1998, the Company's short-term bank lines, revolving credit
facilities and receivables purchase facilities with banks aggregated $18.1
billion (none of which was utilized at such date).
S-7
<PAGE> 8
APPLICATION OF PROCEEDS
The net proceeds from the sale of the Notes will be applied to the
reduction of commercial paper and other borrowings due within one year.
DESCRIPTION OF THE NOTES
The following description of the specific terms of the Notes (referred to
in the attached Prospectus as "Debt Securities") supplements the more general
description of the Debt Securities contained in the Prospectus. If there are any
inconsistencies between the information in this section and the information in
the Prospectus, the information in this section controls. Investors should read
this section together with the section called "Description of Debt Securities"
in the Prospectus. Any capitalized terms that are defined in the Prospectus have
the same meanings in this section unless a different definition appears in this
section. The Company qualifies the description of the Notes by reference to the
Indenture.
GENERAL
The Notes:
- will be senior debt of the Company;
- will be issued as a separate series under the Indenture between the
Company and the Trustee, The Chase Manhattan Bank ("Chase"), dated as of
November 1, 1995;
- will be limited in aggregate principal amount to $1,500,000,000 (subject
to increase by any further issues designated as part of the same series);
- will mature and become due and payable, at 100% of their principal amount
together with any accrued and unpaid interest, on April 20, 2004;
- will not be redeemable by the Company prior to maturity unless certain
events occur involving United States taxation (see "-- Redemption for Tax
Reasons"); and
- will not be subject to any sinking fund.
INTEREST
The Notes will bear interest at the rate of 5.80% per annum. Interest will
accrue from April 20, 1999 or from the most recent Interest Payment Date to
which interest has been paid or provided for. The Company will make interest
payments semiannually on April 20 and October 20 of each year, starting October
20, 1999 (each an "Interest Payment Date") and at maturity. The Company will
make interest payments to the person in whose name the Notes are registered at
the close of business on the April 5 and October 5 before the next Interest
Payment Date. If the Interest Payment Date is not a Business Day at the relevant
place of payment, payment of interest will be made on the next day that is a
Business Day at such place of payment. "Business Day" means any day that is not
a Saturday or Sunday, and that is not a day on which banking institutions are
generally authorized or obligated by law to close in The City of New York and,
for any place of payment outside of The City of New York, in such place of
payment.
Interest on the Notes will be computed on the basis of a 360-day year of
twelve 30-day months.
PAYMENT OF ADDITIONAL AMOUNTS
The Company will pay, subject to certain exceptions set forth below and to
the Company's right of redemption for tax reasons, to a holder of a Note, such
additional amounts as may be necessary in order that every net payment of the
principal of and interest on any Note, after deduction or withholding for or on
account of any present or future tax, assessment or other governmental charge
imposed upon such holder, or by reason of the making of such payments, by the
United States or any taxing authority thereof or therein, will not be less than
the amount provided for in such Note to be then due and payable ("Additional
Amounts").
S-8
<PAGE> 9
The Company shall not be required, however, to make any payment for any
Additional Amounts for or on account of:
(i) any tax, assessment or other governmental charge which would not
have been imposed but for (A) the existence of any present or former
connection between such holder (or between a fiduciary, settlor,
beneficiary of, or a person holding a power over such holder if such holder
is an estate or trust, or member or shareholder of, such holder, if such
holder is a partnership or corporation) and the United States or any
political subdivision or taxing authority thereof or therein, including,
without limitation, such holder (or such fiduciary, settlor, beneficiary,
person holding a power over, member or shareholder) being or having been a
citizen or resident or treated as a resident thereof or being or having
been engaged in trade or business or present therein, or having or having
had a permanent establishment therein or (B) a bank receiving interest
described in Section 881(c)(3)(A) of the United States Internal Revenue
Code of 1986, as amended (the "Code") or (C) such holder's present or
future status as a domestic or foreign personal holding company or
controlled foreign corporation or passive foreign investment company or
private foundation or tax exempt organization, with respect to the United
States of America or a corporation which accumulates earnings to avoid
United States federal income tax;
(ii) any estate, inheritance, gift, sales, use, transfer, excise,
personal property or similar tax, assessment or other governmental charge;
(iii) any tax, assessment or other governmental charge that is imposed
or withheld solely by reason of a change in law, regulation or
administrative or judicial interpretation that becomes effective more than
30 days after the payment becomes due or is duly provided for, whichever
occurs later;
(iv) any tax, assessment or other governmental charge which is (A)
payable otherwise than by withholding from payment of principal of, or
interest on, such Note or (B) required to be withheld by any paying agent
from any such payment, if such payment may be made without withholding by
any other paying agent outside the United States;
(v) any tax, assessment or other governmental charge which would not
have been imposed but for the failure to comply with certification,
information, documentation or other reporting requirements concerning the
nationality, residence, identity or connections of the holder or beneficial
owner of such Note, if such compliance is required by statute or by
regulation of the United States or any political subdivision or taxing
authority thereof or therein or by an applicable tax treaty to which the
United States is a party as a precondition to relief or exemption from such
tax, assessment or other governmental charge;
(vi) any tax, assessment or other governmental charge imposed on
interest received by a holder or beneficial owner of a Note that is a 10%
shareholder (as defined in Section 871(h)(3)(B) of the Code, and the
regulations that may be promulgated thereunder) of the Company or is a
controlled foreign corporation related to the Company within the meaning of
Section 864(d)(4) of the Code; or
(vii) any combination of items (i) through (vi);
nor shall any Additional Amounts be paid to any holder who is a fiduciary or
partnership or other than the sole beneficial owner of such Note to the extent
that a beneficiary or settlor with respect to such fiduciary, or a member of
such partnership or a beneficial owner thereof would not have been entitled to
the payment of such Additional Amounts had such beneficiary, settlor, member or
beneficial owner been the holder of the Note.
REDEMPTION FOR TAX REASONS
Subject to the conditions described below, the Notes may be redeemed, as a
whole but not in part, at the option of the Company upon not more than 60 days
nor less than 30 days prior notice to the holders thereof at a redemption price
equal to 100% of their principal amount, together with interest accrued, if any,
to but excluding the date fixed for redemption, if on the next succeeding
Interest Payment Date the Company determines that, as a result of any change in
or amendment to the laws or treaties, or any regulations or rulings promulgated
thereunder, of the United States affecting taxation, or any proposed change in
such laws, treaties,
S-9
<PAGE> 10
regulations or rulings, or any change in the official application, enforcement
or interpretation of such laws, treaties, regulations or rulings (including a
holding by a court of competent jurisdiction in the United States affecting
taxation) which change or amendment is made effective or is proposed on or after
the original issue date of the Notes, or any other action predicated on such
amendment or change taken by any taxing authority or court of competent
jurisdiction in the United States or the official proposal of such action,
whether or not such action or proposal was taken or made with respect to the
Company, the Company has or will become obligated to pay Additional Amounts on
any Note and such obligation cannot be avoided by the Company by any reasonable
measures available to it which (in the good faith opinion of the Company) will
not have a material adverse impact on the conduct of its business. Prior to the
giving of any such notice of redemption, the Company shall deliver to the
Trustee (i) a certificate stating that it is entitled to effect such redemption
and setting forth a supportive statement of facts and (ii) a written opinion of
independent legal counsel of recognized standing to such effect based upon such
statement of facts. In addition, no such notice of redemption shall be given
earlier than 90 days prior to the earliest date on which the Company would be
obligated to pay Additional Amounts were a payment in respect of the Notes then
due.
BOOK-ENTRY NOTES -- REGISTRATION, TRANSFER AND PAYMENT OF INTEREST AND PRINCIPAL
The Depositary, Cedelbank and Euroclear
Upon issuance, the Notes will be represented by one or more fully
registered global notes (the "Global Notes"). Each such Global Note will be
deposited with, or on behalf of, The Depository Trust Company or any successor
thereto (the "Depositary"), as Depositary, and registered in the name of Cede &
Co. (the Depositary's partnership nominee). Unless and until it is exchanged in
whole or in part for Notes in definitive form, no Global Note may be transferred
except as a whole by the Depositary to a nominee of such Depositary. Investors
may elect to hold interests in the Global Notes through either the Depositary
(in the United States) or Cedelbank, societe anonyme ("Cedelbank"), and Morgan
Guaranty Trust Company of New York, Brussels Office, as operator of the
Euroclear System ("Euroclear"), if they are participants in such systems, or
indirectly through organizations which are participants in such systems.
Cedelbank and Euroclear will hold interests on behalf of their participants
through customers' securities accounts in Cedelbank's and Euroclear's names on
the books of their respective depositaries, which in turn will hold such
interests in customers' securities accounts in the depositaries' names on the
books of the Depositary. Citibank, N.A. will act as depositary for Cedelbank and
The Chase Manhattan Bank will act as depositary for Euroclear (in such
capacities, the "U.S. Depositaries").
So long as the Depositary, or its nominee, is a registered owner of a
Global Note, the Depositary or its nominee, as the case may be, will be
considered the sole owner or Holder of the Notes represented by such Global Note
for all purposes under the Indenture. Except as provided below, the actual
owners of the Notes represented by a Global Note (the "Beneficial Owners") will
not be entitled to have the Notes represented by such Global Note registered in
their names, will not receive or be entitled to receive physical delivery of the
Notes in definitive form and will not be considered the owners or Holders
thereof under the Indenture, including for purposes of receiving any reports
delivered by the Company or the Trustee pursuant to the Indenture. Accordingly,
each person owning a beneficial interest in a Global Note must rely on the
procedures of the Depositary and, if such person is not a participant of the
Depositary (a "Participant"), on the procedures of the Participant through which
such person owns its interest, to exercise any rights of a Holder under the
Indenture. The Company understands that under existing industry practices, in
the event that the Company requests any action of Holders or that an owner of a
beneficial interest which a Holder is entitled to give or take under the
Indenture, the Depositary would authorize the Participants holding the relevant
beneficial interests to give or take such action, and such Participants would
authorize Beneficial Owners owning through such Participants to give or take
such action or would otherwise act upon the instructions of Beneficial Owners.
Conveyance of notices and other communications by the Depositary to
Participants, by Participants to Indirect Participants, as defined below, and by
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
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<PAGE> 11
The Depositary may discontinue providing its services as securities
depositary with respect to the Notes at any time by giving reasonable notice to
the Company or the Trustee. Under such circumstances, if a successor depositary
is not appointed by the Company within 90 days, the Company will issue
individual definitive Notes in exchange for all the Global Notes representing
such Notes. In addition, the Company may at any time and in its sole discretion
determine not to have the Notes represented by Global Notes and, in such event,
will issue individual definitive Notes in exchange for all the Global Notes
representing the Notes. Individual definitive Notes so issued will be issued in
denominations of $1,000 and any larger amount that is an integral of $1,000 and
registered in such names as the Depositary shall direct.
The following is based on information furnished by the Depositary:
The Depositary will act as securities depositary for the Notes. The Notes
will be issued as fully registered notes registered in the name of Cede & Co.
(the Depositary's partnership nominee). One or more fully registered Global
Notes will be issued for each series of Notes in the aggregate principal amount
of such series, and will be deposited with the Depositary.
The Depositary is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended. The Depositary holds securities that its
Participants deposit with the Depositary. The Depositary also facilitates the
settlement among Participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct Participants of the Depositary
("Direct Participants") include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. The Depositary
is owned by a number of its Direct Participants and by The New York Stock
Exchange, Inc., the American Stock Exchange, Inc., and the National Association
of Securities Dealers, Inc. Access to the Depositary's system is also available
to others such as securities brokers and dealers, banks and trust companies that
clear through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants"). The rules applicable to
the Depositary and its Participants are on file with the Securities and Exchange
Commission.
Purchases of Notes under the Depositary's system must be made by or through
Direct Participants, which will receive a credit for the Notes on the
Depositary's records. The ownership interest of each Beneficial Owner is in turn
to be recorded on the records of Direct Participants and Indirect Participants.
Beneficial Owners will not receive written confirmation from the Depositary of
their purchase, but Beneficial Owners are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct Participants or Indirect
Participants through which such Beneficial Owner entered into the transaction.
Transfers of ownership interests in the Notes are to be accomplished by entries
made on the books of Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interests in Notes, except as provided above.
To facilitate subsequent transfers, all Notes deposited with the Depositary
are registered in the name of the Depositary's partnership nominee, Cede & Co.
The deposit of Notes with the Depositary and their registration in the name of
Cede & Co. effect no change in beneficial ownership. The Depositary has no
knowledge of the actual Beneficial Owners of the Notes; the Depositary's records
reflect only the identity of the Direct Participants to whose accounts such
Notes are credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by the Depositary to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
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<PAGE> 12
Neither the Depositary nor Cede & Co. will consent or vote with respect to
the Notes. Under its usual procedures, the Depositary mails an Omnibus Proxy to
the Company as soon as possible after the applicable record date. The Omnibus
Proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the Notes are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
Principal, Additional Amounts, if any, and/or interest payments on the
Notes will be made in immediately available funds to the Depositary. The
Depositary's practice is to credit Direct Participants' accounts on the
applicable payment date in accordance with their respective holdings shown on
the Depositary's records unless the Depositary has reason to believe that it
will not receive payment on such date. Payments by Participants to Beneficial
Owners will be governed by standing instructions and customary practices, as is
the case with securities held for the accounts of customers in bearer form or
registered in "street name", and will be the responsibility of such Participant
and not of the Depositary, the Trustee or the Company, subject to any statutory
or regulatory requirements as may be in effect from time to time. Payment of
principal, Additional Amounts, if any, and/or interest to the Depositary is the
responsibility of the Company or the Trustee, disbursement of such payments to
Direct Participants shall be the responsibility of the Depositary, and
disbursement of such payments to the Beneficial Owners shall be the
responsibility of Direct Participants and Indirect Participants.
The Depositary's 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." The Depositary has informed Participants and
other members of the financial community 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, the Depositary's plan includes a testing phase, which is expected
to be completed within appropriate time frames. However, the Depositary's
ability to properly perform 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 the Depositary licenses software and hardware, and third party
vendors on whom the Depositary relies for information or the provision of
services, including telecommunication and electrical utility service providers,
among others.
Cedelbank advises that it is incorporated under the laws of Luxembourg as a
professional depositary. Cedelbank holds securities for its participating
organizations ("Cedel Participants") and facilitates the clearance and
settlement of securities transactions between Cedel Participants through
electronic book-entry changes in accounts of Cedel Participants, thereby
eliminating the need for physical movement of certificates. Cedelbank provides
to Cedel Participants, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. Cedelbank interfaces with domestic markets
in several countries. As a professional depositary, Cedelbank is subject to
regulation by the Luxembourg Monetary Institute. Cedel Participants are
recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations and may include the Underwriters. Indirect
access to Cedelbank is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a Cedel Participant either directly or indirectly.
Distributions with respect to the Notes held beneficially through Cedelbank
will be credited to cash accounts of Cedel Participants in accordance with its
rules and procedures, to the extent received by the U.S. Depositary for
Cedelbank.
Euroclear advises that it was created in 1968 to hold securities for
participants of Euroclear ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Euroclear includes various other services, including
securities lending and borrowing and interfaces with domestic markets in several
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<PAGE> 13
countries. Euroclear is operated by the Brussels, Belgium office of Morgan
Guaranty Trust Company of New York (the "Euroclear Operator"), under contract
with Euro-clear Clearance Systems S.C., a Belgian cooperative corporation (the
"Cooperative"). All operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for Euroclear on behalf of Euroclear Participants. Euroclear Participants
include banks (including central banks), securities brokers and dealers and
other professional financial intermediaries and may include the Underwriters.
Indirect access to Euroclear is also available to other firms that clear through
or maintain a custodial relationship with a Euroclear Participant, either
directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear, and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions with respect to Notes held beneficially through Euroclear
will be credited to the cash accounts of Euroclear Participants in accordance
with the Terms and Conditions, to the extent received by the U.S. Depositary for
Euroclear.
Global Clearance and Settlement Procedures
Initial settlement for the Notes will be made in immediately available
funds. Secondary market trading between the Depositary Participants will occur
in the ordinary way in accordance with the Depositary's rules and will be
settled in immediately available funds using the Depositary's Same-Day Funds
Settlement System. Secondary market trading between Cedel Participants and/or
Euroclear Participants will occur in the ordinary way in accordance with the
applicable rules and operating procedures of Cedel Bank and Euroclear and will
be settled using the procedures applicable to conventional eurobonds in
immediately available funds.
Cross-market transfers between persons holding directly or indirectly
through the Depositary on the one hand, and directly or indirectly through Cedel
or Euroclear Participants, on the other, will be effected in the Depositary in
accordance with the Depositary's rules on behalf of the relevant European
international clearing system by its U.S. Depositary; however, such cross-market
transactions will require delivery of instructions to the relevant European
international clearing system by the counterparty in such system in accordance
with its rules and procedures and within its established deadlines (European
time). The relevant European international clearing system will, if the
transaction meets its settlement requirements, deliver instructions to its U.S.
Depositary to take action to effect final settlement on its behalf by delivering
or receiving Notes in the Depositary, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to
the Depositary. Cedel Participants and Euroclear Participants may not deliver
instructions directly to the Depositary.
Because of time-zone differences, credits of Notes received in Cedelbank or
Euroclear as a result of a transaction with a Depositary Participant will be
made during subsequent securities settlement processing and will be credited the
business day following the Depositary settlement date. Such credits or any
transactions in such Notes settled during such processing will be reported to
the relevant Euroclear or Cedel Participants on such business day. Cash received
in Cedelbank or Euroclear as a result of sales of Notes by or through a Cedel
Participant or a Euroclear Participant to a Depositary Participant will be
received with value on the Depositary
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<PAGE> 14
settlement date but will be available in the relevant Cedelbank or Euroclear
cash account only as of the business day following settlement in the Depositary.
Although the Depositary, Cedelbank and Euroclear have agreed to the
foregoing procedures in order to facilitate transfers of Notes among
participants of the Depositary, Cedelbank and Euroclear, they are under no
obligation to perform or continue to perform such procedures and such procedures
may be discontinued at any time.
NOTICES, DEFINITIVE NOTES AND TRANSFERS
Notices to holders of the Notes will be sent by mail to the registered
holders and, so long as the Notes are listed on the Luxembourg Stock Exchange,
will be published in a daily newspaper of general circulation in Luxembourg. It
is expected that publication will be made in the Luxemburger Wort. Any such
notice shall be deemed to have been given on the date of such publication or, if
published more than once, on the date of the first such publication.
In the event definitive Notes are issued, the holders thereof will be able
to receive payments thereon and effect transfers thereof at the offices of Chase
Manhattan Bank Luxembourg S.A. or its successor as paying agent in Luxembourg
with respect to the Notes. The Indenture provides for the replacement of a
mutilated, lost, stolen or destroyed definitive Note, so long as the applicant
shall furnish to the Company and the Trustee such security or indemnity as may
be required by them to save each of them harmless and such evidence of ownership
of such Note as they may require.
The Company has appointed Chase Manhattan Bank Luxembourg S.A. as a paying
agent in Luxembourg with respect to the Notes, and as long as the Notes are
listed on the Luxembourg Stock Exchange, the Company will maintain a paying
agent in Luxembourg and any change in the Luxembourg paying agent will be
published in Luxembourg.
As provided in the Indenture and subject to certain limitations therein set
forth, the Notes are transferable, in whole or in part, upon surrender of the
Notes for registration of transfer at the corporate trust office of the Trustee
in The City of New York, or, in the event definitive Notes are issued and so
long as the Notes are listed on the Luxembourg Stock Exchange, at the offices of
the paying agent in Luxembourg, duly endorsed by or accompanied by a written
instrument of transfer in form satisfactory to the Company and the securities
registrar, and thereupon one or more new Notes, for the aggregate principal
amount being transferred, will be issued to the designated transferee, and a new
Note for any amount not being transferred will be issued to the transferor.
FURTHER ISSUES
The Company may from time to time, without notice to or the consent of the
registered holders of the Notes, create and issue further notes ranking pari
passu with the Notes in all respects (or in all respects except for the payment
of interest accruing prior to the issue date of such further notes or except for
the first payment of interest following the issue date of such further notes)
and so that such further notes may be consolidated and form a single series with
the Notes and have the same terms as to status, redemption or otherwise as the
Notes.
GOVERNING LAW
The Indenture and the Notes for all purposes shall be governed by and
construed in accordance with the laws of the State of New York.
CONCERNING THE TRUSTEE
Chase is the trustee for various other series of debt securities which the
Company has issued under the Indenture. Additionally, Chase is the trustee for
other debt securities which the Company issued under indentures originally
executed by Manufacturers Hanover Trust Company and Chemical Bank. The Company
S-14
<PAGE> 15
also uses Chase for other banking services in the normal course of its business.
Chase is an affiliate of Chase Securities Inc., one of the Underwriters.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary describes the material United States federal income
tax consequences of the ownership of Notes as of the date hereof. Except where
noted, it deals only with Notes held as capital assets and does not deal with
special situations, such as those of dealers in securities or currencies,
financial institutions, tax-exempt entities, life insurance companies, persons
holding Notes as a part of a hedging, conversion or constructive sale
transaction or a straddle or holder of Notes whose "functional currency" is not
the U.S. dollar. Furthermore, the discussion below is based upon the provisions
of the Internal Revenue Code of 1986, as amended (the "Code"), and regulations,
rulings and judicial decisions thereunder as of the date hereof, and such
authorities may be repealed, revoked or modified so as to result in United
States federal income tax consequences different from those discussed below.
Persons considering the purchase, ownership or disposition of Notes should
consult their own tax advisors concerning the United States federal income tax
consequences in light of their particular situations as well as any consequences
arising under the laws of any other taxing jurisdiction.
PAYMENTS OF INTEREST
Except as set forth below, interest on a Note will generally be taxable to
a United States Holder as ordinary income from domestic sources at the time it
is paid or accrued in accordance with the United States Holder's method of
accounting for tax purposes. As used herein, a "United States Holder" of a Note
means a holder that is (i) a citizen or resident of the United States, (ii) a
corporation or partnership created or organized in or under the laws of the
United States or any political subdivision thereof, (iii) an estate the income
of which is subject to United States federal income taxation regardless of its
source or (iv) a trust which is subject to the supervision of a court within the
United States and the control of a United States person as described in section
7701(a)(30) of the Code. A "Non-United States Holder" is a holder that is not a
United States Holder.
SALE, EXCHANGE AND RETIREMENT OF NOTES
A United States Holder's tax basis in a Note will, in general, be the
amount the United States Holder paid for such Note. Upon the sale, exchange,
retirement or other disposition of a Note, a United States Holder will recognize
gain or loss equal to the difference between the amount realized upon the sale,
exchange, retirement or other disposition (less any accrued qualified stated
interest, which will be taxable as such) and the adjusted tax basis of the Note.
Capital gains of individuals derived in respect of capital assets held for more
than one year are eligible for reduced rates of taxation. The deductibility of
capital losses is subject to limitations.
TAX CONSEQUENCES OF SATISFACTION AND DISCHARGE
In that event the Company discharges its obligations under the Notes,
pursuant to satisfaction and discharge provisions of the Indenture, the IRS may
take the view that such a discharge constitutes the retirement of the Notes and
the issuance of new obligations with the result that United States Holders of
the Notes would recognize any gain or loss realized on such a retirement,
although any such gain would generally not be taxable to Non-United States
Holders under the circumstances outlined below. Furthermore, following
discharge, the Notes might be subject to withholding, backup withholding and/or
information reporting.
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<PAGE> 16
NON-UNITED STATES HOLDERS
Under present United States federal income and estate tax law, and subject
to the discussion below concerning backup withholding:
(a) no withholding of United States federal income tax will be
required with respect to the payment by the Company or any paying agent of
principal or interest on a Note owned by a Non-United States Holder,
provided (i) that the beneficial owner does not actually or constructively
own 10% or more of the total combined voting power of all classes of stock
of the Company entitled to vote within the meaning of section 871(h)(3) of
the Code and the regulations thereunder, (ii) the beneficial owner is not a
controlled foreign corporation that is related to the Company through stock
ownership, (iii) the beneficial owner is not a bank whose receipt of
interest on a Note is described in section 881(c)(3)(A) of the Code, (iv)
the beneficial owner satisfies the statement requirement (described
generally below) set forth in section 871(h) and section 881(c) of the Code
and the regulations thereunder and (v) such interest is not considered
contingent interest under section 871(h)(4)(A) of the Code and the
regulations thereunder;
(b) no withholding of United States federal income tax will be
required with respect to any gain or income by a Non-United States Holder
upon the sale, exchange, retirement or other disposition of a Note; and
(c) a Note beneficially owned by an individual who at the time of
death is a Non-United States Holder will not be subject to United States
federal estate tax as a result of such individual's death, provided that
such individual does not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of the Company entitled
to vote within the meaning of section 871(h)(3) of the Code and provided
that the interest payments with respect to such Note would not have been,
if received at the time of such individual's death, effectively connected
with the conduct of a United States trade or business by such individual.
To satisfy the requirement referred to in (a)(iv) above, the beneficial
owner of such Note, or a financial institution holding the Note on behalf of
such owner, must provide, in accordance with specified procedures, a paying
agent of the Company with a statement to the effect that the beneficial owner is
not a United States person. Currently, these requirements will be met if (1) the
beneficial owner provides his name and address, and certifies, under penalties
of perjury, that he is not a United States person (which certification may be
made on an IRS Form W-8 (or successor form)) or (2) a financial institution
holding the Note on behalf of the beneficial owner certifies, under penalties of
perjury, that such statement has been received by it and furnishes a paying
agent with a copy thereof. Under recently finalized Treasury regulations (the
"Final Regulations"), the statement requirement referred to in (a)(iv) above may
also be satisfied with other documentary evidence for interest paid after
December 31, 1999 with respect to an offshore account or through certain foreign
intermediaries.
If a non-United States Holder cannot satisfy the requirements of the
"portfolio interest" exception described in (a) above, payments of premium, if
any, and interest made to such non-United States Holder will be subject to a 30%
withholding tax unless the beneficial owner of the Note provides the Company or
its paying agent, as the case may be, with a properly executed (1) IRS Form 1001
(or successor form) claiming an exemption from withholding under the benefit of
a tax treaty or (2) IRS Form 4224 (or successor form) stating that interest paid
on the Note is not subject to withholding tax because it is effectively
connected with the beneficial owner's conduct of a trade or business in the
United States. Under the Final Regulations, Non-United States Holders will
generally be required to provide IRS Form W-8 in lieu of IRS Form 1001 and IRS
Form 4224, although alternative documentation may be applicable in certain
situations.
If a non-United States Holder is engaged in a trade or business in the
United States and interest on the Note is effectively connected with the conduct
of such trade or business, the non-United States Holder, although exempt from
the withholding tax discussed above, will be subject to United States federal
income tax on such interest on a net income basis in the same manner as if it
were a United States Holder. In addition, if such holder is a foreign
corporation, it may be subject to a branch profits tax equal to 30% of its
effectively
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<PAGE> 17
connected earnings and profits for the taxable year, subject to adjustments. For
this purpose, such interest on a Note will be included in such foreign
corporation's earnings and profits.
Any gain or income realized upon the sale, exchange, retirement or other
disposition of a Note generally will not be subject to United States federal
income tax unless (i) such gain or income is effectively connected with a trade
or business in the United States of the Non-United States Holder, or (ii) in the
case of a Non-United States Holder who is an individual, such individual is
present in the United States for 183 days or more in a taxable year of such
sale, exchange, retirement or other disposition, and certain other conditions
are met.
INFORMATION REPORTING AND BACKUP WITHHOLDING
In general, information reporting requirements will apply to certain
payments of principal and interest paid on Notes and to the proceeds derived
from the sale of a Note paid to United States Holders other than certain exempt
recipients (such as corporations). A 31 percent backup withholding tax will
apply to such payments if the United States Holder (i) fails to provide a
taxpayer identification number (which for an individual would be his or her
social security number) to the payor in the manner required, (ii) is notified by
the IRS that it has failed to report payments of interest and dividends
properly, or (iii) under certain circumstances, fails to certify that it has not
been notified by the IRS that it is subject to backup withholding for failure to
report interest and dividend payments.
No information reporting or backup withholding will be required with
respect to payments made by the Company or any paying agent to Non-United States
Holders if a statement described in (a)(iv) under "Non-United States Holders"
has been received and the payor does not have actual knowledge that the
beneficial owner is a United States person.
In addition, backup withholding and information reporting will not apply if
payments of the principal or interest on a Note are paid or collected by a
foreign office of a custodian, nominee or other foreign agent on behalf of the
beneficial owner of such Note, or if a foreign office of a broker (as defined in
applicable Treasury regulations) pays the proceeds of the sale of a Note to the
owner thereof. If, however, such nominee, custodian, agent or broker is, for
United States federal income tax purposes, a United States person, a controlled
foreign corporation or a foreign person that derives 50% or more of its gross
income for certain periods from the conduct of a trade or business in the United
States, or, after December 31, 1999, if such nominee, custodian, agent or broker
is a foreign partnership, in which one or more United States persons, in the
aggregate, own more than 50% of the income or capital interests in the
partnership or if the partnership is engaged in a trade or business in the
United States, such payments will not be subject to backup withholding but will
be subject to information reporting, unless (1) such custodian, nominee, agent
or broker has documentary evidence in its records that the beneficial owner is
not a United States person and certain other conditions are met or (2) the
beneficial owner otherwise establishes an exemption.
Payments of principal and interest on a Note paid to the beneficial owner
of a Note by a United States office of a custodian, nominee or agent, or the
payment by the United States office of a broker of the proceeds of sale of a
Note, will be subject to both backup withholding and information reporting
unless the beneficial owner provides the statement referred to in (a)(iv) above
and the payor does not have actual knowledge that the beneficial owner is a
United States person or otherwise establishes an exemption.
Any amounts withheld under the backup withholding rules will be allowed as
a refund or a credit against such holder's United States federal income tax
liability provided the required information is furnished to the IRS.
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UNDERWRITING
The Company and the Underwriters named below have entered into an
underwriting agreement dated April 14, 1999. Under the underwriting agreement,
the Company has agreed to sell, and each Underwriter has agreed to purchase, the
amount of the Notes set forth opposite its name.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITERS OF NOTES
- ------------ ----------------
<S> <C>
Bear, Stearns & Co. Inc..................................... $ 675,000,000
Goldman, Sachs & Co......................................... 675,000,000
ABN AMRO Bank N.V........................................... 10,000,000
Banque Nationale de Paris London Branch..................... 10,000,000
Chase Securities Inc. ...................................... 10,000,000
Commerzbank Aktiengesellschaft.............................. 10,000,000
Credit Suisse First Boston Corporation...................... 10,000,000
Deutsche Bank AG London..................................... 10,000,000
Dresdner Bank AG London Branch.............................. 10,000,000
Midland Bank plc............................................ 10,000,000
J.P. Morgan Securities Inc. ................................ 10,000,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated.......... 10,000,000
NationsBank Montgomery Securities LLC....................... 10,000,000
Salomon Smith Barney Inc. .................................. 10,000,000
Societe Generale............................................ 10,000,000
Warburg Dillon Read LLC..................................... 10,000,000
Westdeutsche Landesbank Girozentrale........................ 10,000,000
--------------
Totals............................................ $1,500,000,000
==============
</TABLE>
Bear, Stearns & Co. Inc. and Goldman Sachs & Co. are acting as joint book
managers in connection with the offering of the Notes.
The obligations of the Underwriters to purchase the Notes are subject to
certain conditions. If any of the Notes are purchased, the Underwriters will be
obligated to purchase the entire principal amount of Notes.
The Underwriters have advised the Company that they initially propose to
offer the Notes to the public at the prices stated on the cover page of this
Prospectus Supplement and to certain dealers at a price less a concession of no
more than .20% of the principal amount of the Notes. The Underwriters may allow,
and such dealers may reallow, a discount of no more than .20% of the principal
amount of the Notes to certain other dealers. After the initial offering of the
Notes, the Underwriters may change the public offering price, the concession to
selected dealers and the allowance to other dealers.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, and to contribute
to payments which the Underwriters may be required to make in respect thereof.
Certain of the Underwriters and their affiliates have provided investment
and commercial banking services to the Company. The Underwriters and their
affiliates may provide such services in the future.
Application has been made to list the Notes on the Luxembourg Stock
Exchange. There can be no assurance that such listing will be obtained. The
Notes have been approved for clearance through the Cedelbank and Euroclear
systems.
The Underwriters have advised the Company that they presently intend to
make a market in the Notes as permitted by applicable laws and regulations. The
Underwriters are not obligated to make a market in the Notes and they may
discontinue such market making at any time in their sole discretion.
Accordingly, there may not be adequate liquidity or adequate trading markets for
the Notes.
To facilitate this offering, the Underwriters may engage in transactions
that stabilize, maintain or otherwise affect the price of the Notes.
Specifically, the Underwriters may over-allot in connection with the
S-18
<PAGE> 19
offering, creating a short position in the Notes for their own account. In
addition, to cover over-allotments or to stabilize the price of the Notes, the
Underwriters may bid for, and purchase Notes in the open market. Finally, the
Underwriters may reclaim selling concessions allowed to broker-dealers if the
Underwriters previously distributed the Notes in transactions to cover short
positions, in stabilization transactions or otherwise. Any of these activities
may stabilize or maintain the market price of the Notes above independent market
levels. The Underwriters are not required to engage in these activities and may
end any of these activities at any time. These transactions may be effected on
the Luxembourg Stock Exchange, in the over-the-counter market or otherwise.
Each Underwriter has agreed that it has not offered or sold, and prior to
the date that is six months after the date of issue of the Notes it will not
offer or sell, any Notes to persons in the United Kingdom, except to persons
whose ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of their
business or otherwise in circumstances which will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995. Each Underwriter has agreed that it has and will
continue to comply with all applicable provisions of the Financial Services Act
1986 with respect to anything done by it in relation to the Notes in, from or
otherwise involving the United Kingdom. Furthermore, each Underwriter has agreed
that it has only issued or passed on and will only issue or pass on in the
United Kingdom this Prospectus Supplement (or any other document received by it
in connection with the issuance of the Notes) to a person who is of a kind
described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 (as amended) or is a person to whom this
Prospectus Supplement or such other document may otherwise lawfully be issued or
passed upon.
Each of the Underwriters has represented and agreed that it has not and
will not offer, sell or deliver any of the Notes directly or indirectly, or
distribute this Prospectus Supplement or the Prospectus or any other offering
material relating to the Notes, in or from any jurisdiction except under
circumstances that will result in compliance with the applicable laws and
regulations thereof and that will not impose any obligations on the Company
except as set forth in the underwriting agreement.
Purchasers of the Notes may be required to pay stamp taxes and other
charges in accordance with the laws and practices of the country of purchase in
addition to the public offering price set forth on the cover page.
The Underwriters are offering the Notes subject to prior sale and their
acceptance of the Notes from the Company. The Underwriters reserve the right to
reject any order in whole or in part.
GENERAL INFORMATION
Application has been made to list the Notes on the Luxembourg Stock
Exchange. In connection with the listing application, the Certificate of
Incorporation and the By-Laws of the Company and a legal notice relating to the
issuance of the Notes have been deposited prior to listing with the Greffier en
Chef du Tribunal d'Arrondissement de et a Luxembourg, where copies thereof may
be obtained upon request. Copies of the above documents together with this
Prospectus Supplement, the accompanying Prospectus, the Indenture and the
Company's 1998 10-K Report, as well as all other documents incorporated by
reference herein including future Annual Reports on Form 10-K, Quarterly Reports
on Form 10-Q and Current Reports on Form 8-K, so long as the Notes are listed on
the Luxemburg Stock Exchange, will be made available for inspection at the main
office of Banque Internationale a Luxembourg in Luxembourg. In addition, copies
of such Annual Reports, Quarterly Reports, Current Reports and any other reports
referred to under "Available Information" in the accompanying Prospectus may be
obtained free of charge at such office.
The Indenture provides that the Company, Trustee or holders of not less
than 10% in aggregate principal amount of Notes then outstanding may convene a
meeting of the holders of Notes to consider matters affecting their interests.
Notice of such meeting shall set forth in general terms the action proposed to
be taken at such meeting and shall be given not less than 20 nor more than 90
days prior to the date fixed for the meeting. Modifications and amendments to
the Indenture or to the terms and conditions of the Notes may be made, and
future compliance therewith or past default by the Company may be waived, either
with the written
S-19
<PAGE> 20
consent of the holders of at least 66 2/3% in aggregate principal amount of the
Notes outstanding or by the adoption of a resolution at a meeting of holders of
the Notes of such series by at least 66 2/3% in principal amount of the Notes
represented and voting at such meeting. At any meeting of holders, the quorum
required is the presence of persons holding or representing Notes in an
aggregate principal amount sufficient to take action on the particular matter
before the meeting.
Other than as disclosed or contemplated herein or in the documents
incorporated by reference, to the best of the Company's knowledge and belief,
there has been no material adverse change in the financial position of the
Company on a consolidated basis since December 31, 1998.
Other than as disclosed or contemplated herein or in the documents
incorporated by reference, to the best of the Company's knowledge and belief,
the Company is not a party to any legal or arbitration proceedings (including
any that are pending or threatened) which may have, or have had, since December
31, 1998, a significant effect on the Company's consolidated financial position.
Resolutions relating to the issue and sale of the Notes were adopted by the
Board of Directors of the Company on September 1, 1998 and the Special Committee
thereof on April 14, 1999.
The Notes have been assigned CUSIP No. 046003KA6, Euroclear and Cedelbank
Common Code No. 009678549 and ISIN No. US046003KA63.
S-20
<PAGE> 21
THE COMPANY
ASSOCIATES CORPORATION OF NORTH AMERICA
250 East Carpenter Freeway
Irving, Texas 75062-2729
TRUSTEE AND PAYING AGENT
THE CHASE MANHATTAN BANK
One Chase Plaza
New York, New York
LUXEMBOURG PAYING AGENT
CHASE MANHATTAN BANK LUXEMBOURG S.A.
5 Rue Plaetis
L-2338
Luxembourg
LEGAL ADVISORS
<TABLE>
<S> <C>
To the Underwriters To the Company
as to United States Law as to United States Law
LEBOEUF, LAMB, GREENE & MACRAE, L.L.P. FREDERIC C. LISKOW, ESQ.
125 West 55th Street Vice President and Assistant General Counsel
New York, New York 10019
</TABLE>
AUDITORS
To the Company
PRICEWATERHOUSECOOPERS LLP
1999 Bryan Street, Suite 3000
Dallas, Texas 75201
LISTING AGENT
BANQUE INTERNATIONALE A LUXEMBOURG
69 route d'Esch
L-2953
Luxembourg
<PAGE> 22
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Documents Incorporated by Reference... S-2
The Company........................... S-3
Summary Financial Information......... S-5
Capitalization........................ S-7
Application of Proceeds............... S-8
Description of the Notes.............. S-8
Certain United States Federal Income
Tax Considerations.................. S-15
Underwriting.......................... S-18
General Information................... S-19
PROSPECTUS
Available Information................. 2
Documents Incorporated by Reference... 2
The Company........................... 3
Application of Proceeds............... 3
Description of Debt Securities........ 4
Description of Warrants............... 7
Plan of Distribution.................. 8
Legal Opinions........................ 9
Experts............................... 9
</TABLE>
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$1,500,000,000
[ASSOCIATES LOGO]
5.80% SENIOR NOTES
DUE APRIL 20, 2004
PROSPECTUS SUPPLEMENT
BEAR, STEARNS & CO. INC.
GOLDMAN, SACHS & CO.
ABN AMRO
BNP
CHASE SECURITIES INC.
COMMERZBANK AKTIENGESELLSCHAFT
CREDIT SUISSE FIRST BOSTON
DEUTSCHE BANK
DRESDNER KLEINWORT BENSON
HSBC MARKETS
J.P. MORGAN & CO.
MERRILL LYNCH & CO.
NATIONSBANC MONTGOMERY SECURITIES LLC
SALOMON SMITH BARNEY
SOCIETE GENERALE
WARBURG DILLON READ LLC
WESTDEUTSCHE LANDESBANK GIROZENTRALE
APRIL 14, 1999
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