<PAGE> 1
Filed pursuant to Rule 424(b)(5)
Registration No. 333-63049
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED SEPTEMBER 15, 1998)
$300,000,000
(RYDER LOGO) Ryder System, Inc.
Medium-Term Notes, Series 16
Ryder System, Inc. may use this prospectus supplement to offer its medium-term
notes, Series 16 from time to time.
The following terms may apply to the notes. We will provide the final terms for
each note in a pricing supplement.
- - They may have maturities of nine months or more.
- - They may be subject to redemption or repayment at the option of Ryder System,
Inc. or the holder.
- - They will be denominated in U.S. dollars unless otherwise specified by Ryder
System, Inc. and described in a pricing supplement.
- - They may bear interest at a fixed or floating interest rate. Certain notes
issued at a discount may not bear interest. Floating interest rates may be
based on any of the following formulas:
<TABLE>
<S> <C>
- -- Commercial Paper Rate -- Prime Rate
- -- Federal Funds Rate -- CMT Rate
- -- LIBOR -- Another interest rate index specified
- -- Treasury Rate in the pricing supplement
</TABLE>
- - They may be issued as indexed notes.
- - They may be issued in certificated or book-entry form.
- - Interest will be paid on fixed rate notes on April 1 and October 1 of each
year and at maturity.
- - Interest will be paid on floating rate notes on dates determined at the time
of issuance.
- - They will be issued in minimum denominations of $1,000 and multiples of
$1,000.
- - They will have an aggregate initial offering price not greater than
$300,000,000, less the amount of any other debt securities sold by us under
the attached prospectus after the date of this prospectus supplement. (The
aggregate initial offering price includes the U.S. dollar equivalent of any
notes denominated in a foreign currency.)
- - They will be offered from time to time on a best efforts basis by the Agents
named below on our behalf. In addition, the Agents may purchase notes from us
for resale to investors, and we may sell notes directly to investors on our
own behalf where legally permitted.
We will receive between $297,750,000 and $299,625,000 of the proceeds from the
sale of the notes after paying the Agent's commissions of between $375,000 and
$2,250,000 and before deducting the expenses of the offering of the notes
estimated by Ryder System, Inc. at $377,250. The exact proceeds to Ryder System,
Inc. will be set at the time of issuance. We do not expect that any of the notes
will be listed on a securities exchange, and a market for the notes may not
develop.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS SUPPLEMENT OR THE RELATED PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
SALOMON SMITH BARNEY
BANC OF AMERICA SECURITIES LLC
DEUTSCHE BANC ALEX. BROWN
MERRILL LYNCH & CO.
J.P. MORGAN & CO.
MORGAN STANLEY DEAN WITTER
August 3, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PROSPECTUS SUPPLEMENT PAGE
--------------------- ----
<S> <C>
Ratio of Earnings to Fixed
Charges...................... S-3
Terms of the Notes............. S-3
Certain U.S. Federal Income Tax
Considerations............... S-16
Plan of Distribution........... S-24
</TABLE>
<TABLE>
<CAPTION>
PROSPECTUS PAGE
---------- ----
<S> <C>
Available Information.......... 2
Incorporation of Certain
Documents by Reference....... 3
Ryder System, Inc.............. 3
Use of Proceeds................ 3
Ratio of Earnings to Fixed
Charges...................... 4
Description of Debt
Securities................... 4
Plan of Distribution........... 12
Experts........................ 12
Legal Opinions................. 13
</TABLE>
-------------------------
You should rely only on the information contained or incorporated by reference
in this prospectus supplement and the accompanying prospectus. Ryder System,
Inc. has not authorized anyone to provide you with information different from
that contained in this prospectus supplement and the accompanying prospectus.
Ryder System, Inc. is offering to sell the notes and seeking offers to buy the
notes only in jurisdictions where offers and sales are permitted. The
information contained in this prospectus supplement and the accompanying
prospectus is accurate only as of the date of this prospectus supplement and the
date of the accompanying prospectus, regardless of the time of delivery of this
prospectus supplement or any sale of the notes. In this prospectus, the
"Company," "we," "us" and "our" refer to Ryder System, Inc.
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RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for us and
our subsidiaries, whether or not consolidated, for each of the periods
indicated. For purposes of computing the ratio of earnings to fixed charges,
fixed charges consist of interest expense plus interest capitalized and that
portion (one third) of rental expense considered to represent interest. Earnings
are computed by adding fixed charges, except interest capitalized, to earnings
from continuing operations before income taxes. Prior period ratios have been
restated to exclude discontinued operations.
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED DECEMBER 31,
- ---------------------------------
1998 1997
- --------------- ---------------
<S> <C>
1.87 1.97
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
- -----------------------------
1999 1998
- ------------- -------------
<S> <C>
1.48 1.88
</TABLE>
TERMS OF THE NOTES
GENERAL
The following description (unless otherwise specified in a Pricing Supplement)
of the particular terms of our Medium-Term Notes, Series 16 (the "Notes")
offered hereby supplements, and to the extent inconsistent therewith replaces,
the description of the general terms of the Notes set forth in the Prospectus,
to which description reference is hereby made.
The Notes are a series of the debt securities described in the accompanying
Prospectus and will be limited to $300,000,000 in aggregate initial offering
price. See "Description of Debt Securities" on pages three to eleven of the
accompanying Prospectus for additional information concerning the Notes and the
Indenture (as defined in the accompanying Prospectus) under which they are to be
issued.
The Notes are to mature on any day nine months or more from the date of issue
(the "Issue Date") as selected by the purchaser and agreed to by the Company.
Each Note will bear interest at either:
- - a fixed rate, which may be zero in the case of certain Notes issued at an
Issue Price (as defined below) representing a discount from the principal
amount payable at maturity (a "Zero Coupon Note"), or
- - a floating rate determined by reference to the interest rate basis or
combination of interest rate bases (the "Base Rate") or interest rate formulas
specified in the applicable Pricing Supplement, which may be adjusted by a
Spread or Spread Multiplier (each as defined below).
Interest rates offered by us with respect to the Notes may differ depending
upon, among other things, the aggregate principal amount of the Notes purchased
in any single transaction.
Each Note will be issued initially as either a Book-Entry Note or a Certificated
Note. Except as set forth in the accompanying Prospectus under "Description of
Debt Securities -- Global Securities," Book-Entry Notes will not initially be
issuable as Certificated Notes. The Notes are issuable in denominations of
$1,000 or any amount in excess thereof which is an integral multiple
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of $1,000. Unless otherwise specified in the applicable Pricing Supplement
attached hereto, the Notes will be issued at 100% of their principal amount.
Principal and interest initially will be payable, and Certificated Notes
initially will be transferable and exchangeable, at the office of The Chase
Manhattan Bank (as successor by merger to The Chase Manhattan Bank (National
Association)), as Trustee, at 3800 Colonnade Parkway, Suite 490, Birmingham,
Alabama 35243, provided that payment of interest on Certificated Notes may be
made at our option by check mailed to the registered Holders of such Notes and
provided further that the holder of $10 million or more of Certificated Notes
with similar tenor or terms will be entitled to receive payment by wire transfer
in U.S. dollars, but only if appropriate payment instructions have been received
in writing not later than 15 calendar days prior to the applicable Interest
Payment Date.
As used herein:
(i) "Business Day" with respect to any Note means, unless otherwise
specified in the applicable Pricing Supplement, any day, other than a
Saturday or Sunday, that meets each of the following applicable
requirements: the day is
(a) neither a legal holiday nor a day on which banking institutions
are authorized or required by law or regulation to be closed in The City
of New York; and
(b) if such Note is a LIBOR Note, a London Banking Day.
"London Banking Day" means any day on which dealings in deposits in U.S.
dollars are transacted in the London interbank market;
(ii) "Discount Note" means
(a) a Note which provides for an amount less than the stated
principal amount thereof to be due and payable upon declaration of
acceleration of the maturity thereof pursuant to the Indenture and
(b) any other Note that for United States Federal income tax
purposes would be considered an original issue discount note;
(iii) "Interest Payment Date" with respect to any Note means a date
(other than the Maturity Date) on which, under the terms of such Note,
regularly scheduled interest shall be payable;
(iv) "Maturity Date" with respect to any Note means the date on which
such Note will mature, as specified thereon; and
(v) "Record Date" with respect to any Interest Payment Date for any Note
shall be the date (whether or not a Business Day) 15 calendar days (unless
otherwise specified in the applicable Pricing Supplement) immediately
preceding such Interest Payment Date.
References herein to "U.S. dollars" or "U.S.$" or "$" are to the currency of the
United States of America.
All percentages resulting from any calculations will be rounded, if necessary,
to the nearest one millionth of a percentage point (with five ten-millionths of
a percentage point being rounded upward) and all amounts in U.S. dollars rounded
to the nearest cent (with one-half cent being rounded upward).
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The Pricing Supplement relating to each Note will describe the following terms,
as applicable:
- - whether such Note is a Fixed Rate Note, a Floating Rate Note, a Discount Note
or a Zero Coupon Note;
- - the price (expressed as a percentage of the aggregate principal amount
thereof) at which such Note will be issued (the "Issue Price");
- - the Issue Date;
- - the Maturity Date of such Note;
- - if such Note is a Fixed Rate Note, the rate per annum at which such Note will
bear interest, if any (the "Interest Rate");
- - if such Note is a Floating Rate Note, the Base Rate, the Initial Interest
Rate, the Interest Reset Period, the Interest Reset Date, the Interest Payment
Dates, the Index Maturity, the Maximum Interest Rate and the Minimum Interest
Rate, if any, and the Spread or Spread Multiplier, if any (all as defined
herein), and any other terms relating to the particular method of calculating
the Interest Rate for such Note;
- - whether such Note may be redeemed at our option or repaid at the option of the
holders thereof prior to its Maturity Date, and if so, the provisions relating
to such redemption or repayment;
- - whether such Note will be represented by a Global Note or a certificate issued
in definitive form;
- - certain special tax consequences of the purchase, ownership and disposition of
certain Notes, if any; and
- - any other terms of such Note not inconsistent with the provisions of the
Indenture.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from its Issue Date or from the most
recent Interest Payment Date to which interest has been paid or duly provided
for, as the case may be, at the annual rate stated on its face. Interest will be
payable semiannually on April 1 and October 1 until the principal amount of the
Note is paid or made available for payment or upon earlier redemption or
repayment. Interest will be computed on the basis of a 360-day year of twelve
30-day months.
Interest will be paid to the person in whose name the Fixed Rate Note is
registered at the close of business on the Record Date next preceding the April
1 and October 1 interest payment date (each an "Interest Payment Date").
Notwithstanding the foregoing, periodic payments of interest will not be made
with respect to any Zero-Coupon Note. Interest payable on the Maturity Date will
be payable to the person in whose name the Fixed Rate Note is registered on the
Maturity Date and to whom principal shall be payable. The first payment of
interest on any Fixed Rate Note issued between a Record Date and an Interest
Payment Date will be made on the next succeeding Interest Payment Date to the
registered owner at the close of business on the Record Date next preceding the
date of payment.
We may change interest rates from time to time but no such change will affect
any Fixed Rate Notes theretofore issued or as to which we have accepted an
offer. Each payment of interest shall include interest accrued through the day
preceding the Interest Payment Date or Maturity Date or date of redemption or
repayment. If any Interest Payment Date or the Maturity Date or date of
redemption or repayment of a Fixed Rate Note falls on a day that is not a
Business Day, the payment will be made on the next Business Day as if it were
made on the date payment was due,
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and no interest will accrue after that Interest Payment Date, Maturity Date or
the date of redemption or repayment.
FLOATING RATE NOTES
Each Floating Rate Note will bear interest from its Issue Date at a rate per
annum equal to:
- - the Initial Interest Rate set forth on the applicable Pricing Supplement until
the first Interest Reset Date and
- - thereafter at rates determined by reference to the Base Rate plus or minus the
Spread, if any, or multiplied by the Spread Multiplier, if any (each as
specified in the applicable Pricing Supplement), until the principal thereof
is paid or payment thereof is duly provided for.
The "Spread" is the number of basis points (one basis point equals one-hundredth
of a percentage point) specified in the applicable Pricing Supplement as being
applicable to such Note. The "Spread Multiplier" is the percentage specified in
the applicable Pricing Supplement as being applicable to such Note. Any Floating
Rate Note may also have either or both of the following:
- - a maximum numerical interest rate limitation, or ceiling, on the rate of
interest that may accrue during any interest period (the "Maximum Interest
Rate") and
- - a minimum numerical interest rate limitation, or floor, on the rate of
interest that may accrue during any interest period (the "Minimum Interest
Rate").
The applicable Pricing Supplement will designate one or more of the following
Base Rates as applicable to each Floating Rate Note:
- - the Commercial Paper Rate (a "Commercial Paper Rate Note"),
- - LIBOR (a "LIBOR Note"),
- - the Treasury Rate (a "Treasury Rate Note"),
- - the Federal Funds Rate (a "Federal Funds Rate Note"),
- - the Prime Rate (a "Prime Rate Note"),
- - the CMT Rate (a "CMT Rate Note") or
- - such other Base Rate or interest rate formula as is specified in the
applicable Pricing Supplement.
The Spread, Spread Multiplier, Index Maturity (as defined below) and other
variable terms of the Floating Rate Notes are subject to change by us from time
to time, but no such change will affect any Floating Rate Note theretofore
issued or as to which we have accepted an offer.
The rate of interest on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semiannually, annually or otherwise (such period being the
"Interest Reset Period" for such Note, and the first day of each Interest Reset
Period being an "Interest Reset Date"), as specified in the applicable Pricing
Supplement. Unless otherwise specified in the applicable Pricing Supplement, the
Interest Reset Date will be:
- - in the case of Floating Rate Notes that reset daily, each Business Day;
- - in the case of Floating Rate Notes (other than Treasury Rate Notes) that reset
weekly, Wednesday of each week;
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- - in the case of Treasury Rate Notes that reset weekly, Tuesday of each week
(except as hereinafter provided);
- - in the case of Floating Rate Notes that reset monthly, the third Wednesday of
each month;
- - in the case of Floating Rate Notes that reset quarterly, the third Wednesday
of March, June, September and December;
- - in the case of Floating Rate Notes that reset semiannually, the third
Wednesday of each of two months specified in the applicable Pricing
Supplement; and
- - in the case of Floating Rate Notes that reset annually, the third Wednesday of
the month specified in the applicable Pricing Supplement.
If any Interest Reset Date for any Floating Rate Note would otherwise be a day
that is not a Business Day, such Interest Reset Date shall be postponed to the
next day that is a Business Day, except, in the case of a LIBOR Note, if such
Business Day is in the next succeeding calendar month, such Interest Reset Date
shall be the immediately preceding Business Day.
Interest on each Floating Rate Note will be payable monthly, quarterly,
semiannually, annually or as otherwise specified in the applicable Pricing
Supplement (the "Interest Payment Period"). Except as provided below or in the
applicable Pricing Supplement, interest will be payable:
- - in the case of Floating Rate Notes which reset daily, weekly or monthly, on
the third Wednesday of each month or on the third Wednesday of March, June,
September and December;
- - in the case of Floating Rate Notes which reset quarterly, on the third
Wednesday of March, June, September and December;
- - in the case of Floating Rate Notes which reset semiannually, on the third
Wednesday of each of the two months specified in the applicable Pricing
Supplement;
- - in the case of Floating Rate Notes which reset annually, on the third
Wednesday of the month specified in the applicable Pricing Supplement; and
- - in each case, on the Maturity Date thereof.
If any Interest Payment Date for any Floating Rate Note would otherwise be a day
that is not a Business Day, such Interest Payment Date shall be postponed to the
next day that is a Business Day except, in the case of a LIBOR Note, if such
Business Day is in the next succeeding calendar month, such Interest Payment
Date shall be the immediately preceding Business Day and no interest will accrue
for the period from and after such Interest Payment Date. If the Maturity Date
(or date of redemption or repayment) of any Floating Rate Note would fall on a
day that is not a Business Day, the payment of interest and premium, if any, and
principal may be made on the next succeeding Business Day, and no interest on
such payment will accrue for the period from and after the Maturity Date (or the
date of redemption or repayment).
Interest will be paid to the person in whose name a Floating Rate Note is
registered at the close of business on the Record Date immediately preceding an
Interest Payment Date. Interest payable on the Maturity Date or the date of
redemption or repayment will be payable to the person in whose name a Floating
Rate Note is registered on that date and to whom principal shall be payable. The
first payment of interest on any Floating Rate Note issued after a Record Date
and before the next succeeding Interest Payment Date shall be made on the second
succeeding Interest Payment Date to the registered owner at the close of
business on the Record Date next preceding the date of such payment.
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Interest payments on each Interest Payment Date or on the Maturity Date or the
date of redemption or repayment for Floating Rate Notes will include accrued
interest from and including the Issue Date or from and including the last date
in respect of which interest has been paid or duly provided for, as the case may
be, to, but excluding, such Interest Payment Date or Maturity Date or the date
of redemption or repayment.
Accrued interest will be calculated by multiplying the principal amount of a
Floating Rate Note by an accrued interest factor. The accrued interest factor
will be computed by adding the interest factors calculated for each day in the
period for which accrued interest is being calculated. The interest factor
(expressed as a decimal) for each such day will be computed by dividing the
interest rate applicable to such day by 360, in the case of Commercial Paper
Rate Notes, LIBOR Notes, Federal Funds Rate Notes and Prime Rate Notes, or by
the actual number of days in the year in the case of Treasury Rate Notes or CMT
Rate Notes. The interest rate in effect on each day will be
- - if such day is an Interest Reset Date, the interest rate with respect to the
Interest Determination Date (as defined below) pertaining to such Interest
Reset Date, or
- - if such day is not an Interest Reset Date, the interest rate with respect to
the Interest Determination Date pertaining to the next preceding Interest
Reset Date, subject in either case to any Maximum Interest Rate or Minimum
Interest Rate limitation referred to above and to any adjustment by a Spread
or Spread Multiplier referred to above.
The interest rate in effect for the period from the Issue Date to the first
Interest Reset Date set forth in the applicable Pricing Supplement will be the
"Initial Interest Rate" specified in the applicable Pricing Supplement.
The "Interest Determination Date" pertaining to an Interest Reset Date for
Commercial Paper Rate Notes, Prime Rate Notes, Federal Funds Rate Notes or CMT
Rate Notes will be the second Business Day next preceding such Interest Reset
Date. The Interest Determination Date pertaining to an Interest Reset Date for a
LIBOR Note will be the second London Banking Day next preceding such Interest
Reset Date. The Interest Determination Date pertaining to an Interest Reset Date
for a Treasury Rate Note will be the day of the week in which such Interest
Reset Date falls on which Treasury bills of the Index Maturity (as defined
below) specified on the face of such Note are auctioned, but in no event shall
such Interest Determination Date be after the related Interest Payment Date.
Treasury bills are normally sold at auction on Monday of each week, unless that
day is a legal holiday, in which case the auction is normally held on the
following Tuesday, except that such auction may be held on the preceding Friday.
If, as the result of a legal holiday, an auction is held on the preceding
Friday, that Friday will be the Interest Determination Date pertaining to the
Interest Reset Date occurring in the next succeeding week for that Treasury Rate
Note. If an auction date shall fall on any Interest Reset Date for a Treasury
Rate Note, then that Interest Reset Date shall instead be the first Business Day
immediately following such auction date. If no auction is held in any week, or
on the preceding Friday, the Interest Determination Date shall be the Monday of
the week in which the Interest Reset Date falls.
The "Calculation Date", where applicable, pertaining to an Interest
Determination Date will be the first to occur of either
- - the tenth calendar day after such Interest Determination Date or, if such day
is not a Business Day, the next succeeding Business Day or
- - the Business Day preceding the date any payment is required to be made for any
period following the applicable Interest Reset Date or Maturity Date (or the
date of redemption or repayment).
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Unless otherwise specified in the applicable Pricing Supplement, The Chase
Manhattan Bank shall be the calculation agent (in such capacity, the
"Calculation Agent") with respect to Floating Rate Notes. Upon request of the
holder of any Floating Rate Note, the Calculation Agent will provide the
interest rate then in effect and, if determined, the interest rate that will
become effective on the next Interest Reset Date with respect to such Floating
Rate Note.
"Index Maturity" is the particular maturity (specified in the applicable Pricing
Supplement) of the type of instrument or obligation from which a Base Rate is
calculated.
COMMERCIAL PAPER RATE NOTES
Each Commercial Paper Rate Note will bear interest at the interest rate
calculated with reference to the Commercial Paper Rate and any Spread or Spread
Multiplier specified in that Note and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the "Commercial
Paper Rate" means, with respect to any Interest Determination Date, the Money
Market Yield, calculated as described below, of the rate on such date for
commercial paper having the Index Maturity designated in the applicable Pricing
Supplement as published by the Board of Governors of the Federal Reserve System
in "Statistical Release H.15(519), Selected Interest Rates," or any successor
publication of such Board ("H.15(519)"), under the heading "Commercial Paper-
Nonfinancial." The following procedures will be followed if the Commercial Paper
Rate cannot be determined as described above:
- - If such rate is not published by 3:00 p.m., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, then the
Commercial Paper Rate shall be the Money Market Yield of the rate on that
Interest Determination Date for commercial paper having the Index Maturity
designated in the applicable Pricing Supplement as set forth
in the daily update of the Board of Governors of the Federal Reserve System at
http://www.bog.frb.fed.us/releases/h15/update or any successor site or
publication (the "H.15 Daily Update") paper having the Index Maturity on the
face hereof.
- - If such rate is neither published in H.15(519) or in the H.15 Daily Update by
3:00 p.m., New York City time, on the Calculation Date pertaining to such
Interest Determination Date, then the Commercial Paper Rate for that Interest
Determination Date shall be calculated by the Calculation Agent and shall be
the Money Market Yield of the arithmetic mean of the offered rates of three
leading dealers of commercial paper in The City of New York, which may include
The Chase Manhattan Bank (in such capacity, "Chase"), selected by the
Calculation Agent (after consulting with us) as of 11:00 a.m., New York City
time, on that Interest Determination Date, for commercial paper having the
Index Maturity designated in the applicable Pricing Supplement placed for an
industrial issuer whose bond rating is "AA," or the equivalent, from a
nationally recognized rating agency; provided, however, that, if the dealers
selected as aforesaid are not quoting as mentioned in this sentence, the
Commercial Paper Rate will be the Commercial Paper Rate in effect on such
Interest Determination Date.
"Money Market Yield" shall be a yield (expressed as a percentage) calculated in
accordance with the following formula:
<TABLE>
<C> <C> <C> <C> <S>
D X 360
------------- X 100
Money Market Yield = 360 - (D X M)
</TABLE>
where "D" refers to the per annum rate for the commercial paper, quoted on a
bank discount basis and expressed as a decimal; and "M" refers to the actual
number of days in the interest period for which interest is being calculated.
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LIBOR NOTES
Each LIBOR Note will bear interest at the interest rate calculated with
reference to LIBOR and any Spread or Spread Multiplier specified in that Note
and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "LIBOR" will be
determined by the Calculation Agent in accordance with the following provisions:
(i) With respect to an Interest Determination Date, LIBOR shall equal
either: (A) the arithmetic mean, as determined by the Calculation Agent, of
the offered rates which appear on the display specified in the applicable
Pricing Supplement on the LIBOR page of the Reuters Monitor Money Rates
Service (or such other relevant page as may replace that page on that
service) (the "Reuters Screen") or (B) the offered rate which appears on
page 3750 of the Dow Jones Telerate Service (or such other page as may
replace that page on that service) (the "Telerate Page"), in each case as
of 11:00 a.m., London time, on that Interest Determination Date; if neither
the Reuters Screen nor the Telerate Page is specified in the applicable
Pricing Supplement, LIBOR will be determined as if the Telerate Page had
been specified; provided, however, in the case of (A) above, if fewer than
two such offered rates so appear on the Reuters Screen, or in the case of
(B) above, if no rate appears on the Telerate Page, LIBOR for that Interest
Determination Date will be determined as described in (ii) below.
(ii) If, on any Interest Determination Date, fewer than two offered
rates appear on the Reuters Screen and if no rate appears on the Telerate
Page, as the case may be, the Calculation Agent will request the principal
London office of each of four major banks in the London interbank market,
which may include Chase, as selected by the Calculation Agent (after
consulting with us), to provide the Calculation Agent with its quotation of
the rate offered to prime banks in the London interbank market at
approximately 11:00 a.m., London time, on that Interest Determination Date
for deposits in U.S. dollars having the Index Maturity, and in a principal
amount equal to an amount not less than $1,000,000 that is representative
of a single transaction in such market at such time (a "Representative
Amount"). If at least two such quotations are provided, LIBOR will be the
arithmetic mean of such quotations. If fewer than two quotations are
provided, LIBOR will be the arithmetic mean of the rates quoted at
approximately 11:00 a.m., New York City time, on such Interest
Determination Date by three major U.S. banks, which may include Chase,
selected by the Calculation Agent (after consulting with us), for loans in
U.S. dollars to leading European banks having the Index Maturity designated
in the Pricing Supplement, commencing on the second London Banking Day
immediately following that Interest Determination Date and in a
Representative Amount, provided, however, that if fewer than three banks
selected as aforesaid by the Calculation Agent are quoting as mentioned in
this sentence, LIBOR for such date will be LIBOR in effect on such Interest
Determination Date.
TREASURY RATE NOTES
Each Treasury Rate Note will bear interest at the interest rate calculated with
reference to the Treasury Rate and any Spread or Spread Multiplier specified in
that Note and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the "Treasury
Rate" means, with respect to any Interest Determination Date, the rate from the
most recent auction of direct obligations of the United States ("Treasury
bills") having the Index Maturity designated in the applicable Pricing
Supplement as such rate appears on either the Telerate Page 56 or the Telerate
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<PAGE> 11
Page 57 under the heading "AVGE INVEST YIELD". The following procedures will be
followed if the Treasury Rate cannot be determined as described above:
- - If such rate is not so published by 3:00 p.m., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, then the
Treasury Rate shall be the auction average rate (expressed as a bond
equivalent, on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) as otherwise made available by the United States
Department of the Treasury.
- - In the event that the results of the auction of Treasury bills having the
Index Maturity designated in the applicable Pricing Supplement is not
published or made available as provided above by 3:00 p.m., New York City
time, on such Calculation Date or if no such auction is held in a particular
week (or on the preceding Friday, if applicable), then the Treasury Rate for
that Interest Determination Date shall be calculated by the Calculation Agent
and shall be a yield to maturity (expressed as a bond equivalent, on the basis
of a year of 365 or 366 days, as applicable, and applied on a daily basis) of
the arithmetic mean of the secondary market bid rates, as of approximately
3:30 p.m., New York City time, on such Interest Determination Date, of three
leading primary United States government securities dealers selected by the
Calculation Agent (after consulting with us) for the issue of Treasury bills
with a remaining maturity closest to the Index Maturity designated in the
applicable Pricing Supplement; provided, however, that if the dealers selected
as aforesaid are not quoting as mentioned in this sentence, the Treasury Rate
will be the Treasury Rate in effect on such Interest Determination Date.
FEDERAL FUNDS RATE NOTES
Each Federal Funds Rate Note will bear interest at the interest rate calculated
with reference to the Federal Funds Rate and any Spread or Spread Multiplier
specified in that Note and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the "Federal
Funds Rate" means, with respect to any Interest Determination Date, the rate on
that day for Federal Funds as published in H.15(519) under the heading "Federal
Funds (Effective)." The following procedures will be followed if the Federal
Funds Rate cannot be determined as described above:
- - If the above rate is not so published by 9:00 a.m., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, then the
Federal Funds Rate shall be the rate on such Interest Determination Date as
published in the H.15 Daily Update under the heading "Federal Funds
(Effective)."
- - If such rate is not published in either H.15(519) or the H.15 Daily Update by
3:00 p.m., New York City time, on the Calculation Date pertaining to such
Interest Determination Date, the Federal Funds Rate for such Interest
Determination Date shall be calculated by the Calculation Agent and will be
the arithmetic mean of the rates for the last transaction in overnight Federal
Funds arranged by each of three leading brokers of Federal Funds transactions
in New York City, which may include Chase, selected by the Calculation Agent
(after consulting with us) prior to 11:00 a.m., New York City time, on such
Interest Determination Date; provided, however, that if the brokers selected
as aforesaid are not quoting as mentioned in this sentence, the Federal Funds
Rate with respect to such Interest Determination Date will remain the Federal
Funds Rate then in effect on such Interest Determination Date.
PRIME RATE NOTES
Each Prime Rate Note will bear interest at the interest rate calculated with
reference to the Prime Rate and any Spread or Spread Multiplier specified in
that Note and in the applicable Pricing Supplement.
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Unless otherwise specified in the applicable Pricing Supplement, the "Prime
Rate" means, with respect to any Interest Determination Date, the rate on such
date as published in H.15(519) under the heading "Bank Prime Loan." The
following procedures will be followed if the Prime Rate cannot be determined as
described above:
- - In the event that such rate is not published by 9:00 a.m., New York City time,
on the Calculation Date pertaining to such Interest Determination Date, then
the Prime Rate will be the rate on the Interest Determination Date as
published in the H.15 Daily Update opposite the caption "Bank Prime Loan".
- - If such rate is not published prior to 3:00 p.m., New York City time, on the
Calculation Date in either H.15 (519) or the H.15 Daily Update, then the Prime
Rate will be determined by the Calculation Agent and will be the arithmetic
mean of the rates of interest publicly announced by each bank that appears on
the Reuters Screen USPRIME1 Page as such bank's prime rate or base lending
rate as in effect for that Interest Determination Date. "Reuters Screen
USPRIME1 Page" means the display designated as page "USPRIME1" on the Reuters
Monitor Money Rates Service (or such other page as may replace the USPRIME1
page on that service for the purpose of displaying prime rates or base lending
rates of major United States banks).
- - If fewer than four such rates but more than one such rate appear on the
Reuters Screen USPRIME1 Page for such Interest Determination Date, the Prime
Rate shall be determined by the Calculation Agent and will be the arithmetic
mean of the prime rates quoted on the basis of the actual number of days in
the year divided by 360 as of the close of business on such Interest
Determination Date by at least two major money center banks in New York City
selected by the Calculation Agent (after consulting with us).
- - If fewer than two such rates appear on the Reuters Screen USPRIME1 Page, the
Prime Rate will be determined by the Calculation Agent and will be the
arithmetic mean of the prime rates furnished in New York City by three
substitute banks or trust companies organized and doing business under the
laws of the United States, or any State thereof, in each case having total
equity capital of at least U.S. $500,000,000 and being subject to supervision
or examination by Federal or State authority, which may include Chase,
selected by the Calculation Agent (after consulting with us) to provide such
rate or rates; provided, however, that if the banks selected as aforesaid are
not quoting as mentioned in this sentence, the Prime Rate will remain the
Prime Rate in effect on such Interest Determination Date.
CMT RATE NOTES
Each CMT Rate Note will bear interest at the interest rate calculated with
reference to the CMT Rate and any Spread or Spread Multiplier specified in that
Note and any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the "CMT Rate"
means, with respect to any Interest Determination Date, the rate on such date as
displayed on the Designated CMT Telerate Page (as defined below) under the
caption " . . . Treasury Constant Maturities . . . Federal Reserve Board Release
H.15 . . . Mondays Approximately 3:45 P.M.," under the column for the Designated
CMT Maturity Index (as defined below) for (i) if the Designated CMT Telerate
Page is 7051, the rate on such CMT Rate Interest Determination Date and (ii) if
the Designated CMT Telerate Page is 7052, the week, or the month, as applicable,
ended immediately preceding the week in which the related CMT Rate Interest
Determination Date occurs. The following procedures will be followed if the CMT
Rate cannot be determined as described above:
- - If such rate is no longer displayed on the relevant page, or if not displayed
by 3:00 P.M., New York City time, on the related Calculation Date, then the
CMT Rate for such CMT Rate
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Interest Determination Date will be such treasury constant maturity rate for
the Designated CMT Maturity Index as published in the relevant H.15(519).
- - If such rate is no longer published, or if not published by 3:00 P.M., New
York City time, on the related Calculation Date, then the CMT Rate for such
CMT Rate Interest Determination Date will be such treasury constant maturity
rate for the Designated CMT Maturity Index (or other United States Treasury
rate for the Designated CMT Maturity Index), for the CMT Rate Interest
Determination Date with respect to such Interest Reset Date as may then be
published by either the Board of Governors of the Federal Reserve System or
the United States Department of the Treasury that the Calculation Agent
determines to be comparable to the rate formerly displayed on the Designated
CMT Telerate Page and published in the relevant H.15(519).
- - If such information is not provided by 3:00 P.M., New York City time, on the
related Calculation Date, then the CMT Rate for the CMT Rate Interest
Determination Date will be calculated by the Calculation Agent, and will be a
yield to maturity, based on the arithmetic mean of the secondary market
closing offer side prices as of approximately 3:30 P.M., New York City time,
on the CMT Rate Interest Determination Date reported, according to their
written records, by three leading primary United States government securities
dealers (each, a "Reference Dealer") in The City of New York (which may
include the Agents or their affiliates) selected by the Calculation Agent
after consulting with us (from five such Reference Dealers selected by the
Calculation Agent after consulting with us and eliminating the highest
quotation (or, in the event of equality, one of the highest) and the lowest
quotation (or, in the event of equality, one of the lowest)), for the most
recently issued direct noncallable fixed rate obligations of the United States
("Treasury Notes") with an original maturity of approximately the Designated
CMT Maturity Index and a remaining term to maturity of not less than such
Designated CMT Maturity Index minus one year.
- - If the Calculation Agent cannot obtain three such Treasury Note quotations,
the CMT Rate for such CMT Rate Interest Determination Date will be calculated
by the Calculation Agent and will be a yield to maturity based on the
arithmetic mean of the secondary market offer side prices as of approximately
3:30 P.M., New York City time, on the CMT Rate Interest Determination Date of
three Reference Dealers in The City of New York (from five such Reference
Dealers selected by the Calculation Agent after consulting with us and
eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)), for Treasury Notes with an original maturity of the number of years
that is the next highest to the Designated CMT Maturity Index and a remaining
term to maturity closest to the Designated CMT Maturity Index and in an amount
of at least $100 million.
- - If three or four (and not five) of such Reference Dealers are quoting as
described above, then the CMT Rate will be based on the arithmetic mean of the
offer prices obtained and neither the highest nor the lowest of such quotes
will be eliminated; provided however, that if fewer than three Reference
Dealers selected by the Calculation Agent after consulting with us are quoting
as described herein, the CMT Rate will be the CMT Rate in effect on such CMT
Rate Interest Determination Date.
- - If two Treasury Notes with an original maturity as described in the third
preceding sentence have remaining terms to maturity equally close to the
Designated CMT Maturity Index, the quotes for the Treasury Note with the
shorter remaining term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page designated in the applicable Pricing Supplement, or any
other page as may replace such page on that service for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519), for the
purpose of displaying Treasury Constant Maturities as reported in H.15(519).
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If no such page is specified in the applicable Pricing Supplement, the
Designated CMT Telerate Page shall be 7052, for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity of the
U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20, or 30 years) specified
in the applicable Pricing Supplement with respect to which the CMT Rate will be
calculated. If no such maturity is specified in the applicable Pricing
Supplement, the Designated CMT Maturity Index shall be 2 years.
BOOK-ENTRY NOTES
Upon issuance, all Fixed Rate Book-Entry Notes having the same Issue Date,
Interest Rate, Interest Payment Dates, redemption provision, repayment
provision, and Maturity Date and all Floating Rate Book-Entry Notes having the
same Base Rate, Initial Interest Rate, Interest Reset Dates, Interest Reset
Period, Spread or Spread Multiplier, Index Maturity, redemption provision,
repayment provision, and Maturity Date will be represented by a single Global
Security. Each Global Security representing Book-Entry Notes will be deposited
with, or on behalf of, the Depositary and registered in the name of a nominee of
the Depositary.
The Depositary has advised us and the Agent as follows: the Depositary is a
limited-purpose trust company organized under the laws of the State of New York,
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. The Depositary was created to hold securities of its participants
and to facilitate the clearance and settlement of securities transactions among
its participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. The Depositary's participants include securities
brokers and dealers (including the Agents), banks, trust companies, clearing
corporations and certain other organizations, some of whom (and/or their
representatives) own the Depositary. Access to the Depositary's book-entry
system is also available to others, such as banks, brokers, dealers and trust
companies, that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.
A further description of the Depositary's procedure with respect to Global
Securities representing Book-Entry Notes is set forth in the accompanying
Prospectus under "Description of Debt Securities -- Global Securities." The
Depositary has confirmed to us, the Agents and the Trustee that it intends to
follow such procedures.
SINKING FUND
Unless otherwise specified in the applicable Pricing Supplement, no sinking fund
will be provided for the Notes.
REDEMPTION
The Notes will not generally be redeemable prior to their Maturity Date. We, in
the applicable Pricing Supplement relating to a Note, may specify that a Note
will be redeemable at our option on a date or dates specified prior to its
Maturity Date at a price or prices set forth in the applicable Pricing
Supplement, together with accrued interest to the date of redemption. We may
redeem any of the Notes which are redeemable and remain outstanding either in
whole or from time to time in part, upon not less than 30, nor more than 60,
days notice. If less than all of the Notes with like tenor and terms are
redeemed, the Notes to be redeemed shall be selected by the Trustee by such
method as the Trustee shall deem fair and appropriate.
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The amount of any Discount Note payable in the event of redemption by us or
acceleration of the Maturity Date thereof, in lieu of the stated principal
amount due at the Maturity Date, shall be the Amortized Face Amount of such
Discount Note as of the date of such redemption, repayment or acceleration. The
"Amortized Face Amount" of a Discount Note shall be the amount equal to:
- - the Issue Price of such Discount Note set forth in the applicable Pricing
Supplement plus
- - the portion of the difference between the Issue Price and the principal amount
of such Discount Note that has accrued at the yield to maturity set forth in
the Pricing Supplement (computed in accordance with generally accepted United
States bond yield computation principles) at the date as of which the
Amortized Face Amount is calculated.
In no event shall the Amortized Face Amount of such Discount Note exceed its
stated principal amount. See also "Certain Federal Income Tax Considerations
- -- United States Persons -- Discount Notes."
REPAYMENT AND REPURCHASE
The Notes will not generally be repayable at the option of the holder prior to
their Maturity Date. We, in the Pricing Supplement relating to a Note, may
specify that a Note will be repayable at the option of the holder on a date or
dates specified prior to its Maturity Date at a price or prices set forth in the
applicable Pricing Supplement, together with accrued interest to the date of
repayment.
In order for a Note to be repaid, the Paying Agent (we have initially appointed
the Trustee as Paying Agent) must receive at least 30, but not more than 45,
days prior to the repayment date:
- - the Note with the form entitled "Option to Elect Repayment" on the reverse of
the Note duly completed or
- - a facsimile transmission or a letter from a member of a national securities
exchange or the National Association of Securities Dealers, Inc. or a
commercial bank or trust company in the United States of America setting forth
the name of the holder of the Note, the principal amount of the Note, the
principal amount of the Note to be repaid, the certificate number or a
description of the tenor and terms of the Note, a statement that the option to
elect repayment is being exercised thereby and a guarantee that the Note to be
repaid with the form entitled "Option to Elect Repayment" on the reverse of
the Note duly completed will be received by the Paying Agent not later than
five Business Days after the date of such facsimile transmission or letter and
such Note and form duly completed are received by the Paying Agent by such
fifth Business Day.
Exercise of the repayment option by the holder of a Note shall be irrevocable.
The repayment option may be exercised by the holder of a Note for less than the
entire principal amount of the Note provided that the principal amount of the
Note remaining outstanding after repayment is an authorized denomination.
We may at any time purchase Notes at any price in the open market or otherwise.
Notes purchased by us may be held or resold or, at our discretion may be
surrendered to the Trustee for cancellation.
CERTAIN LIMITATIONS ON CLAIMS IN BANKRUPTCY
If a bankruptcy proceeding is commenced in respect of the Company, the claim of
the holder of a Discount Note may, under Section 502(b)(2) of Title 11 of the
United States Code, be limited to
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the issue price of such Note plus that portion of any original issue discount
that is amortized from the date of issue to the commencement of the proceeding.
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the principal U.S. Federal tax consequences
resulting from the beneficial ownership of Notes by certain persons. This
summary does not purport to consider all the possible U.S. Federal tax
consequences of the purchase, ownership or disposition of the Notes and is not
intended to reflect the individual tax position of any beneficial owner. It
deals only with Notes held as capital assets, whether issued in U.S. dollars or
currencies or composite currencies other than U.S. dollars ("Foreign Currency").
Moreover, except as expressly indicated, it addresses initial purchasers and
does not address beneficial owners with a special tax status or special tax
situations, such as financial institutions, insurance companies, dealers in
securities or currencies, Notes (or Foreign Currency) held as a hedge against
currency risks or as part of a straddle with other investments or as part of a
"synthetic security" or other integrated investment (including a "conversion
transaction") comprised of a Note and one or more other investments, or
situations in which the functional currency of the beneficial owner is not the
U.S. dollar. Except to the extent discussed below under "Non-U.S. Holders", this
summary is not applicable to non-United States persons not subject to U.S.
Federal income tax on their worldwide income. This summary is based upon the
U.S. Federal tax laws and regulations as now in effect and as currently
interpreted and does not take into account possible changes in such tax laws or
such interpretations, any of which may be applied retroactively. It does not
include any description of the tax laws of any state, local or foreign
governments that may be applicable to the Notes or holders thereof. Persons
considering the purchase of Notes should consult their own tax advisors
concerning the application of the U.S. Federal tax laws to their particular
situations as well as any consequences to them under the laws of any other
taxing jurisdiction.
U.S. HOLDERS
PAYMENTS OF INTEREST
In general, interest on a Note, whether payable in U.S. dollars or a Foreign
Currency (other than certain payments on a Discount Note, as defined and
described below under "Original Issue Discount"), will be taxable to a
beneficial owner who or which is (i) a citizen or resident of the United States,
(ii) a corporation created or organized under the laws of the United States or
any State thereof (including the District of Columbia), (iii) an estate the
income of which is includible in gross income for U.S. Federal income tax
purposes regardless of its source, or (iv) a trust the administration over which
a U.S. court is able to exercise primary supervision and all of the substantial
decisions of which one or more United States persons have the authority to
control (a "U.S. Holder") as ordinary income at the time it is received or
accrued, depending on the holder's method of accounting for tax purposes. If an
interest payment is denominated in or determined by reference to a Foreign
Currency, then special rules, described below under "Foreign Currency Notes",
apply.
ORIGINAL ISSUE DISCOUNT
The following discussion summarizes the U.S. Federal income tax consequences to
U.S. Holders of Notes issued with original issue discount ("OID"). The basic
rules for reporting OID are contained in the Internal Revenue Code of 1986, as
amended (the "Code") and the Treasury regulations (the "OID Regulations")
thereunder which expand and illustrate the rules set forth in the Code.
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Special rules apply to OID on a Note that is denominated in Foreign Currency.
See "Foreign Currency Notes -- Foreign Currency Discount Notes".
General. A Note will be treated as issued with OID (a "Discount Note") if the
excess of the Note's "stated redemption price at maturity" over its issue price
is greater than a de minimis amount (as set forth in the Code and the OID
Regulations). Generally, the issue price of a Note (or any Note that is part of
an issue of Notes) will be the first price at which a substantial amount of
Notes that are part of such issue of Notes is sold to the public (other than to
underwriters, placement agents or wholesalers). Under the OID Regulations, the
"stated redemption price at maturity" of a Note is the sum of all payments
provided by the Note that are not payments of "qualified stated interest". A
"qualified stated interest" payment includes any stated interest payment on a
Note that is unconditionally payable at least annually at a single fixed rate
(or at certain floating rates) that appropriately takes into account the length
of the interval between stated interest payments. The Pricing Supplement will
state whether a particular issue of Notes will constitute an issue of Discount
Notes.
In general, if the excess of a Note's stated redemption price at maturity over
its issue price is de minimis, then such excess constitutes "de minimis OID".
Under the OID Regulations, unless the election described below under "Election
to Treat All Interest as Original Issue Discount" is made, such a Note will not
be treated as issued with OID (in which case the following paragraphs under
"Original Issue Discount" will not apply) and a U.S. Holder of such a Note will
recognize capital gain with respect to such de minimis OID as stated principal
payments on the Note are made. The amount of such gain with respect to each such
payment will equal the product of the total amount of the Note's de minimis OID
and a fraction, the numerator of which is the amount of the principal payment
made and the denominator of which is the stated principal amount of the Note.
In certain cases, Notes that bear stated interest and are issued at par may be
deemed to bear OID for Federal income tax purposes, with the result that the
inclusion of interest in income for Federal income tax purposes may vary from
the actual cash payments of interest made on such Notes, generally accelerating
income for cash method taxpayers. Under the OID Regulations, a Floating Rate
Note may be a Discount Note where (i) it provides for a maximum interest rate or
a minimum interest rate that is reasonably expected as of the issue date to
cause the yield on the Note to be significantly less, in the case of a maximum
rate, or more, in the case of a minimum rate, than the expected yield determined
without the maximum or minimum rate, as the case may be; (ii) it provides for
significant front-loading or back-loading of interest; (iii) it bears interest
at certain combinations of floating or fixed rates; or (iv) it provides for
certain other kinds of contingent payments. Notice will be given in the
applicable Pricing Supplement when we determine that a particular Note will be a
Discount Note. Unless specified in the applicable Pricing Supplement, Floating
Rate Notes will not be Discount Notes.
The Code and the OID Regulations require a U.S. Holder of a Discount Note having
a maturity of more than one year from its date of issue to include OID in gross
income before the receipt of cash attributable to such income, without regard to
the holder's method of accounting for tax purposes. The amount of OID includible
in gross income by a U.S. Holder of a Discount Note is the sum of the "daily
portions" of OID with respect to the Discount Note for each day during the
taxable year or portion of the taxable year in which the U.S. Holder holds such
Discount Note ("accrued OID"). The daily portion is determined by allocating to
each day in any "accrual period" a pro rata portion of the OID allocable to that
accrual period. Under the OID Regulations, accrual periods with respect to a
Note may be any set of periods (which may be of varying lengths) selected by the
U.S. Holder as long as (i) no accrual period is longer than one year and (ii)
each scheduled payment of interest or principal on the Note occurs on the first
day or final day of an accrual period.
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The amount of OID allocable to an accrual period equals the excess of (a) the
product of the Discount Note's adjusted issue price at the beginning of the
accrual period and the Discount Note's yield to maturity (determined on the
basis of compounding at the close of each accrual period and properly adjusted
for the length of the accrual period) over (b) the sum of any payments of
qualified stated interest on the Discount Note allocable to the accrual period.
The "adjusted issue price" of a Discount Note at the beginning of the first
accrual period is the issue price and at the beginning of any accrual period
thereafter is (x) the sum of the issue price of such Discount Note, the accrued
OID for each prior accrual period (determined without regard to the amortization
of any acquisition premium or bond premium, which are discussed below), and the
amount of any qualified stated interest on the Note that has accrued prior to
the beginning of the accrual period but is not payable until a later date, less
(y) any prior payments on the Discount Note that were not qualified stated
interest payments. If a payment (other than a payment of qualified stated
interest) is made on the first day of an accrual period, then the adjusted issue
price at the beginning of such accrual period is reduced by the amount of the
payment. If a portion of the initial purchase price of a Note is attributable to
interest that accrued prior to the Note's issue date, the first stated interest
payment on the Note is to be made within one year of the Note's issue date and
such payment will equal or exceed the amount of pre-issuance accrued interest,
then the U.S. Holder may elect to decrease the issue price of the Notes by the
amount of pre-issuance accrued interest, in which case a portion of the first
stated interest payment will be treated as a return of the excluded pre-issuance
accrued interest and not as an amount payable on the Note.
The OID Regulations contain certain special rules that generally allow any
reasonable method to be used in determining the amount of OID allocable to a
short initial accrual period (if all other accrual periods are of equal length)
and require that the amount of OID allocable to the final accrual period equal
the excess of the amount payable at the maturity of the Note (other than any
payment of qualified stated interest) over the Note's adjusted issue price as of
the beginning of such final accrual period. In addition, if an interval between
payments of qualified stated interest on a Note contains more than one accrual
period, then the amount of qualified stated interest payable at the end of such
interval is allocated pro rata (on the basis of their relative lengths) between
the accrual periods contained in the interval.
U.S. Holders of Discount Notes generally will have to include in income
increasingly greater amounts of OID over the life of the Note.
Acquisition Premium. A U.S. Holder that purchases a Note at its original
issuance for an amount in excess of its issue price but less than its stated
redemption price at maturity (any such excess being "acquisition premium"), and
that does not make the election described below under "Original Issue Discount
- -- Election To Treat All Interest as Original Issue Discount", is permitted to
reduce the daily portions of OID by a fraction, the numerator of which is the
excess of the U.S. Holder's purchase price for the Note over the adjusted issue
price, and the denominator of which is the excess of the sum of all amounts
payable on the Note after the purchase date, other than payments of qualified
stated interest, over the Note's adjusted issue price. Alternatively, a U.S.
Holder may elect to compute OID accruals as described under "Original Issue
Discount -- General" above, treating the U.S. Holder's purchase price as the
issue price.
Optional Redemption. If the Company has an option to redeem a Note, or the
Holder has an option to cause a Note to be repurchased, prior to the Note's
stated maturity, such option will be presumed to be exercised if, by treating
any date on which such Note may be redeemed or repurchased as the maturity date
and the amount payable on such date in accordance with the terms of such Note
(the "redemption price") as the stated redemption price at maturity, the yield
on the Note would be (i) in the case of an option of the Company, lower than its
yield to stated maturity, or (ii) in the case of an option of the Holder, higher
than its yield to stated maturity. If such option is not in fact exercised when
presumed to be exercised, the Note would be treated
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solely for OID purposes as if it were redeemed or repurchased, and a new Note
were issued, on the presumed exercise date for an amount equal to the Note's
adjusted issue price on that date.
Short-Term Notes. Under the Code, special rules apply with respect to OID on
Notes that mature one year or less from the date of issuance ("Short-Term
Notes"). In general, a cash basis U.S. Holder of a Short-Term Note is not
required to include OID in income as it accrues for U.S. Federal income tax
purposes unless it elects to do so. Accrual basis U.S. Holders and certain other
U.S. Holders, including banks, regulated investment companies, dealers in
securities and cash basis U.S. Holders who so elect, are required to include OID
in income as it accrues on Short-Term Notes on a straight-line basis, unless an
election is made to accrue the OID under the constant yield method (based on
daily compounding). In the case of a U.S. Holder not required and not electing
to include OID in income currently, any gain realized on the sale or retirement
of Short Term Notes will be ordinary income to the extent of the OID accrued on
a straight-line basis (unless an election is made to accrue the OID under the
constant yield method) through the date of sale or retirement. U.S. Holders who
are not required and do not elect to include OID on Short-Term Notes in income
as it accrues will be required to defer deductions for any interest paid on
indebtedness incurred to purchase or carry Short-Term Notes in an amount not
exceeding the deferred interest income until the deferred income is realized.
Any U.S. Holder of a Short-Term Note can elect to apply the rules in the
preceding paragraph taking into account the amount of "acquisition discount", if
any, with respect to the Note (rather than the OID with respect to such Note).
Acquisition discount is the excess of the stated redemption price at maturity of
the Short-Term Note over the U.S. Holder's purchase price. Acquisition discount
will be treated as accruing on a ratable basis or, at the election of the U.S.
Holder, on a constant-yield basis.
For purposes of determining the amount of OID subject to these rules, the OID
Regulations provide that interest payments on a Short-Term Note are not
qualified stated interest, but instead are included in the Short-Term Note's
stated redemption price at maturity. However, all payments on Short-Term Notes,
whether denominated as principal or interest, will be treated by a cash basis
U.S. Holder as taxable payments of accrued OID, to the extent that OID has
accrued at time of payment.
NOTES PURCHASED AT A PREMIUM
Under the Code, a U.S. Holder that purchases a Note for an amount in excess of
its principal amount will not be subject to the OID rules and may elect to treat
such excess as "amortizable bond premium", in which case the amount of qualified
stated interest required to be included in the U.S. Holder's income each year
with respect to interest on the Note will be reduced by the amount of
amortizable bond premium allocable (based on the Note's yield to maturity) to
such year. Any election to amortize bond premium shall apply to all bonds (other
than bonds the interest on which is excludible from gross income) held by the
U.S. Holder at the beginning of the first taxable year to which the election
applies or thereafter acquired by the U.S. Holder, and may not be revoked
without the consent of the Internal Revenue Service ("IRS"). A U.S. Holder that
does not elect to amortize bond premium will generally treat the premium as a
capital loss when the Note matures. See also "Original Issue
Discount -- Election to Treat All Interest as Original Issue Discount".
NOTES PURCHASED AT A MARKET DISCOUNT
A Note, other than a Short-Term Note, will be treated as issued at a market
discount (a "Market Discount Note") if the amount for which a U.S. Holder
purchased the Note is less than the Note's issue price, subject to a de minimis
rule similar to the rule relating to de minimis OID described under "Original
Issue Discount -- General".
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In general, any gain recognized on the maturity or disposition of a Market
Discount Note will be treated as ordinary income to the extent that such gain
does not exceed the accrued market discount on such Note. Alternatively, a U.S.
Holder of a Market Discount Note may elect to include market discount in income
currently over the life of the Market Discount Note. Such an election applies to
all debt instruments with market discount acquired by the electing U.S. Holder
on or after the first day of the first taxable year to which the election
applies and may not be revoked without the consent of the IRS.
Market discount accrues on a straight-line basis unless the U.S. Holder elects
to accrue such market discount on a constant yield to maturity basis. Such as
election shall apply only to the Note with respect to which it is made and is
irrevocable. A U.S. Holder of a Market Discount Note who does not elect to
include market discount in income currently generally will be required to defer
deductions for interest on borrowings allocable to such Note in an amount not
exceeding the accrued market discount on such Note until the maturity or
disposition of such Note.
The market discount rules do not apply to a Short-Term Note.
ELECTION TO TREAT ALL INTEREST AS ORIGINAL ISSUE DISCOUNT
Any U.S. Holder may elect to include in gross income all interest that accrues
on a Note using the constant yield method (described above under the heading
"Original Issue Discount General"), with the modifications described below. For
purposes of this election, interest includes stated interest, OID, de minimis
OID, market discount (described above under "Notes Purchased at a Market
Discount"), acquisition discount, de minimis market discount and unstated
interest, as adjusted by any amortizable bond premium (described above under
"Notes Purchased at a Premium") or acquisition premium.
In applying the constant-yield method to a Note with respect to which this
election has been made, the issue price of the Note will equal the electing U.S.
Holder's adjusted basis in the Note immediately after its acquisition, the issue
date of the Note will be the date of its acquisition by the electing U.S.
Holder, and no payments on the Note will be treated as payments of qualified
stated interest. This election will generally apply only to the Note with
respect to which it is made and may not be revoked without the consent of the
IRS. If this election is made with respect to a Note with amortizable bond
premium, then the electing U.S. Holder will be deemed to have elected to apply
amortizable bond premium against interest with respect to all debt instruments
with amortizable bond premium (other than debt instruments the interest on which
is excludible from gross income) held by such electing U.S. Holder as of the
beginning of the taxable year in which the Note with respect to which the
election is made is acquired or thereafter acquired. The deemed election with
respect to amortizable bond premium may not be revoked without the consent of
the IRS.
A U.S. Holder may make this election for a Market Discount Note only if the
holder is eligible to elect to include market discount in income currently. If a
U.S. Holder makes this election for a Market Discount Note, the holder is
treated as making both the election to accrue market discount on the constant
yield to maturity basis and the election to include market discount in income
currently over the life of all debt instruments held or thereafter acquired by
such U.S. Holder. See "Notes Purchased at a Market Discount" above with respect
to these various elections.
PURCHASE, SALE AND RETIREMENT OF THE NOTES
General. A U.S. Holder's adjusted tax basis in a Note will generally be its U.S.
dollar cost (which, in the case of a Note purchased with a Foreign Currency,
will be the U.S. dollar value of the purchase price on the date of purchase),
increased by the amount of any OID or market
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discount (or acquisition discount, in the case of a Short-Term Note) previously
included in the U.S. Holder's income with respect to the Note and the amount, if
any, of income attributable to de minimis OID included in the U.S. Holder's
income with respect to the Note, and reduced by the sum of (i) the amount of any
payments that are not qualified stated interest payments, and (ii) the amount of
any amortizable bond premium applied to reduce interest on the Note. A U.S.
Holder generally will recognize gain or loss on the sale or retirement of a Note
equal to the difference between the amount realized on the sale or retirement
and the U.S. Holder's adjusted tax basis in the Note. The amount realized on a
sale or retirement for an amount in Foreign Currency will be the U.S. dollar
value of such amount on the date of sale or retirement. Except to the extent
described above under "Original Issue Discount -- Short Term Notes" or below
under "Foreign Currency Notes -- Exchange Gain or Loss", and except to the
extent attributable to accrued but unpaid interest, gain or loss recognized on
the sale or retirement of a Note will be capital gain or loss and will be
long-term capital gain or loss if the Note was held for more than one year.
FOREIGN CURRENCY NOTES
Interest Payments. If an interest payment is denominated in or determined by
reference to a Foreign Currency, the amount of income recognized by a cash basis
U.S. Holder will be the U.S. dollar value of the interest payment, based on the
exchange rate in effect on the date of receipt, regardless of whether the
payment is in fact converted into U.S. dollars. Accrual basis U.S. Holders may
determine the amount of income recognized with respect to such interest payments
in accordance with either of two methods. Under the first method, the amount of
income recognized will be based on the average exchange rate in effect during
the interest accrual period (or, with respect to an accrual period that spans
two taxable years, the partial period within the taxable year). Upon receipt of
an interest payment (including a payment attributable to accrued but unpaid
interest upon the sale or retirement of a Note) determined by reference to a
Foreign Currency, an accrual basis U.S. Holder will recognize exchange gain or
loss (taxable as ordinary income or loss) measured by the difference between
such average exchange rate and the exchange rate in effect on the date of
receipt, regardless of whether the payment is in fact converted into U.S.
dollars. Under the second method, an accrual basis U.S. Holder may elect to
translate interest income into U.S. dollars at the spot exchange rate in effect
on the last day of the accrual period or, in the case of an accrual period that
spans two taxable years, at the exchange rate in effect on the last day of the
partial period within the taxable year. Additionally, if a payment of interest
is actually received within 5 business days of the last day of the accrual
period or taxable year, an accrual basis U.S. Holder applying the second method
may instead translate such accrued interest into U.S. dollars at the spot
exchange rate in effect on the day of actual receipt (in which case no exchange
gain or loss will result). Any election to apply the second method will apply to
all debt instruments held by the U.S. Holder at the beginning of the first
taxable year to which the election applies or thereafter acquired by the U.S.
Holder and may not be revoked without the consent of the IRS.
Exchange of Amounts in Other Than U.S. Dollars. Foreign Currency received as
interest on a Note or on the sale or retirement of a Note will have a tax basis
equal to its U.S. dollar value at the time such interest is received or at the
time of such sale or retirement, as the case may be. Foreign Currency that is
purchased will generally have a tax basis equal to the U.S. dollar value of the
Foreign Currency on the date of purchase. Any gain or loss recognized on a sale
or other disposition of a Foreign Currency (including its use to purchase Notes
or upon exchange for U.S. dollars) will be ordinary income or loss.
Foreign Currency Discount Notes. OID for any accrual period on a Discount Note
that is denominated in a Foreign Currency will be determined in the Foreign
Currency and then translated into U.S. dollars in the same manner as stated
interest accrued by an accrual basis U.S.
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Holder. Upon receipt of an amount attributable to original issue discount
(whether in connection with a payment of interest or the sale or retirement of a
Note), a U.S. Holder may recognize ordinary income or loss.
Amortizable Bond Premium. Amortizable bond premium on a Note that is denominated
in a Foreign Currency will be determined in the relevant Foreign Currency. Any
loss realized on the sale, exchange or retirement of a Foreign Currency Note
with amortizable bond premium by a U.S. Holder that has not elected to amortize
such premium under Section 171 of the Code will be a capital loss to the extent
of such bond premium. If such an election is made, amortizable bond premium
taken into account on a current basis will reduce interest income in units of
the relevant foreign currency. Exchange gain or loss is realized on such
amortized bond premium with respect to any period by treating the bond premium
amortized in such period as a return of principal.
Market Discount. Market discount is determined in units of the Foreign Currency.
Accrued market discount that is required to be taken into account on the
maturity or upon disposition of a Note is translated into U.S. dollars at the
exchange rate on the maturity or the disposition date, as the case may be (and
no part is treated as exchange gain or loss). Accrued market discount currently
includible in income by an electing U.S. Holder is translated into U.S. dollars
at the average exchange rate for the accrual period (or the partial accrual
period during which the U.S. Holder held the Note), and exchange gain or loss is
determined on maturity or disposition of the Note (as the case may be) in the
manner described above under "Foreign Currency Notes -- Interest Payments" with
respect to the computation of exchange gain or loss on the receipt of accrued
interest by an accrual method holder.
Exchange Gain Or Loss. Gain or loss recognized by a U.S. Holder on the sale or
retirement of a Note that is attributable to changes in exchange rates will be
treated as ordinary income or loss. However, exchange gain or loss is taken into
account only to the extent of total gain or loss realized on the transaction.
NON-U.S. HOLDERS
Subject to the discussion of backup withholding below, payments of principal
(and premium, if any) and interest (including OID) by us or any agent of ours
(acting in its capacity as such) to any holder of a Note that is not a U.S.
Holder (a "Non-U.S. Holder") will not be subject to U.S. Federal withholding
tax, provided, in the case of interest (including OID), that (i) the Non-U.S.
Holder does not actually or constructively own 10% or more of the total combined
voting power of all classes of our stock entitled to vote, (ii) the Non-U.S.
Holder is not a controlled foreign corporation for U.S. tax purposes that is
related to us (directly or indirectly) through stock ownership, (iii) the
Non-U.S. Holder is not a bank receiving interest described in Section
881(c)(3)(A) of the Code, and (iv) either (A) the Non-U.S. Holder certifies to
us or our agent under penalties of perjury that it is not a United States person
and provides its name and address or (B) a securities clearing organization,
bank or other financial institution that holds customers' securities in the
ordinary course of its trade or business (a "financial institution") and holds
the Note certifies to us or our agent under penalties of perjury that such
statement has been received from the Non-U.S. Holder by it or by another
financial institution and furnishes the payor with a copy thereof. Under
recently finalized Treasury Regulations ("Final Regulations"), the certification
requirement discussed above may also be satisfied with other documentary
evidence for interest paid (including OID) after December 31, 2000 with respect
to an offshore account or through certain foreign intermediaries. A Non-U.S.
Holder of a Note providing for payments of contingent interest within the
meaning of Section 871(h) of the Code, generally will not, however, be exempt
from U.S. Federal withholding tax under the rules described above with respect
to payments of such contingent interest. The applicable Pricing Supplement will
contain a
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description of U.S. Federal withholding tax consequences to Non-U.S. Holders of
a purchase of a Note providing for payments of such contingent interest.
If a Non-U.S. Holder is engaged in a trade or business in the United States and
interest (including OID) on the Note is effectively connected with the conduct
of such trade or business, that Non-U.S. Holder may claim exemption from U.S.
Federal withholding tax on such interest (or OID) by providing, in lieu of the
certificate described in the preceding paragraph, a properly executed IRS Form
4224. However, that Non-U.S. Holder may be subject to U.S. Federal income tax on
such interest (or OID) in the same manner as if it were a U.S. Holder. In
addition, if the Non-U.S. Holder is a foreign corporation, it may be subject to
a branch profits tax equal to 30% of its effectively connected earnings and
profits for the taxable year, subject to certain adjustments. For purposes of
the branch profits tax, interest (including OID) on a Note will be included in
the effectively connected earnings and profits of that holder if such interest
(or OID) is effectively connected with the conduct by that holder of a trade or
business in the United States.
Any capital gain, market discount or exchange gain realized on the sale,
exchange, retirement or other disposition of a Note by a Non-U.S. Holder will
not be subject to U.S. Federal income or withholding taxes if (i) such gain is
not effectively connected with a U.S. trade or business of the Non-U.S. Holder
and (ii) in the case of an individual, such Non-U.S. Holder (A) is not present
in the United States for 183 days or more in the taxable year of the sale,
exchange, retirement or other disposition and (B) does not have a tax home (as
defined in Section 911(d)(3) of the Code) in the United States in the taxable
year of the sale, exchange, retirement or other disposition and the gain is not
attributable to an office or other fixed place of business maintained by such
individual in the United States.
Notes held by an individual who is neither a citizen nor a domiciliary of the
United States for U.S. Federal tax purposes at the time of such individual's
death will not be subject to U.S. Federal estate tax, provided that, at the time
of death, the income from such Notes was not or would not have been effectively
connected with a U.S. trade or business of that individual and the individual
qualified for the exemption from U.S. Federal withholding tax (without regard to
the certification requirements) described above.
The foregoing discussion applies to a Non-U.S. Holder that is not entitled to
the benefits of an applicable tax treaty. If a Non-U.S. Holder is entitled to
the benefits of a tax treaty, interest (including OID) (and premium, if any)
otherwise subject to U.S. Federal withholding tax may be exempt from that tax or
subject to a reduced rate of tax. In addition, interest (and OID) (and premium,
if any) on a Note as well as any capital gain, market discount or exchange gain
recognized on the sale, exchange, retirement or other disposition of a Note that
is effectively connected with the conduct of trade or business by the Non-U.S.
Holder in the United States may be exempt from U.S. federal income tax if the
Non-U.S. Holder does not have a permanent establishment or fixed base in the
United States. If the Non-U.S. Holder is a foreign corporation, the treaty may
reduce the tax rate of the branch profits tax. Finally, a tax treaty may affect
the application of the U.S. Federal estate tax with respect to a Note.
PURCHASERS OF NOTES WHO ARE NON-U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX
ADVISORS WITH RESPECT TO THE POSSIBLE APPLICABILITY OF UNITED STATES WITHHOLDING
AND OTHER TAXES UPON INCOME REALIZED IN RESPECT OF THE NOTES.
INFORMATION REPORTING AND BACKUP WITHHOLDING
For each calendar year in which the Notes are outstanding, we and each paying
agent making payments to a beneficial owner in respect of a Note will generally
be required to provide the IRS with certain information, including the
beneficial owner's name, address and taxpayer identifica-
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<PAGE> 24
tion number (either the beneficial owner's Social Security number or its
employer identification number, as the case may be), and the aggregate amount of
interest and principal paid to the beneficial owner during the calendar year.
These reporting requirements, however, do not apply with respect to certain U.S.
Holders who establish their eligibility for an exemption, including
corporations, securities broker-dealers, other financial institutions,
tax-exempt organizations, qualified pension and profit sharing trusts, and
individual retirement accounts.
In the event that a U.S. Holder of a Note fails to establish its exemption from
such information reporting requirements or is subject to the reporting
requirements described above and fails to supply its correct taxpayer
identification number in the manner required by applicable law, or underreports
its tax liability, as the case may be, we or the payment agent making payments
in respect of a Note may be required to "backup" withhold a tax equal to 31% of
each payment of interest and principal with respect to Notes. This backup
withholding tax is not an additional tax and may be credited against the U.S.
Holder's U.S. Federal income tax liability if the required information is
furnished to the IRS.
Information reporting and backup withholding will not be required with respect
to payments made by us or any paying agent to a Non-U.S. Holder if the required
certification described in clause (iii) in the first paragraph under "Non-U.S.
Holders" (or such other documentary evidence as provided under the Final
Regulations for payments made after December 31, 2000) 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 generally will not
apply if payments of principal 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
U.S. 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, for taxable years beginning after December 31, 2000, 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 which 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 or 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 a certification as provided above and the payor does
not have actual knowledge that the beneficial owner is a United States person or
otherwise establishes an exemption.
PLAN OF DISTRIBUTION
We are offering the Notes on a continuing basis through the Agents. The Agents
have agreed to use their best efforts to solicit orders for the purchase of the
Notes. We reserve the right to sell Notes directly to investors on our own
behalf in those jurisdictions where we are authorized to do so. We will have the
sole right to accept orders to purchase Notes and may reject any proposed
purchase of Notes in whole or in part. Each Agent will have the right, in its
discretion reasonably exercised, to reject any proposed purchase of Notes
through it in whole or in part. Payment of the
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<PAGE> 25
purchase price of Notes will be required to be made in immediately available
funds. With respect to Notes with maturity periods that are thirty years or
shorter, we will pay each Agent a commission ranging from .125% to .750%,
depending upon the maturity period of the Notes sold, of the principal amount of
Notes sold through such Agent. With respect to Notes sold with maturity periods
in excess of thirty years, the commission amount shall be negotiated. No
commission will be payable on any sales made directly by us.
We may also sell Notes at a discount to an Agent as principal for resale to one
or more investors and other purchasers at varying prices related to prevailing
market prices at the time of resale or, if set forth in the applicable Pricing
Supplement, at a fixed public offering price, as determined by such Agent. After
any initial public offering of Notes to be resold to investors and other
purchasers, the public offering price (in the case of Notes to be resold at a
fixed public offering price), the concession and the discount may be changed. In
addition, an Agent may offer Notes purchased by it as principal to other
dealers. Notes sold by an Agent to a dealer may be sold at a discount and,
unless otherwise specified in the applicable Pricing Supplement, such discount
allowed will not be in excess of the discount received by such Agent from us.
Unless otherwise specified in the applicable Pricing Supplement, any Note
purchased by an Agent as principal will be purchased at 100% of the principal
amount thereof less a percentage equal to the commission applicable to an agency
sale of a Note of identical maturity.
Concurrently with the offering of the Notes through the Agents or otherwise as
described herein, we may issue other debt securities as described in the
accompanying Prospectus.
The Agents, whether acting as agent or principal, may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933 (the "Securities
Act"). We have agreed to indemnify the Agents against certain liabilities,
including liabilities under the Securities Act, or to contribute to payments
that the Agent may be required to make in respect thereof. No Note will have an
established trading market when issued. The Notes will not be listed on any
securities exchange. Each Agent may make a market in the Notes, but such Agent
is not obligated to do so and may discontinue any market-making at any time
without notice. There can be no assurance of a secondary market for any Notes or
that the Notes will be sold.
Each Agent and certain of its affiliates may from time to time engage in
transactions with, and perform investment banking and commercial lending
services for, us and certain of our affiliates in the ordinary course of
business.
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<PAGE> 26
$800,000,000
RYDER SYSTEM, INC.
DEBT SECURITIES
Ryder System, Inc. (the "Company") from time to time may offer its debt
securities (the "Debt Securities"), in one or more Series, of up to $800,000,000
in aggregate principal amount (or net proceeds in the case of securities issued
at an original issue discount), including the equivalent thereof in other
currencies, or composite currency units such as the European Currency Unit, in
amounts, at prices and on terms to be determined at the time of offering. See
"Plan of Distribution."
The Debt Securities, when issued, will rank on a parity with all other unsecured
and unsubordinated indebtedness of the Company.
When a particular Series of Debt Securities is offered (the "Offered Debt
Securities"), a supplement to this Prospectus will be delivered (the "Prospectus
Supplement") together with this Prospectus setting forth the terms of such
Offered Debt Securities, including the specific designation, aggregate principal
amount, denominations, maturity, interest rate (or method for its calculation)
and payment dates, if any, any redemption or repayment terms, the initial public
offering price, whether such Offered Debt Securities will be issued, in whole or
in part, in registered, bearer or global form (or any two or three of such
forms), the names of, and the principal amounts to be purchased by or through
underwriters, dealers or agents, if any, and the compensation of such persons,
any listing of the Offered Debt Securities on a securities exchange and other
terms in connection with the offering and sale of such Offered Debt Securities.
The Company may sell the Debt Securities to or through underwriters and also may
sell the Debt Securities directly to other purchasers or through agents or
dealers. See "Plan of Distribution."
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
This Prospectus may not be used to consummate sales of Debt Securities unless
accompanied by a Prospectus Supplement.
The Date of this Prospectus is September 15, 1998.
<PAGE> 27
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER MADE BY THIS
PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT OTHER THAN THOSE CONTAINED IN, OR
INCORPORATED BY REFERENCE IN, THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT, AND
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY AGENT, UNDERWRITER OR DEALER. THIS
PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF ANY OFFER TO BUY ANY OF THE DEBT SECURITIES 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 OR ANY PROSPECTUS SUPPLEMENT AT
ANY TIME DOES NOT IMPLY THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THEIR RESPECTIVE DATES.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected, and copies may be obtained at
the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates, as well as at the following
Regional Offices of the Commission: Citicorp Center, 500 Madison Street, Suite
1400, Chicago, Illinois 60661-2511 and Seven World Trade Center, Suite 1300, New
York, New York 10048. Such material may also be accessed electronically by means
of the Commission's home page on the Internet at http://www.sec.gov. Reports,
proxy statements and other information concerning the Company can also be
inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street,
New York, New York 10005, where the Company's common stock is listed and at the
offices of the following other stock exchanges where the Company's common stock
is listed: the Chicago Stock Exchange, Inc., One Financial Place, 440 South
LaSalle Street, Chicago, Illinois 60605, and the Pacific Stock Exchange, Inc.,
233 South Beaudry Avenue, Los Angeles, California 90012 and 301 Pine Street, San
Francisco, California 94104.
The Prospectus constitutes a part of a Registration Statement filed by the
Company with the Commission under the Securities Act of 1933, as amended (the
"Securities Act of 1933"). This Prospectus omits certain of the information
contained in the Registration Statement in accordance with the rules and
regulations of the Commission. Reference is hereby made to the Registration
Statement and related exhibits for further information with respect to the
Company and the Securities. Statements contained herein concerning the
provisions of any document are not necessarily complete and, in each instance,
reference is made to the copy of such document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference.
Certain statements and information contained or incorporated by reference herein
constitute "forward-looking statements" within the meaning of the Federal
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance, or achievements of the Company
to be materially different from any future results, performance, or achievements
expressed or implied by such forward-looking statements. Any such statements and
information should be considered in the light of such risks, uncertainties and
other factors.
2
<PAGE> 28
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1997, and Quarterly Reports for the periods ended March 31, 1998 and June 30,
1998, which have been filed by the Company with the Commission pursuant to the
Exchange Act, is incorporated by reference in this Prospectus and shall be
deemed to be a part hereof.
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering made by this Prospectus
and any accompanying Prospectus Supplement shall be deemed to be incorporated
herein by reference and shall be deemed to be a part hereof from the date of
filing of such documents (such documents, and the documents enumerated above,
being herein referred to as "Incorporated Documents").
Any statement contained in an Incorporated Document shall be deemed to be
modified or superseded for purposes of the Registration Statement or this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed Incorporated Documents or in an accompanying Prospectus
Supplement modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person, including any beneficial
owner, to whom a Prospectus is delivered, upon the written or oral request of
such person, a copy of any or all Incorporated Documents, other than exhibits to
such Incorporated Documents unless such exhibits are specifically incorporated
by reference into the Incorporated Documents. Requests should be directed to
Public Relations Department 4C, Ryder System, Inc., 3600 N.W. 82nd Avenue,
Miami, Florida 33166 (Telephone: 305/500-3187).
RYDER SYSTEM, INC.
The Company was incorporated in Florida in 1955. Through its subsidiaries, the
Company engages primarily in the logistics and transportation business with
focus on: 1) integrated logistics, including dedicated contract carriage, the
management of carriers, and inventory deployment; 2) transportation services,
including full service leasing, maintenance and short-term rental of trucks,
tractors and trailers; and 3) public transit management and operations, fleet
management and maintenance services, and student transportation services.
The principal executive offices of the Company are located at 3600 N.W. 82nd
Avenue, Miami, Florida 33166. Its telephone number is 305/500-3187.
USE OF PROCEEDS
Unless otherwise specified in the Prospectus Supplement, the net proceeds
available to the Company from the sale of the Offered Debt Securities may be
used for general corporate purposes, which might include the repayment of
indebtedness, working capital, capital expenditures, acquisitions and the
repurchase of shares of the Company's equity securities. Pending use for these
purposes, the Company may invest proceeds from the sale of the Offered Debt
Securities in short-term marketable securities. The precise amount and timing of
sales of any Debt Securities will be dependent on market conditions and the
availability and cost of other funds to the Company.
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<PAGE> 29
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for the
Company and its subsidiaries, whether or not consolidated, for the six-month
periods ended June 30, 1998 and 1997, and for each of the years in the five-year
period ended December 31, 1997. For purposes of computing the ratio of earnings
to fixed charges, fixed charges consist of interest expense plus interest
capitalized and that portion (one third) of rental expense considered to be
interest. Earnings are computed by adding fixed charges, except interest
capitalized, to earnings from continuing operations before income taxes. Prior
period ratios have been restated to exclude discontinued operations.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
- -------------------------- ------------------------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
- ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
1.95 1.92 1.97 0.98(1) 1.79 2.04 2.00
</TABLE>
(1) The ratio of earnings to fixed charges for the year ended December 31, 1996,
was unfavorably impacted by restructuring and other charges totaling $228
million before taxes, related primarily to staff and facility reductions, a
writedown of assets and other costs associated with restructuring
initiatives. Further discussion of these charges is included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997.
Without such charges, the ratio of earnings to fixed charges for the year
ended December 31, 1996 would have been 1.74.
DESCRIPTION OF DEBT SECURITIES
The following description of the Debt Securities sets forth certain general
terms and provisions of the Debt Securities to which a Prospectus Supplement may
relate. The particular terms of the Offered Debt Securities and the extent, if
any, to which such general provisions do not apply to the Offered Debt
Securities will be described in the Prospectus Supplement relating to such
Offered Debt Securities.
The Offered Debt Securities may be issued from time to time under an Indenture
dated as of May 1, 1987 and supplemented as of November 15, 1990 and June 24,
1992 (as supplemented, the "Indenture"), between the Company and The Chase
Manhattan Bank (National Association), as Trustee (the "Trustee"). The following
are brief summaries of certain provisions of the Indenture and are subject to
the detailed provisions of such Indenture, to which reference is hereby made for
a complete statement of such provisions. References appearing below are to the
Indenture and, wherever particular provisions are referred to, such provisions
are incorporated by reference as a part of the statement made, and the statement
is qualified in its entirety by such reference. Whenever a capitalized term is
referred to and not herein defined, the definition thereof is contained in the
Indenture.
GENERAL
The Debt Securities which may be offered under the Indenture are not limited in
amount and may be issued from time to time in one or more Series. (Section
2.01.)
The Debt Securities may be issued in fully registered form without coupons
("Registered Securities") or in bearer form with or without coupons ("Bearer
Securities"). In addition, Debt Securities may be issued in the form of one or
more global securities (each a "Global Security"). Registered Securities which
are book-entry securities ("Book-Entry Securities") will be issued as registered
Global Securities. Bearer Securities may be issued in the form of temporary or
definitive Global Securities. Unless otherwise provided in the Prospectus
Supplement, the Debt Securities will be only Registered Securities.
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<PAGE> 30
Debt Securities of a single Series may be issued at various times with different
maturity dates and different principal repayment provisions, may bear interest
at different rates, may be issued at or above par or with an original issue
discount, and may otherwise vary, all as provided in the Indenture.
The Debt Securities will be unsecured and unsubordinated general obligations of
the Company and will rank on a parity with all other unsecured and
unsubordinated indebtedness of the Company.
Reference is made to the Prospectus Supplement relating to the particular Series
of Offered Debt Securities for the following terms of such Debt Securities: (a)
the title of such Debt Securities; (b) any limit upon the aggregate principal
amount of such Debt Securities; (c) the initial public offering price; (d) the
currency or currency unit of payment; (e) the date or date on which the
principal of such Debt Securities is payable; (f) the rate or rates at which
such Debt Securities will bear interest or the method for calculating such rate,
if any, the date or dates from which such interest will accrue, the dates on
which such interest will be payable and the record date for the interest payable
on any interest payment date; (g) whether such Debt Securities will be issued as
Registered Securities or Bearer Securities or both; (h) the place where the
principal of and interest on such Debt Securities will be payable; (i) the
period or periods, if any, within which the price or prices at which and the
terms and conditions upon which such Debt Securities may be redeemed by the
Company; (j) the obligation, if any, of the Company to redeem or purchase such
Debt Securities pursuant to any sinking fund or at the option of a Holder
thereof, and the terms and conditions upon which such Debt Securities shall be
redeemed or purchased pursuant to such obligation; (k) any provisions for the
remarketing of the Debt Securities by and on behalf of the Company; (l) if other
than denominations of $1,000 and integral multiples thereof, the denominations
in which such Debt Securities shall be issuable; (m) if other than the principal
amount thereof, the portion of the principal amount of such Debt Securities
which shall be payable upon declaration of acceleration of the maturity thereof;
(n) whether the Offered Debt Securities are to be issued in whole or in part in
the form of one or more Global Securities and, if so, the identity of the
depositary for such Global Security or Securities; (o) whether and under what
circumstances the Company will pay additional amounts to any Holder of Offered
Debt Securities who is not a United States person in respect of any tax,
assessment or other governmental charge required to be withheld or deducted and,
if so, whether the Company will have the option to redeem rather than pay any
additional amounts; (p) any additions, deletions or modifications to the
covenants, events of default or the ability of the Company to discharge its
obligations set forth in the Indenture, that will be applicable with respectto
the Offered Debt Securities; or (q) any other terms not inconsistent with the
Indenture. (Section 2.02). If any Debt Securities of a particular Series are
Bearer Securities, the Prospectus Supplement will describe additional provisions
relating to, and any applicable restrictions on, such Bearer Securities,
including certain tax consequences.
A Debt Security will not be valid until authenticated by the manual signature of
the Trustee or an authenticating agent. Such signature will be conclusive
evidence that the Debt Security has been authenticated under the Indenture.
(Section 2.03.)
The Company will maintain an office or agency where registered Debt Securities
may be presented for registration of transfer or exchange ("Registrar") and an
office or agency where the Debt Securities and coupons, if any, may be presented
for payment ("Paying Agent"). For a discussion of certain restrictions on the
registration, transfer and exchange of Global Securities, see "Global
Securities". If the Company fails to maintain a Registrar or Paying Agent, the
Trustee will act as such. (Sections 2.05 and 4.04.)
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<PAGE> 31
CERTAIN DEFINITIONS
A summary of the definitions of certain terms in the Indenture follows
(reference should be made to Article 1 of the Indenture for complete definitions
of the following and other terms):
"Additional Amounts" means any additional amounts which are required by
a Debt Security or by or pursuant to a Board Resolution, under
circumstances specified therein, to be paid by the Company in respect of
certain taxes, assessments or other governmental charges imposed on certain
Holders of Debt Securities.
"After-Acquired Indebtedness" means (a) pre-existing indebtedness
assumed by the Company or a Restricted Subsidiary as a result of the
acquisition of the assets or stock of an entity other than a Subsidiary of
the Company and (b) liens on property existing at the time of acquisition
of said property.
"Indebtedness" means indebtedness other than Subordinated Indebtedness
of the Company or its Restricted Subsidiaries for borrowed money or leasing
obligations as reflected on the Consolidated balance sheet of the Company
and its Restricted Subsidiaries, and indebtedness of other parties
guaranteed by the Company or its Restricted Subsidiaries.
"Leasing Indebtedness" means the capitalized indebtedness of any lease
obligations on personal property.
"Net Tangible Assets" means total assets as reflected on the
Consolidated balance sheet of the Company and its Restricted Subsidiaries,
after deduction for minority interests, less: (a) goodwill and other
intangibles, (b) amounts invested in, advanced to, or equity in
Unrestricted Subsidiaries and (c) unamortized debt discount.
"Original Issue Discount Debt Security" means a Debt Security which
provides that an amount less than the principal amount thereof shall become
due and payable upon acceleration of the maturity or redemption thereof, or
any Debt Security which for United States Federal income tax purposes would
be considered an original issue discount debt security.
"Restricted Subsidiary" means any Subsidiary other than an Unrestricted
Subsidiary.
"Secured Indebtedness" means Indebtedness, other than Intercompany
Indebtedness, secured by a lien on any property and any unsecured
Indebtedness of any Restricted Subsidiary other than a Foreign Financing
Subsidiary.
"Unrestricted Subsidiary" means (a) any Subsidiary (other than a Foreign
Financing Subsidiary) substantially all of the property of which is located
or substantially all of the business of which is conducted outside of the
United States of America or its possessions, Canada or the United Kingdom
and (b) any other Subsidiary (including, if so designated, a Foreign
Financing Subsidiary) so designated by the Board of Directors or the Chief
Executive Officer of the Company.
CERTAIN COVENANTS OF THE COMPANY
Limitation on Secured Indebtedness.
Unless otherwise provided in the Prospectus Supplement, the Company and its
Restricted Subsidiaries will not incur any Secured Indebtedness unless Debt
Securities then outstanding are equally and ratably secured, with the following
exceptions: (a) Secured Indebtedness existing at the date of the Indenture, (b)
Indebtedness of a corporation in existence at the time it becomes a Restricted
Subsidiary, (c) After-Acquired Indebtedness, (d) Intercompany Indebtedness
secured in favor of the Company or any Restricted Subsidiary, (e) Indebtedness
deemed Secured Indebtedness by virtue of certain liens or charges not yet due or
payable without penalty or which are being contested and for which reserves have
been set aside, (f) industrial revenue bond
6
<PAGE> 32
Indebtedness, (g) Real Property Indebtedness, (h) Leasing Indebtedness not to
exceed 10% of Consolidated Net Tangible Assets and (i) additional Secured
Indebtedness and Leasing Indebtedness not to exceed a total of 15% of
Consolidated Net Tangible Assets. (Section 4.06.)
Limitation on Consolidations and Mergers.
The Company shall not consolidate with or merge into, or transfer all or
substantially all of its assets to, another entity unless such entity is a
corporation that assumes all the obligations under the Debt Securities and the
Indenture and certain other conditions are met (whereupon all such obligations
of the Company shall terminate). (Section 5.01.)
EVENTS OF DEFAULT AND REMEDIES
Unless otherwise provided in the Prospectus Supplement, the Events of Default
with respect to the Debt Securities of any Series are: (a) default for 30 days
in the payment of interest thereon, (b) default in the payment of principal
thereof, (c) default in performance of any other agreement of the Company with
respect thereto which continues for 90 days after written notice, and (d)
certain events of bankruptcy, insolvency or reorganization. (Section 6.01.) If
an Event of Default is continuing with respect to the Debt Securities of any
Series, the Trustee or the Holders of 25% in principal amount of the Debt
Securities of that Series, by notice in writing to the Company and the Trustee,
may accelerate the principal of such Debt Securities, but the Holders of a
majority in principal amount of such Debt Securities may rescind such
acceleration if all existing Events of Default have been cured. (Section 6.02.)
Holders of Debt Securities may not enforce the Indenture except in the case of
the failure of the Trustee, for 60 days, to act after notice of an Event of
Default and a request to enforce the Indenture by the Holders of 25% in
principal amount of the Series of Debt Securities affected thereby and an offer
of indemnity satisfactory to the Trustee. (Section 6.06.) This provision will
not prevent any Holder of a Debt Security from enforcing payment of the
principal of and interest on such Debt Security at the respective due dates
thereof. (Section 6.07.) The Holders of a majority in principal amount of the
Debt Securities of any series may direct the manner of conducting any
proceedings for any remedy or trust power available to the Trustee. The Trustee,
however, may refuse to follow any direction that conflicts with law or the
Indenture, is unduly prejudicial to Holders of other Debt Securities or would
involve the Trustee in personal liability. (Section 6.05.)
Holders of a majority in principal amount of any Series of Debt Securities may
waive any Default with respect to that Series except a Default in payment of the
principal or interest. (Section 6.04.)
The Company will furnish an annual Officers' Certificate to the Trustee as to
knowledge of any Default under the Indenture. (Section 4.03.)
SATISFACTION AND DISCHARGE
Unless otherwise provided in the Prospectus Supplement, the Company may
terminate certain of its obligations under the Indenture, including its
obligation to comply with the covenants described above with respect to the Debt
Securities of any Series which does not provide for the payment of any
Additional Amounts, on the terms and subject to the conditions contained in the
Indenture, by depositing in trust with the Trustee, money or U.S. Government
Obligations sufficient to pay principal and interest on such Debt Securities to
maturity. Such deposit and termination is conditioned upon the Company's
delivery of an opinion of independent tax counsel that the Holders of such Debt
Securities will have no Federal income tax consequences as a result of such
deposit and termination. Such termination will not relieve the Company of its
obligation to pay when due the principal of or interest on the Debt Securities
if the Debt Securities are not paid from the money or U.S. Government
Obligations held by the Trustee for the payment thereof. (Section 8.01.)
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<PAGE> 33
MODIFICATION AND WAIVER
The Company and the Trustee, with the consent of the Holders of 66 2/3% in
principal amount of the Debt Securities affected, may execute supplemental
indentures amending the Indenture or such Debt Securities, except that no such
amendment may, without the consent of the Holders of the affected Debt
Securities, among other things, change the maturity or reduce the principal
amount thereof, change the rate or the time of payment of interest thereon,
change any obligation of the Company to pay Additional Amounts relating to a
particular Debt Security or reduce the amount of principal of an Original Issue
Discount Debt Security that would be due and payable upon a declaration of
acceleration of the maturity thereof. (Sections 9.02 and 9.03.)
The Company and the Trustee may also, without the consent of any Holders of Debt
Securities, enter into supplemental indentures for the purposes, among other
things, of curing ambiguities and inconsistencies and making changes that do not
adversely affect the rights of any Holders of Debt Securities. (Section 9.01.)
PAYMENT AND PAYING AGENTS
Unless otherwise provided in the Prospectus Supplement, payment of principal of,
premium, if any, and interest, if any, on Registered Securities will be made in
U.S. dollars at the office of such Paying Agent or Paying Agents as the Company
may designate from time to time, except that at the option of the Company
payment of any interest may be made by check mailed to the address of the person
entitled thereto as such address shall appear in the security register
maintained by the Registrar. Unless otherwise provided in the Prospectus
Supplement, payment of any installment of interest on Registered Securities will
be made to the person in whose name such Registered Security is registered at
the close of business on the regular record date for such interest. (Section
4.01.)
Unless otherwise provided in the Prospectus Supplement, payment of principal of,
premium, if any, and interest, if any, on Bearer Securities will be payable in
U.S. dollars, subject to any applicable laws and regulations, at the offices of
such Paying Agents outside the United States as the Company may designate from
time to time and payment of interest on Bearer Securities with coupons
appertaining thereto on any Interest Payment Date will be made only against
surrender of the coupon relating to such Interest Payment Date. No payment of
interest on a Bearer Security will be made unless on the earlier of the date of
the first such payment by the Company or the delivery by the Company of the
Bearer Security in definitive form, a written certificate in the form required
by the Indenture is provided to the Trustee stating that on such date the Bearer
Security is not owned by a United States person or, if a beneficial interest in
such Bearer Security is owned by a United States person, that such United States
person (i) is a foreign branch of a United States financial institution, (ii)
acquired and holds the Bearer Security through the foreign branch of a United
States financial institution (and, in either case (i) or (ii), such financial
institution agrees to comply with the requirements of Section 165(j)(3)(A), (B)
or (C) of the Internal Revenue Code of 1986, as amended (the "Code"), and the
regulations thereunder) or (iii) is a financial institution purchasing for
resale during the restricted period (as defined under "Global
Securities -- Bearer Securities") only to non-United States persons outside the
United States. As used herein, "United States" means the United States of
America (including the states and the District of Columbia), its territories,
its possessions and any other areas subject to its jurisdiction. No payment with
respect to any Bearer Security will be made at any office or agency of the
Company in the United States or by check mailed to any address in the United
States or by transfer to an account maintained with a bank located in the United
States. Notwithstanding the foregoing, payments of principal of, premium, if
any, and interest, if any, on Bearer Securities denominated and payable in U.S.
dollars will be made at the office of the Company's Paying Agent in The City of
New York, if (but only if) payment of the full amount thereof at all offices or
agencies outside the United States is illegal or effectively precluded by
exchange controls or other similar restrictions. (Section 4.04.)
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<PAGE> 34
Unless otherwise provided in the Prospectus Supplement, the Corporate Trust
Office of the Trustee in The City of New York will be designated as the
Company's sole Paying Agent for payments with respect to Offered Debt Securities
that are issuable solely as Registered Securities and as the Company's Paying
Agent in The City of New York for payments with respect to Offered Debt
Securities (subject to the limitations described above in the case of Bearer
Securities) that are issuable solely as Bearer Securities or as both Registered
Securities and Bearer Securities. Any Paying Agents outside the United States
and any other Paying Agents in the United States initially designated by the
Company for the Offered Debt Securities will be named in the Prospectus
Supplement. The Company may at any time designate additional Paying Agents or
rescind the designation of any Paying Agent or approve a change in the office
through which any Paying Agent acts, except that, if Debt Securities of a Series
are issuable solely as Registered Securities, the Company will be required to
maintain a Paying Agent in each place of payment for such Series and, if Debt
Securities of a Series are issuable as Bearer Securities, the Company will be
required to maintain (i) a Paying Agent in The City of New York for payments
with respect to any Registered Securities of the Series (and for payments with
respect to Bearer Securities of the Series in the circumstances described above,
but not otherwise) and (ii) a Paying Agent in a place of payment located outside
the United States where Debt Securities of such Series and any coupons
appertaining thereto may be presented and surrendered for payment; provided,
that if the Debt Securities of such Series are listed on The International Stock
Exchange of the United Kingdom and the Republic of Ireland Limited or the
Luxembourg Stock Exchange or any other stock exchange located outside the United
States and such stock exchange shall so require, the Company will maintain a
Paying Agent in London or Luxembourg or any other required city located outside
the United States, as the case may be, for the Debt Securities of such Series.
(Section 4.04.)
GLOBAL SECURITIES
The Debt Securities of a Series may be issued in whole or in part in the form of
one or more Global Securities that will be deposited with, or on behalf of, a
depositary (a "Depositary") identified in the Prospectus Supplement relating to
such Series. Global Securities may be issued in either registered or bearer
form, and in either temporary or definitive form. Unless and until it is
exchanged in whole for Debt Securities in definitive form, a Global Security may
not be transferred except as a whole by the U.S. Depositary for such Global
Security to a nominee of such Depositary or by a nominee of such Depositary to
such Depositary or another nominee of such Depositary or by such Depositary or
any such nominee to a successor of such Depositary or a nominee of such
successor. (Section 2.16.)
The specific terms of any depositary arrangement with respect to the Offered
Debt Securities will be described in the Prospectus Supplement relating thereto.
Unless otherwise specified, the Company anticipates that the following provision
will apply to all depositary arrangements.
Unless otherwise specified in the Prospectus Supplement, Registered Securities
which are to be represented by a Global Security to be deposited with or on
behalf of a Depositary will be represented by a Global Security registered in
the name of such Depositary or its nominee. (Section 2.16.) Upon the issuance of
a Global Security in registered form, the Depositary for such Global Security
will credit, on its book-entry registration and transfer system, the respective
principal amounts of the Debt Securities represented by such Global Security to
the accounts of institutions that have accounts with such Depositary or its
nominee ("participants"). The accounts to be credited shall be designated by the
underwriters or selling agents for such Debt Securities, or by the Company if
such Debt Securities are offered and sold directly by the Company. Ownership of
beneficial interests in such Global Securities will be limited to participants
or persons that may hold interests through participants. Ownership of beneficial
interests in such Global Securities will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the Depositary or
its nominee for such Global Security or by
9
<PAGE> 35
participants or persons that hold through participants. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability to transfer beneficial interests in a Global Security.
So long as the Depositary for a Global Security in registered form, or its
nominee, is the registered owner of such Global Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or Holder of
the Debt Securities represented by such Global Security for all purposes under
the Indenture governing such Debt Securities. Except as set forth below, owners
of beneficial interests in such Global Securities will not be entitled to have
Debt Securities of the Series represented by such Global Security registered in
their names, will not receive or be entitled to receive physical delivery of
Debt Securities of such Series in definitive form and will not be considered the
owners or Holders thereof under the Indenture.
Payment of principal of, premium, if any, and interest, if any, on Debt
Securities registered in the name of or held by a Depositary or its nominee will
be made to the Depositary or its nominee, as the case may be, as the registered
owner or the Holder of the Global Security representing such Debt Securities.
None of the Company, the Trustee, any Paying Agent or the Registrar for such
Debt Securities will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in a Global Security for such Debt Securities or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests. (Section 2.15.)
The Company expects that the Depositary for Debt Securities of a Series, upon
receipt of any payment of principal of, premium, if any, or interest, if any, on
permanent Global Securities, will immediately credit participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such Global Securities as shown on the records of such
Depositary. The Company also expects that payments by participants to owners of
beneficial interests in such Global Security held through such participants will
be governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of such participants.
If a Depositary for Registered Securities is at any time unwilling or unable to
continue as depositary and a successor depositary is not appointed by the
Company within 90 days, the Company will issue individual certificates for the
Registered Securities in definitive form in exchange for the Global Security or
Securities representing such Registered Securities. In addition, the Company may
at any time and in its sole discretion determine not to have any Registered
Securities represented by one or more Global Securities and, in such event, will
issue individual certificates for the Registered Securities in definitive form
in exchange for the Global Security or Securities representing such Registered
Securities. In any such instance, an owner of a beneficial interest in a Global
Security will be entitled to physical delivery in definitive form of individual
certificates for the Registered Securities of the Series represented by such
Global Security equal in principal amount to such beneficial interest and to
have such individual certificates registered in the name of the owner of such
beneficial interest. (Section 2.16.)
BEARER SECURITIES.
If so specified in the Prospectus Supplement, all or any portion of the Debt
Securities of a Series that are issuable as Bearer Securities initially will be
represented by one or more temporary Global Securities, without interest
coupons, to be deposited with a Common Depositary in London for Morgan Guaranty
Trust Company of New York, Brussels Office, as operator of the Euro-clear System
("Euro-clear") and Centrale de Livraison de Valeurs Mobilieres, S.A. ("CEDEL")
for credit to the respective accounts of the beneficial owners of such Debt
Securities (or to such other accounts as they may direct). On and after the
exchange date determined as provided in any such temporary Global Security and
described in the Prospectus Supplement,
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<PAGE> 36
each such temporary Global Security will be exchangeable for definitive Global
Securities without interest coupons, as specified in the Prospectus Supplement,
upon written certification (as described under "Payment and Paying Agents") of
non-United States beneficial ownership. Thereafter, the beneficial owner of a
Debt Security represented by a definitive Global Security may at any time upon
30 days notice to the Trustee given through Euro-clear or CEDEL, exchange its
interest for definitive Bearer Securities or Bearer Securities with coupons, if
any. No Bearer Security delivered in exchange for a portion of a temporary
Global Security shall be mailed or otherwise delivered to any location in the
United States in connection with such exchange. (Section 2.04.)
Unless otherwise provided in the Prospectus Supplement, interest in respect of
any portion of a temporary Global Security payable in respect of an Interest
Payment Date occurring prior to the issuance of definitive Debt Securities will
be paid to each of Euro-clear and CEDEL with respect to the portion of the
temporary Global Security held for its account upon delivery to the Trustee of a
certificate of non-United States beneficial ownership signed by Euro-clear or
CEDEL, as the case may be, in the form required by the Indenture and dated no
earlier than such Interest Payment Date. (Section 4.01.)
ABSENCE OF CERTAIN COVENANTS
The Company is not restricted by the Indenture from paying dividends or from
incurring, assuming or becoming liable for any type of debt or other obligation
or creating liens on its property, except as set forth under "Limitation on
Secured Indebtedness." The Indenture does not require the maintenance of any
financial ratios or specified levels of net worth or liquidity. The Indenture
contains no provisions which afford Holders of the Debt Securities protection in
the event of a highly leveraged transaction involving the Company.
TITLE
Title to any Bearer Securities and any coupons appertaining thereto will pass by
delivery. The Company, the Trustee and any agent of the Company or the Trustee
may treat the bearer of any Bearer Security and the bearer of any coupon and the
registered owner of any Registered Security (including Registered Securities in
global registered form) as the absolute owner thereof (whether or not such Debt
Security or coupon shall be overdue and notwithstanding any notice to the
contrary) for the purpose of making payment and for all other purposes.
REGARDING THE TRUSTEE
The Chase Manhattan Bank (National Association) is the Trustee under the
Indenture. The Chase Manhattan Bank (National Association) also acts as
depositary for funds of, makes loans to, acts as trustee and performs certain
other services for, the Company and certain of its subsidiaries and affiliates
in the normal course of its business. M. Anthony Burns, Chairman of the Board,
President, Chief Executive Officer and a director of the Company and David T.
Kearns, a director of the Company, presently also serve as directors of The
Chase Manhattan Corporation, the parent company of the Trustee.
NOTICES
Notices to Holders of registered Debt Securities will be mailed by first class
mail to the address on the register kept by the Registrar. Notices to Holders of
Bearer Securities will be given by publication at least twice in a daily
newspaper in London and, if any of the Bearer Securities are listed on any stock
exchange, in such other publication as might be required by such exchange.
(Section 10.02.)
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<PAGE> 37
PLAN OF DISTRIBUTION
GENERAL
The Company may sell the Debt Securities to or through underwriters and also may
sell the Debt Securities directly to other purchasers or through agents or
dealers. Only underwriters named in a Prospectus Supplement are deemed to be
underwriters in connection with the Debt Securities offered thereby.
The distribution of the Debt Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed from time
to time, or at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. Each Prospectus
Supplement will describe the method of distribution of the Offered Debt
Securities. The Offered Debt Securities may include previously issued Debt
Securities which have been acquired and are being remarketed on behalf of the
Company.
In connection with the sale of the Debt Securities, such underwriters may
receive compensation from the Company or from purchasers of the Debt Securities
for whom they may act as agents in the form of discounts, concessions or
commissions. Underwriters, dealers and agents that participate in the
distribution of the Debt Securities may be deemed to be underwriters and any
discounts or commissions received by them and any profit on the resale of the
Debt Securities by them may be deemed to be underwriting discounts and
commissions under the Securities Act. Any such underwriter, dealer or agent will
be identified, and any such compensation will be described, in the Prospectus
Supplement. Any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to time.
Under agreements which may be entered into by the Company, underwriters, dealers
and agents who participate in the distribution of the Debt Securities may be
entitled to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments which the underwriters, dealers or agents may be required to make in
respect thereof.
Unless otherwise specified in the Prospectus Supplement, each underwriter,
dealer and agent participating in the distribution of any Debt Securities which
are Bearer Securities will agree that it will not offer, sell or deliver,
directly or indirectly, Bearer Securities in the United States or to United
States persons (other than offices located outside the United States of certain
United States financial institutions) in connection with the original issuance
of the Debt Securities.
DELAYED DELIVERY ARRANGEMENTS
If so indicated in the Prospectus Supplement, the Company will authorize dealers
or other persons acting as the Company's agents to solicit offers by certain
institutions to purchase Debt Securities from the Company pursuant to contracts
providing for payment and delivery on a future date. Institutions with which
such contracts may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and others, but in all cases such institutions must be approved by
the Company. The obligations of any purchaser under any such contract will not
be subject to any conditions except that (a) the purchase of the Offered Debt
Securities shall not at the time of delivery be prohibited under the laws of the
jurisdiction to which such purchaser is subject and (b) if the Offered Debt
Securities are also being sold to underwriters, the Company shall have sold to
such underwriters the Offered Debt Securities not sold for delayed delivery. The
dealers and such other persons will not have any responsibility in respect of
the validity or performance of such contracts.
EXPERTS
The financial statements of Ryder System, Inc. as of December 31, 1997 and 1996,
and for each of the years in the three-year period ended December 31, 1997, have
been incorporated by reference herein in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public
12
<PAGE> 38
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing. To the extent that KPMG Peat Marwick
LLP audits and reports on financial statements of Ryder System, Inc. issued at
future dates, and consents to the use of their reports thereon, such financial
statements also will be incorporated by reference herein in reliance upon their
report and said authority.
LEGAL OPINIONS
Certain legal matters relating to the Debt Securities to be offered hereby will
be passed upon for the Company by Serge G. Martin of the Ryder System, Inc. Law
Department, Counsel of the Company, and for the underwriters, if any, by
Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New York, New York
10019. Mr. Martin is a full-time employee of the Company and owns, and holds
options to purchase, shares of Common Stock of the Company.
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<PAGE> 39
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$300,000,000
RYDER SYSTEM, INC.
MEDIUM-TERM NOTES, SERIES 16
(RYDER LOGO)
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PROSPECTUS SUPPLEMENT
AUGUST 3, 1999
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SALOMON SMITH BARNEY
BANC OF AMERICA SECURITIES LLC
DEUTSCHE BANC ALEX. BROWN
MERRILL LYNCH & CO.
J.P. MORGAN & CO.
MORGAN STANLEY DEAN WITTER
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