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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-45415
PROSPECTUS SUPPLEMENT
(To Prospectus dated March 27, 1998)
[THE EQUITABLE COMPANIES LOGO]
CERTAIN DEBT SECURITIES
The Equitable Companies Incorporated, a Delaware corporation (the
"Company"), has issued the indicated principal amounts of the following debt
securities:
$250,000,000 6 1/2% Senior Notes due 2008
$350,000,000 7% Senior Debentures due 2028
All of the foregoing debt securities are hereinafter in this Prospectus
Supplement collectively referred to as the "Offered Securities."
The 6 1/2% Senior Notes due 2008 (the "Senior Notes") and the 7% Senior
Debentures due 2028 (the "Senior Debentures") were issued by the Company on
April 6, 1998. Interest on the Offered Securities is payable semiannually on
April 1 and October 1 of each year, commencing on October 1, 1998. The Senior
Notes will mature on April 1, 2008 and the Senior Debentures will mature on
April 1, 2028. The Offered Securities are not entitled to any sinking fund. The
Senior Notes and the Senior Debentures are redeemable at the option of the
Company, in whole or in part, at any time prior to maturity at the prices stated
herein. The Offered Securities are issued only in fully registered form in
denominations of $1,000 and integral multiples thereof. The Offered Securities
are unsecured obligations of the Company and, because the Company is a
non-operating holding company, are effectively subordinated to liabilities of
its subsidiaries, including liabilities under contracts of insurance and
annuities written by the Company's insurance subsidiaries. Accordingly, holders
of Offered Securities should look only to the assets of the Company for payments
of principal and interest. See "Description of the Offered Securities."
The Offered Securities are represented by global Offered Securities
registered in the name of the nominee of The Depository Trust Company ("DTC").
Beneficial interests in the global Offered Securities will be shown on, and
transfers thereof will be effected only through, records maintained by DTC, its
nominee and its participants. Except as described herein, Offered Securities in
definitive form will not be issued. The Offered Securities will trade in the DTC
Same-Day Funds Settlement System until maturity, and secondary market trading
activity for the Offered Securities will therefore settle in immediately
available funds. All payments of principal and interest will be made by the
Company in immediately available funds. See "Description of the Offered
Securities -- Global Offered Securities" and "-- Same-Day Settlement in Respect
of Global Offered Securities."
SEE "RISK FACTORS" BEGINNING ON PAGE S-5 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE
OFFERED SECURITIES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus Supplement has been prepared for use by Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJSC"), an affiliate of the Company, in
connection with offers and sales of the Offered Securities which may be made by
or through DLJSC from time to time in market-making transactions at negotiated
prices relating to prevailing market prices at the time of sale or otherwise.
The Company has been advised by DLJSC that it currently intends to make a market
in the Offered Securities; however, it is not obligated to do so. Any such
market-making may be discontinued at any time, and there is no assurance as to
the liquidity of, or trading market for, the Offered Securities. DLJSC may act
as principal or agent in such transactions. See "Plan of Distribution."
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS APRIL 14, 1998
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FOR NORTH CAROLINA PURCHASERS: THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE COMMISSIONER OF INSURANCE FOR THE STATE OF NORTH CAROLINA,
NOR HAS THE COMMISSIONER OF INSURANCE RULED UPON THE ACCURACY OR ADEQUACY OF
THIS DOCUMENT.
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THE EQUITABLE
For the purposes of this Prospectus, the term "The Equitable" refers to The
Equitable Companies Incorporated (the "Company") and its subsidiaries.
The Equitable is a diversified financial services organization serving a
broad spectrum of insurance, investment management and investment banking
customers. It is one of the world's largest investment managers, with total
assets under management of approximately $274.1 billion at December 31, 1997.
The Equitable's insurance business, which comprises its Insurance Operations, is
conducted principally by its life insurance subsidiary, The Equitable Life
Assurance Society of the United States ("Equitable Life"), a wholly-owned
subsidiary of the Company. The Equitable's investment management and investment
banking businesses, which comprise the Investment Services segment, are
conducted by Alliance Capital Management L.P. ("Alliance"), in which the Company
owned at March 1, 1998 approximately a 58% interest, and Donaldson, Lufkin &
Jenrette, Inc. ("DLJ"), in which the Company owned at March 1, 1998
approximately a 73.1% common stock interest.
AXA is the largest shareholder of the Company, beneficially owning
(together with certain of its affiliates) at March 1, 1998 58.7% of the
outstanding shares of the Company's common stock. The Company is a Delaware
corporation with its principal headquarters located at 1290 Avenue of the
Americas, New York, New York 10104 (telephone (212) 554-1234).
INSURANCE OPERATIONS
Insurance Operations accounted for $3.68 billion, or approximately 38.1% of
consolidated revenues for the year ended December 31, 1997. The Insurance Group
offers a variety of products, which include traditional, variable and
interest-sensitive life insurance products, annuity products and mutual fund and
other investment products, as well as association plans. These products are
marketed in all 50 states by a career agency force of over 7,300 agents (except
association plans, which are marketed directly to clients by the Insurance
Group). Equitable Distributors, Inc. ("EDI"), the Company's wholesale
distribution company, offers the Income Manager series of annuity products to
major securities firms, other broker-dealers and banks and by December 31, 1997
had executed sales agreements with two major securities firms, approximately 150
broker-dealers and six major banks. In 1997, major securities firms, other
broker-dealers and banks accounted for $632.6 million (48.4%) of all Income
Manager premiums and deposits. This segment also includes the Insurance Group's
separate accounts for certain individual insurance and annuity products in which
customers may invest their accumulated policy funds. As of December 31, 1997,
the Insurance Group had nearly 2.8 million policy or contract holders. Equitable
Life, which was established in the State of New York in 1859, has been among the
largest life insurance companies in the United States for more than 100 years.
The Equitable believes the experience and training of its career agency
force constitutes a key competitive advantage in the sale of the Insurance
Group's sophisticated insurance products, including variable life insurance and
annuity products which offer a broad range of investment options. At December
31, 1997, the Insurance Group led the insurance industry in the number of agents
and employees who hold both the Chartered Life Underwriter (CLU) and Chartered
Financial Consultant (ChFC) designation.
The claims-paying or financial strength rating of Equitable Life is AA-
from Standard & Poor's Corporation (4th highest rating of 18) and Duff & Phelps
Credit Rating Co. (4th highest rating of 18), A from A.M. Best Company, Inc.
(3rd highest rating of 13), Aa3 from Moody's Investors Service, Inc. (4th
highest rating of 19) and AA from Fitch Investors Service, Inc. (3rd highest
rating of 26).
INVESTMENT SERVICES
The Investment Services segment, which accounted for $5.97 billion, or
approximately 61.7% of consolidated revenues for the year ended December 31,
1997, provides investment management, investment banking, securities transaction
and brokerage services to both corporate and institutional clients, including
the Insurance Group, and to high net worth individuals. In recent years, rapid
growth in sales of mutual funds to individuals and retail clients has augmented
the traditional focus on institutional markets. This segment also
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includes the institutional Separate Accounts, which provide various investment
options for group clients through pooled or single group accounts and which at
December 31, 1997 held assets totaling $12.03 billion.
The Equitable continues to pursue its strategy of increasing third party
assets under management. The Investment Subsidiaries continue to add third party
assets under management, while continuing to provide investment management
services to the Insurance Group. Of the $274.1 billion of assets under
management at December 31, 1997, $216.9 billion (79.1%) were managed by the
Investment Subsidiaries for third parties, including domestic and overseas
investors, mutual funds, pension funds, endowment funds and, through the
Insurance Group's separate accounts, $34.6 billion for insurance and annuity
customers of the Insurance Group. During 1997, approximately $87.4 million
(1.5%) of revenues of the Investment Services segment consisted of fees earned
by the Investment Subsidiaries for investment management and other services
provided to the Insurance Group and to unconsolidated real estate joint
ventures.
DLJ is a leading integrated investment and merchant bank that serves
institutional, corporate, governmental and individual clients both domestically
and internationally. DLJ's businesses include securities underwriting, sales and
trading; merchant banking; financial advisory services; investment research;
venture capital; correspondent brokerage services; online interactive brokerage
services; and asset management. DLJ's revenues for the year ended December 31,
1997 were $4.64 billion. DLJ conducts its operations through three principal
operating groups: the Banking Group, which includes DLJ's Investment Banking,
Merchant Banking and Emerging Markets groups; the Capital Markets Group,
consisting of DLJ's Fixed Income, Institutional Equities and Equity Derivatives
Divisions, and Sprout, its venture capital affiliate; and the Financial Services
Group, comprised of the Pershing Division, the Investment Services Group and the
Asset Management Group. At March 1, 1998, The Equitable owned approximately
73.1% of DLJ's outstanding common stock; assuming full vesting of restricted
stock units and full exercise of all outstanding options, The Equitable would
own approximately 58.1% of DLJ's common stock.
Alliance is one of the largest investment advisors in the United States and
provides diversified investment management services to a variety of institutions
including Equitable Life, pension funds, endowments and foreign financial
institutions as well as to individual investors through a broad line of mutual
funds. Alliance had assets under management at December 31, 1997 of
approximately $218.7 billion (including $193.7 billion for third party clients).
Alliance's assets under management at December 31, 1997 consisted of
approximately $133.7 billion from separately managed accounts for institutional
investors and high net worth individuals and approximately $85.0 billion from
mutual fund accounts. Alliance's greatest growth in recent years has been in
products for individual investors, primarily mutual funds, which generate
relatively high management and servicing fees as compared to fees charged to
separately managed accounts. Alliance has opted for Federal income tax purposes
to maintain its partnership status and pay a 3.5% tax on partnership gross
income commencing January 1, 1998, which is expected to reduce 1998
distributions by Alliance by approximately 10% from what they would have been
under the former tax structure.
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RISK FACTORS
In addition to the other information contained or incorporated by reference
in this Prospectus Supplement and the accompanying Prospectus, the following
factors should be carefully considered prior to deciding whether or not to
purchase the Offered Securities. This Prospectus Supplement, the accompanying
Prospectus and the information incorporated herein and therein by reference
include forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. These forward-looking statements are subject to certain
risks and uncertainties, including those identified in "Risk Factors," which
could cause actual results to differ materially from historical results or those
anticipated. Forward-looking statements include, among other things, discussions
concerning The Equitable's potential exposure to market risks, as well as
statements expressing management's expectations, beliefs, estimates, forecasts,
projections and assumptions, as indicated by words such as "believes,"
"estimates," "intends," "anticipates," "expects," "projects," "should,"
"probably," "risk," "target," "goals," "objectives," or similar expressions. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Forward-Looking Statements" in the Company's Annual Report on Form
10-K for the year ended December 31, 1997 (the "1997 10-K").
HOLDING COMPANY STRUCTURE
The Offered Securities are obligations exclusively of the Company. The
Company is a non-operating holding company which conducts business through its
subsidiaries and the Offered Securities therefore are effectively subordinated
to liabilities of the Company's subsidiaries, including liabilities under
contracts of insurance and annuities written by the Insurance Group.
Accordingly, holders of Offered Securities should look only to the assets of the
Company for payments of interest and principal. At December 31, 1997, the
Company (excluding its subsidiaries) had $569.0 million of senior debt
outstanding. The only direct wholly owned operating subsidiary of the Company is
Equitable Life. At March 1, 1998, the Company also owned directly approximately
40.1% of the outstanding common stock of DLJ. All of the Company's other
indirect subsidiaries (including its approximate 58% interest in Alliance and an
additional interest in DLJ of 33.0% of its outstanding common stock) are
directly or indirectly owned by Equitable Life.
PAYMENTS ON OFFERED SECURITIES AND LIQUIDITY
The Company's ability to make cash payments with respect to its securities,
including the payment of principal and interest on the Offered Securities,
depends on the availability of adequate sources of funds. Since the 1992
demutualization, the Company has not received any dividends from Equitable Life.
Under the New York Insurance Law, Equitable Life would be permitted to pay
shareholder dividends to the Company only if it files notice of its intention to
declare such a dividend and the amount thereof with the Superintendent of
Insurance of the State of New York and the Superintendent, who by statute has
broad discretion in such matters, does not disapprove the distribution.
Management believes the Company's primary sources of liquidity will be
sufficient to meet its cash requirements for several years. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources -- Liquidity Requirements" and
"-- Liquidity Sources" in the 1997 10-K.
INVESTMENT ASSETS
As of December 31, 1997, commercial and agricultural mortgages and equity
real estate comprised 12.4% ($4,608.5 million) and 9.5% ($3,551.0 million),
respectively, of the $37,296.9 million aggregate amortized cost net of valuation
allowances ("net amortized cost") of assets held in the Insurance Group's
General Account in respect of continuing operations ("General Account Investment
Assets") and assets held in the General Account associated with the Insurance
Group's discontinued Wind-Up Annuity and guaranteed interest contract ("GIC")
lines of business ("Discontinued Operations Investment Assets"). Since 1990, The
Equitable has recognized significant additions to asset valuation allowances and
writedowns on commercial mortgages and equity real estate. At December 31, 1997,
asset valuation allowance balances for continuing and discontinued operations
totaled $536.6 million.
The Equitable announced in January 1998 its intention to accelerate the
sale of equity real estate by disposing of approximately $2 billion depreciated
cost of properties over the following 12 to 15 months. In
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connection with this program, Equitable Life reclassified $1.50 billion
depreciated cost of continuing and discontinued operations' equity real estate
from "held for the production of income" to "held for sale." The
reclassification generated additions to valuation allowances of $243.0 million
for continuing operations in the fourth quarter of 1997. Also, the review of the
equity real estate portfolio identified properties held for the production of
income which were impaired as determined under SFAS No. 121 resulting in
writedowns of $161.1 million for continuing operations in 1997. The total
pre-tax impact of these actions was $345.1 million (net of related DAC
amortization of $59.0 million) for continuing operations. In addition, these
real estate actions contributed to the strengthening of discontinued operations'
allowance for future losses in the fourth quarter of 1997 discussed under
"Discontinued Operations" below.
The determination of asset valuation allowances and writedowns requires
numerous forecasts and the exercise of a significant degree of judgment, and is
an inherently subjective process. No assurance can be given as to the amount of
future writedowns and additions to the asset valuation allowances. Since the
size of the portfolio of equity real estate properties held for sale is
significantly larger than in prior periods due to the fourth quarter action
discussed above, fluctuations in the related valuation allowances prior to
actual sale could be larger than those experienced in prior periods. For more
information concerning The Equitable's General Account Investment Assets and
Discontinued Operations Investment Assets, including problem, potential problem
and restructured investments and asset valuation allowances, see "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Continuing Operations Investment Portfolio" and "-- Discontinued
Operations Investment Portfolio" in the 1997 10-K and Notes 2, 3, 5 and 7 of
Notes to Consolidated Financial Statements contained therein.
At December 31, 1997, the net amortized cost of below investment grade
fixed maturities in General Account and Discontinued Operations Investment
Assets (including redeemable preferred stock) was $3,436.9 million (representing
9.2% of the net amortized cost of all General Account and Discontinued
Operations Investment Assets). See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Continuing Operations
Investment Portfolio" and "-- Discontinued Operations Investment Portfolio" in
the 1997 10-K and Notes 3 and 7 of Notes to Consolidated Financial Statements
contained therein.
DISCONTINUED OPERATIONS
In September 1991, management discontinued the operations of the Wind-Up
Annuity and GIC lines of business and established related loss provisions. At
December 31, 1997, $1.05 billion of contractholder liabilities were outstanding,
of which $29.5 million related to GIC products and the balance to Wind-Up
Annuities. Discontinued operations had total assets of $2.03 billion at December
31, 1997 which are not reflected in total assets within The Equitable's
consolidated balance sheet.
Management believes the loss provisions for Wind-Up Annuities and GIC
contracts at December 31, 1997 (aggregating $259.2 million) are adequate to
provide for all future losses; however, the determination of loss provisions
continues to involve numerous estimates and subjective judgments regarding the
expected performance of discontinued operations investment assets. There can be
no assurance the losses provided for will not differ from the losses ultimately
realized. To the extent actual results or future projections of discontinued
operations differ from management's current best estimates and assumptions
underlying the loss provisions, the difference would be reflected in the
consolidated statements of earnings in discontinued operations. In particular,
to the extent income, sales proceeds and holding periods for equity real estate
differ from management's current best estimates and assumptions underlying the
loss provisions, the difference would be reflected in the consolidated
statements of earnings in discontinued operations. During 1997 and 1996, the
loss provisions were further strengthened by $134.1 million and $129.0 million,
respectively. See Notes 1, 4, 5, 8 and 9 to the "Selected Consolidated Financial
Data" herein and the "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Discontinued Operations" in the 1997
10-K.
VOLATILE NATURE OF SECURITIES BUSINESS
In recent periods, DLJ has contributed a significant portion of The
Equitable's earnings and dividends on the common stock of DLJ held directly by
the Company have provided significant amounts of liquidity. The
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securities industry generally experienced favorable market conditions in 1996
and 1997, as continuing strong stock and bond markets and strong trading volumes
on all major exchanges led to increased merger and acquisition activity as well
as underwriting activity. DLJ's principal business activities, investment and
merchant banking, securities sales and trading and correspondent brokerage
services are, by their nature, highly competitive and subject to various risks,
volatile trading markets and fluctuations in the volume of market activity.
Consequently, DLJ's net income and revenue have been, and are likely to continue
to be, subject to wide fluctuations, reflecting the impact of many factors
beyond DLJ's control, including securities market conditions, the level and
volatility of interest rates, competitive conditions and the size and timing of
transactions. There can be no assurance that such fluctuations in DLJ's earnings
will not affect the level of The Equitable's future earnings. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Combined Results of Operations -- Combined Results of Continuing
Operations by Segment -- Investment Services" in the 1997 10-K.
RATINGS
Ratings are an important factor in establishing the competitive position of
insurance companies. A significant downgrade in the financial strength or
claims-paying ratings of Equitable Life could have a material adverse effect on
the Insurance Group's business, liquidity and results of operations. For a
discussion of the Insurance Group's current ratings, see "The
Equitable -- Insurance Operations" herein and "Business --
Competition -- Insurance and Annuities" in the 1997 10-K.
RISK-BASED CAPITAL
Since 1993, life insurers, including Equitable Life, have been subject to
certain risk-based capital ("RBC") guidelines. While the RBC guidelines are
intended to be a regulatory tool only, and are not intended as a means to rank
insurers generally, comparisons of RBC ratios of life insurers have become
generally available. Equitable Life was above its target RBC ratio at year end
1997. Principally because of the RBC formula's treatment of Equitable Life's
large holdings of subsidiary common stock (including its interests in Alliance
and DLJ), equity real estate and mortgages, Equitable Life's year end 1997 RBC
ratio is lower than those of its competitors in the life insurance industry. See
"Business -- Regulation -- Risk-Based Capital" in the 1997 10-K.
MARKET RISK, RISK MANAGEMENT AND DERIVATIVE FINANCIAL INSTRUMENTS
The Equitable's businesses are subject to market risks arising from its
insurance asset/liability management, asset management and trading activities.
Primary market risk exposures result from interest rate fluctuations, equity
price movements, changes in credit quality and, additionally at DLJ, foreign
currency exchange exposure. For more information about these risks, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Market Risk, Risk Management and Derivative Financial Instruments"
in the 1997 10-K.
ABSENCE OF PUBLIC MARKET FOR OFFERED SECURITIES
The Offered Securities are new issues of securities for which no market
currently exists. If the Offered Securities are traded after their initial
issuance, they may trade at a discount from the initial public offering price,
depending upon prevailing interest rates, the market for similar securities and
other factors. No assurance can be given that a holder of Offered Securities
will be able to sell such securities in the future or that such sale will be at
a price equal to or higher than the initial offering price of the Offered
Securities. No assurance can be given that an active market will develop or be
maintained for the Offered Securities. The Company does not intend to apply for
listing of the Offered Securities on any securities exchange or to seek their
admission to trading on any inter-dealer quotation system. The Underwriters
currently intend to make a market in the Offered Securities, subject to
applicable law and regulations. However, the Underwriters are not obligated to
do so and may discontinue such market making at any time without notice.
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CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company at December 31, 1997 and as adjusted to give effect to the sale of the
Offered Securities. The financial data at December 31, 1997 in the following
table are derived from the Company's consolidated financial statements audited
by Price Waterhouse LLP, included in the 1997 10-K and incorporated by reference
herein.
<TABLE>
<CAPTION>
AT DECEMBER 31, 1997
-------------------------
HISTORICAL AS ADJUSTED
---------- -----------
(IN MILLIONS)
<S> <C> <C>
DEBT:
Short-term debt
Company................................................ $ 25.0 $ 25.0
Subsidiaries of Company................................ 1,841.6 1,841.6
Long-term debt
Company................................................ 544.0 1,135.8
Subsidiaries of Company................................ 3,800.2 3,800.2
--------- ---------
Total debt........................................ 6,210.8 6,802.6
SHAREHOLDERS' EQUITY:
Series D Convertible Preferred Stock; $1.00 par value;
$500.00 stated value; 60,000 shares authorized and issued,
51,960 outstanding (liquidation value $26.0 million)...... 514.4 514.4
Stock Employee Compensation Trust (Series D Convertible
Preferred Stock held in trust)............................ (514.4) (514.4)
Common Stock; $0.01 par value; 500 million shares
authorized; 222.2 million shares issued and outstanding... 2.2 2.2
Capital in excess of par value.............................. 3,627.5 3,627.5
Retained earnings........................................... 1,137.4 1,137.4
Net unrealized investment gains............................. 523.7 523.7
Minimum pension liability................................... (17.3) (17.3)
--------- ---------
Total shareholders' equity........................ 5,273.5 5,273.5
--------- ---------
Total Capitalization........................................ $11,484.3 $12,076.1
========= =========
</TABLE>
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USE OF PROCEEDS
The Equitable Companies Incorporated will not receive any proceeds from the
sale of the Offered Securities in any market-making transactions with which this
Prospectus Supplement is delivered.
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected historical consolidated financial
information for The Equitable. The selected historical consolidated financial
information (other than General Account Investment Assets and assets under
management) at December 31, 1997 and 1996 and for each of the years in the
three-year period ended December 31, 1997 has been derived from consolidated
financial statements audited by Price Waterhouse LLP, independent accountants,
included in the 1997 10-K and incorporated by reference herein and should be
read in conjunction with and is qualified by reference to such statements and
related notes. The selected historical consolidated financial information (other
than General Account Investment Assets and assets under management) at December
31, 1995, 1994 and 1993 and for each of the years in the two-year period ended
December 31, 1994 have been derived from consolidated financial statements not
included or incorporated herein.
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SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF EARNINGS DATA:
REVENUES
Universal life and investment-type product
policy fee income......................... $ 950.6 $ 874.0 $ 788.2 $ 715.0 $ 644.5
Premiums.................................... 601.5 597.6 606.8 625.6 599.1
Net investment income(1).................... 3,991.3 3,336.3 3,047.4 2,838.4 2,715.0
Investment gains, net(2)(3)................. 592.4 599.2 552.3 338.6 526.4
Commissions, fees and other income.......... 3,427.8 2,800.5 2,142.4 1,748.4 1,851.5
Contribution from the Closed Block(2)(11)... 102.5 125.0 143.2 137.0 137.9
---------- ---------- ---------- ---------- ----------
Total revenues..................... 9,666.1 8,332.6 7,280.3 6,403.0 6,474.4
---------- ---------- ---------- ---------- ----------
BENEFITS AND OTHER DEDUCTIONS
Interest credited to policyholders' account
balances.................................. 1,267.0 1,271.1 1,249.2 1,202.2 1,325.6
Policyholders' benefits(4).................. 978.6 1,317.7 1,008.6 914.9 1001.7
Other operating costs and
expenses(4)(5)(6)......................... 6,317.5 5,228.0 4,377.3 3,739.3 3,770.8
---------- ---------- ---------- ---------- ----------
Total benefits and other
deductions....................... 8,563.1 7,816.8 6,635.1 5.856.4 6,098.1
---------- ---------- ---------- ---------- ----------
EARNINGS FROM CONTINUING OPERATIONS BEFORE
FEDERAL INCOME TAXES, MINORITY INTEREST
AND CUMULATIVE EFFECT OF ACCOUNTING
CHANGE(4)................................. 1,103.0 515.8 645.2 546.6 376.3
Federal income taxes (7).................... 280.5 137.4 192.3 157.0 111.7
Minority interest in net income of
consolidated subsidiaries................. 174.3 172.4 87.5 68.3 31.9
---------- ---------- ---------- ---------- ----------
EARNINGS FROM CONTINUING OPERATIONS BEFORE
CUMULATIVE EFFECT OF ACCOUNTING
CHANGE(4)................................. 648.2 206.0 365.4 321.3 232.7
Discontinued operations, net of Federal
income taxes(1)(5)(8)(9).................. (87.2) (83.8) -- -- --
Cumulative effect of accounting change, net
of Federal income taxes(10)............... -- (23.1) -- (27.1) --
---------- ---------- ---------- ---------- ----------
Net earnings................................ 561.0 99.1 365.4 294.2 232.7
Dividends on preferred stocks............... 15.6 26.7 26.7 80.1 65.4
---------- ---------- ---------- ---------- ----------
Net Earnings Applicable to Common Shares.... $ 545.4 $ 72.4 $ 338.7 $ 214.1 $ 167.3
========== ========== ========== ========== ==========
NET EARNINGS PER COMMON SHARE:
Basic..................................... $ 2.71 $ .39 $ 1.84 $ 1.49 $ 1.18
========== ========== ========== ========== ==========
Diluted................................... $ 2.47 $ .37 $ 1.75 $ 1.37 $ 1.08
========== ========== ========== ========== ==========
Cash Dividend Per Common Share............ $ .20 $ .20 $ .20 $ .20 $ .20
========== ========== ========== ========== ==========
REVENUES BY SEGMENT:
Insurance operations(1)(2)(3)............... $ 3,684.2 $ 3,770.6 $ 3,614.6 $ 3,507.4 $ 3,464.4
Investment services(3)...................... 5,968.1 4,540.0 3,689.8 2,908.6 3,024.1
Corporate, other and eliminations........... 13.8 22.0 (24.1) (13.0) (14.1)
---------- ---------- ---------- ---------- ----------
Total Revenues..................... $ 9,666.1 $ 8,332.6 $ 7,280.3 $ 6,403.0 $ 6,474.4
========== ========== ========== ========== ==========
</TABLE>
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<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA -- (CONTINUED)
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
EARNINGS FROM CONTINUING OPERATIONS BEFORE
FEDERAL INCOME TAXES, MINORITY INTEREST
AND CUMULATIVE EFFECT OF ACCOUNTING
CHANGE, BY SEGMENT:
Insurance operations........................ $ 250.3 $ (36.6) $ 303.1 $ 327.5 $ 128.2
Investment services......................... 971.3 663.2 466.3 375.2 359.3
Corporate interest expense and other
eliminations.............................. (118.6) (110.8) (124.2) (156.1) (111.2)
---------- ---------- ---------- ---------- ----------
EARNINGS FROM CONTINUING OPERATIONS BEFORE
FEDERAL INCOME TAXES, MINORITY INTEREST
AND CUMULATIVE EFFECT OF ACCOUNTING
CHANGE.................................... $ 1,103.0 $ 515.8 $ 645.2 $ 546.6 $ 376.3
========== ========== ========== ========== ==========
GENERAL ACCOUNT INVESTMENT ASSETS (AT PERIOD
END)(11)(12).............................. $ 35,527.6 $ 34,939.2 $ 33,777.1 $ 32,338.6 $ 32,695.5
========== ========== ========== ========== ==========
ASSETS UNDER MANAGEMENT (AT PERIOD END):
The Equitable............................... $ 57,139 $ 54,990 $ 50,900 $ 47,376 $ 51,003
Third Party(13)............................. 216,945 184,784 144,441 125,145 121,643
---------- ---------- ---------- ---------- ----------
Total.............................. $ 274,084 $ 239,774 $ 195,341 $ 172,521 $ 172,646
========== ========== ========== ========== ==========
CONSOLIDATED BALANCE SHEETS DATA (AT PERIOD
END):
Total assets(11)(14)........................ $151,437.6 $128,811.2 $113,716.2 $ 94,785.3 $100,382.3
Long-term debt.............................. 4,344.2 3,920.7 3,852.0 2,925.9 2,662.3
Total liabilities(11)(14)................... 146,164.1 124,823.2 109,607.5 91,605.2 96,670.9
Redeemable preferred stock.................. -- -- -- -- 264.9
Shareholders' equity........................ 5,273.5 3,988.0 4,108.7 3,180.1 3,446.5
Book value per common share................. 23.57 19.12 19.88 14.93 16.83
</TABLE>
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(1) Net investment income and discontinued operations included $53.3 million,
$114.3 million, $154.6 million, $219.7 million and $197.1 million for 1997,
1996, 1995, 1994 and 1993, respectively, recognized as investment income by
continuing operations and as interest expense by discontinued operations
relating to intersegment loans.
(2) Investment gains, net included additions to asset valuation allowances and
writedowns of publicly traded securities and equity real estate, for
continuing operations aggregating $483.8 million ($544.7 million including
amounts related to the Closed Block), $178.6 million ($205.8 million
including amounts related to the Closed Block), $197.6 million ($224.9
million including amounts related to the Closed Block), $100.5 million
($137.5 million including amounts related to the Closed Block), and $108.7
million ($147.3 million including amounts related to the Closed Block) for
1997, 1996, 1995, 1994 and 1993, respectively. In 1997, additions to
valuation allowances of $227.6 million ($243.0 million including amounts
related to the Closed Block) were recorded related to management's
announced intention to accelerate sales of equity real estate.
Additionally, in 1997, $132.3 million ($161.1 million including amounts
related to the Closed Block) of writedowns on real estate held for
production of income were recorded. Additionally, as of January 1, 1996, as
a result of the adoption of SFAS No. 121, $152.4 million of allowances on
assets held for investment were released and impairment losses of $144.0
million ($149.6 million including amounts related to the Closed Block) were
recognized on real estate held and used.
(3) Investment gains, net for 1997 included a pre-tax gain of $252.1 million
resulting from the sale of Equitable Real Estate Investment Management,
Inc. and certain affiliates. Investment gains, net for 1996 included a
$79.4 million gain (before variable compensation and related expenses)
related to the sale of shares of one investment in the DLJ long-term
corporate development portfolio. Investment gains, net for 1995 included
$34.7 million gain resulting from the sale of a minority interest in DLJ.
Investment gains, net for 1994 included a $52.4 million gain related to the
sale by Alliance of 4.96 million of newly issued Alliance Units. Investment
gains, net for 1993 included a $49.3 million gain (before variable
compensation and related expenses) related to the sale of shares on that
same investment in the DLJ long-term corporate development portfolio.
S-11
<PAGE> 12
(4) During the fourth quarter of 1996, The Equitable completed experience and
loss recognition studies of participating group annuity contracts and
conversion annuities ("Pension Par") and disability income ("DI") products.
As a result of these studies, $145.0 million of unamortized DI deferred
policy acquisition costs ("DAC") were written off and reserves were
strengthened by $248.0 million for these lines of business. Consequently,
earnings from continuing operations for 1996 decreased by $255.5 million
($393.0 million pre-tax). See Note 2 of Notes to Consolidated Financial
Statements in the 1997 10-K.
(5) Other operating costs and expenses included corporate interest expenses of
$127.2 million, $139.6 million, $100.5 million, $50.6 million and $28.4
million for 1997, 1996, 1995, 1994 and 1993, respectively, and interest
credited to discontinued operations of $88.2 million and $97.7 million for
1994 and 1993, respectively.
(6) Other operating costs and expenses included provisions associated with
employee termination and exit costs of $42.4 million, $24.4 million, $39.2
million, $20.4 million and $96.4 million for 1997, 1996, 1995, 1994 and
1993, respectively (including $41.7 million, $22.3 million, $28.1 million,
$20.4 million and $45.6 million attributable to Insurance Operations for
1997, 1996, 1995, 1994 and 1993, respectively; and $0.7 million, $2.1
million, $11.1 million and $50.8 million attributable to Investment
Services for 1997, 1996, 1995 and 1993, respectively).
(7) During 1997, The Equitable released $97.5 million of tax reserves related
to years prior to 1989.
(8) Discontinued operations, net of Federal income taxes, included additions to
asset valuation allowances and writedowns of fixed securities and, in 1997
and 1996, equity real estate aggregating $212.5 million, $36.0 million,
$38.2 million, $50.8 million and $53.0 million for 1997, 1996, 1995, 1994
and 1993, respectively. Additionally, the implementation of SFAS No. 121 as
of January 1, 1996 resulted in the release of existing valuation allowances
of $71.9 million on equity real estate and recognition of impairment losses
of $69.8 million.
(9) During the 1997 and 1996 reviews of the allowance for estimated future
losses for discontinued operations, management determined it was necessary
to increase the allowance. As a result, net earnings decreased by $87.2
million and $83.8 million for 1997 and 1996, respectively. Incurred losses
of $154.4 million, $23.7 million, $25.1 million, $21.7 million and $24.7
million for 1997, 1996, 1995, 1994 and 1993, respectively, were charged to
discontinued operations' allowance for future losses. See Note 7 of Notes
to Consolidated Financial Statements included in the 1997 10-K.
(10) Cumulative effect of accounting change, net of Federal income taxes,
included a charge of $23.1 million, net of a Federal income tax benefit of
$12.4 million, related to SFAS No. 121 for the year ended December 31,
1996, a charge of $27.1 million, net of a Federal income tax benefit of
$14.6 million related to SFAS No. 112 for the year ended December 31, 1994.
(11) The results of the Closed Block are reported on one line in the
consolidated statements of earnings. Total assets, total liabilities and
General Account Investment Assets included the assets and liabilities of
the Closed Block and, therefore, are comparable for all periods presented.
See Note 6 of Notes to Consolidated Financial Statements included in the
1997 10-K.
(12) General Account Investment Assets does not include the Discontinued
Operations Investment Assets, which had an aggregate carrying value of
$1.77 billion, $2.49 billion, $3.26 billion, $3.90 billion and $4.82
billion at December 31, 1997, 1996, 1995, 1994 and 1993, respectively.
(13) Third party assets under management included Separate Accounts assets under
management of $34.60 billion, $29.87 billion, $24.72 billion, $20.67
billion and $19.74 billion at December 31, 1997, 1996, 1995, 1994 and 1993,
respectively.
(14) Assets and liabilities relating to discontinued operations are not
reflected on the consolidated balance sheets of The Equitable, except that
as of December 31, 1997, 1996, 1995, 1994 and 1993, the net amount due to
continuing operations for intersegment loans made to discontinued
operations in excess of continuing operations obligations to fund
discontinued operations accumulated deficit (the amount required to make
assets equal to liabilities) is reflected as "Amounts due from discontinued
operations." In 1995, continuing operations transferred $1,215.4 million in
cash to discontinued operations in settlement of its obligation.
Subsequently, discontinued operations remitted $1,155.4 million in cash to
continuing operations in partial repayment of borrowings by discontinued
operations. See Note 7 of Notes to Consolidated Financial Statements
included in the 1997 10-K.
S-12
<PAGE> 13
DESCRIPTION OF THE OFFERED SECURITIES
GENERAL
The Offered Securities have been issued under a Senior Indenture, dated as
of December 1, 1993 (the "Senior Indenture"), between the Company and The Chase
Manhattan Bank (formerly known as Chemical Bank), as Trustee (the "Trustee"),
(the Senior Indenture as amended and supplemented from time to time, the
"Indenture"). The Offered Securities were issued pursuant to a Supplemental
Indenture, dated as of April 1, 1998, between the Company and the Trustee. The
Indenture (including the Supplemental Indenture referred to above) has been
incorporated by reference as an exhibit to the Registration Statement of which
the accompanying Prospectus is a part. The following summary of certain
provisions of the Indenture and of the Offered Securities (referred to in the
accompanying Prospectus as the "Debt Securities") supplements, and to the extent
inconsistent therewith replaces, the summary of certain provisions of the Debt
Securities set forth in the accompanying Prospectus, to which reference is
hereby made. These summaries together address the material terms of the Offered
Securities and the Indenture but are subject to, and are qualified in their
entirety by reference to, the text of the Offered Securities and the Indenture.
The Senior Notes are limited to $250 million in aggregate principal amount
and will mature on April 1, 2008. The Senior Debentures are limited to $350
million in aggregate principal amount and will mature on April 1, 2028.
Reference is made to the accompanying Prospectus for a detailed summary of
additional provisions of the Offered Securities and of the Indenture under which
the Offered Securities are issued.
The Senior Notes will bear interest at the rate of 6 1/2% per annum and the
Senior Debentures will bear interest at the rate of 7% per annum, in each case
from April 6, 1998, or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, payable semi-annually on April 1
and October 1, commencing October 1, 1998, to the persons in whose names the
Senior Notes or Senior Debentures, as the case may be, are registered at the
close of business on the regular record date relating thereto, which is the
March 15 and September 15, as the case may be, next preceding such Interest
Payment Date.
The Offered Securities are not entitled to any sinking fund. The provisions
of Article 4 of the Indenture relating to defeasance, which are described in the
accompanying Prospectus, will apply to the Offered Securities.
The Offered Securities are issued only in fully registered form in
denominations of $1,000 and any integral multiple thereof. Offered Securities
may be transferred or exchanged without any service charge, other than any tax
or other governmental charge imposed in connection therewith, at the corporate
trust office of the Trustee in the City of New York, or at any other office or
agency maintained by the Company for such purpose.
OPTIONAL REDEMPTION
The Senior Notes and the Senior Debentures may be redeemed by the Company,
in whole or in part, at any time prior to maturity at a price (the "Redemption
Price") equal to the sum of (i) the aggregate principal amount being redeemed
plus accrued interest thereon to the date of redemption and (ii) the Make-Whole
Amount (as defined below), if any, with respect to such Offered Securities.
Notice of an optional redemption of any Offered Securities will be given to
holders thereof at their addresses, as shown in the register, not more than 60
nor less than 30 days prior to the date fixed for redemption. The notice of
redemption will specify, among other items, the date fixed for redemption and
the principal amount of the Offered Securities of the applicable series held by
such holder to be redeemed.
If funds for the redemption of any Offered Securities called for redemption
have been made available on such redemption date, such Offered Securities will
cease to bear interest on the date fixed for such redemption specified in the
notice of redemption and the only right of the holders thereof will be to
receive payment of the Redemption Price.
S-13
<PAGE> 14
If fewer than all of the outstanding Offered Securities of a series are to
be redeemed, Offered Securities of such series shall be redeemed pro rata based
on the outstanding principal amount of such Offered Securities being redeemed.
Certain Definitions Applicable to Optional Redemption. "Make-Whole Amount"
means, in connection with any optional redemption of the Offered Securities of a
series, the excess, if any, of (i) the aggregate present value as of the date of
such redemption of each dollar of principal being redeemed and the amount of
interest that would have been payable in respect of such dollar if such
prepayment had not been made determined by discounting, on a semiannual basis,
such principal and interest at the Reinvestment Rate (determined on the business
day immediately preceding the date of such redemption) from the respective dates
on which such principal and interest would have been payable if such prepayment
had not been made, over (ii) the aggregate principal amount of the Offered
Securities of the applicable series being redeemed or paid plus accrued interest
to the date of redemption.
The term "Reinvestment Rate" means the arithmetic mean of the yields for
the two weeks set forth under the heading "Week Ending" published in the
Statistical Release under the caption "Treasury Constant Maturities" for the
maturity (rounded to the nearest month) corresponding to the Weighted Average
Life to Maturity of the principal being prepaid or paid plus 15 basis points
(three-twentieths of one percent) in respect of the Senior Notes and 20 basis
points (one-fifth of one percent) in the case of the Senior Debentures. If no
maturity exactly corresponds to such Weighted Average Life to Maturity, yields
for the two published maturities most closely corresponding to such Weighted
Average Life to Maturity shall be calculated pursuant to the immediately
preceding sentence and the Reinvestment Rate shall be interpolated or
extrapolated from such yields on a straight-line basis rounding in each of such
relevant periods to the nearest month. For the purposes of calculating the
Reinvestment Rate, the most recent Statistical Release published prior to the
date of determination of the Make-Whole Amount shall be used.
The term "Remaining Dollar-Years" means, at any time, with respect to any
Senior Note or Senior Debenture, as the case may be, the result obtained by
multiplying (i) an amount equal to the then remaining principal payment at final
maturity of such Senior Note or Senior Debenture, as the case may be, unpaid
immediately prior to such time by (ii) the number of years (calculated to the
nearest one-twelfth) that will elapse between such time and the date such
required principal payment at final maturity is due.
The term "Statistical Release" means the statistical release designated
"H.15(519)" or any successor publication which is published weekly by the
Federal Reserve System and which establishes yields on actively traded U.S.
government securities adjusted to constant maturities or if such statistical
release is not published at the time of any determination under the Indenture,
then such other reasonably comparable index which shall be designated by the
Company.
The term "Weighted Average Life to Maturity" means, at any time, with
respect to any Senior Note or Senior Debenture, as the case may be, the number
of years obtained by dividing the then Remaining Dollar-Years at such time of
such Senior Note or Senior Debenture, as the case may be, by the then
outstanding principal amount of such Senior Note or Senior Debenture, as the
case may be.
GLOBAL OFFERED SECURITIES
Each series of the Offered Securities has been issued only in the form of
one or more fully registered global Offered Securities, representing the
aggregate principal amount of each series of the Offered Securities, that have
been deposited with, or on behalf of, DTC, and registered in the name of Cede &
Co., the nominee of DTC. Except under certain circumstances described in the
Prospectus under "Description of Debt Securities -- Book-Entry System," global
Offered Securities will not be exchanged for definitive Offered Securities and
will not otherwise be issuable as definitive Offered Securities.
DTC has advised the Company as follows: DTC is a limited-purpose trust
company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the 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
S-14
<PAGE> 15
Securities Exchange Act of 1934, as amended (the "Exchange Act"). DTC holds
securities that its participants ("Participants") deposit with it. DTC also
facilitates the settlement among Participants of securities transactions, such
as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Participants in DTC
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Participants and by the New York Stock Exchange, the
American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Access to DTC's system is also available to others, such as
securities brokers and dealers, banks and trust companies that clear
transactions through or maintain a direct or indirect custodial relationship
with a Direct Participant either directly or indirectly ("Indirect
Participants"). The rules applicable to DTC and its Participants are on file
with the Securities and Exchange Commission.
Purchases of Offered Securities under DTC's system must be made by or
through Direct Participants, which will receive a credit for such Offered
Securities on DTC's records. The ownership interest of each actual purchaser of
each Offered Security ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchase, but Beneficial Owners are
expected to receive written confirmations providing details of the transaction,
as well as periodic statements of their holdings, from the Direct or Indirect
Participants through which such Beneficial Owners entered into the transaction.
Transfers of ownership interests in Offered Securities are to be accomplished by
entries made on the books of Participants acting on behalf of Beneficial Owners.
Beneficial Owners of Offered Securities will not receive Offered Securities in
definitive form representing their ownership interest therein, except in the
event that use of the book-entry system for such Offered Securities is
discontinued or upon the occurrence of certain other events described herein or
in the attached Prospectus.
To facilitate subsequent transfers, all Offered Securities which are
deposited with DTC are registered in the name of DTC's nominee, Cede & Co. The
deposit of Offered Securities with DTC and their registration in the name of
Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the
actual beneficial owners of the Offered Securities: DTC's records reflect only
the identity of the Direct Participants to whose accounts such Offered
Securities are credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to the Offered
Securities. Under its usual procedures, DTC mails an omnibus proxy (an "Omnibus
Proxy") to the Company as soon as possible after the applicable record date. The
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the Offered Securities are credited on the
applicable record date (identified in a listing attached to the Omnibus Proxy).
The nominee of DTC, as holder of record of the Offered Securities, will be
entitled to receive payments of principal and interest by wire transfer in same
day funds for payment to Beneficial Owners in accordance with customary
procedures established from time to time by DTC. DTC's practice is to credit
Direct Participants' accounts on the relevant payment date in accordance with
their respective holdings shown on DTC's records unless DTC has reason to
believe that it will not receive payment on such date. Payments by Participants
to Beneficial Owners will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of customers in
bearer form or registered in "street name," and will be the responsibility of
such Participants and not of DTC, the Trustee, or the Company, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payment of principal, premium and interest to DTC is the responsibility of the
Company or the Trustee, disbursement of such payments to Direct Participants
shall be the responsibility of DTC, and disbursement of such payments to the
Beneficial Owners shall be the responsibility of Direct and Indirect
Participants. Neither the Company nor the Trustee will have any responsibility
or liability for the disbursements of payments in respect of ownership interests
in the Offered
S-15
<PAGE> 16
Securities by DTC or the Direct or Indirect Participants or for maintaining or
reviewing any records of DTC or the Direct or Indirect Participants relating to
ownership interests in the Offered Securities or the disbursement of payments in
respect thereof.
DTC may discontinue providing its services as securities depository with
respect to the Offered Securities at any time by giving reasonable notice to the
Company or the Trustee. Under such circumstances, and in the event that a
successor securities depositary is not obtained, Offered Securities in
definitive form are required to be printed and delivered. The Company may decide
to discontinue use of a system of book-entry transfers through DTC (or a
successor securities depository). In that event, Offered Securities in
definitive form will be printed and delivered.
The information in this section concerning DTC and DTC's system has been
obtained from sources that the Company believes to be reliable, but is subject
to any changes to the arrangements between the Company and DTC and any changes
to such procedures that may be instituted unilaterally by DTC.
SAME-DAY SETTLEMENT IN RESPECT OF GLOBAL OFFERED SECURITIES
Settlement by the purchasers of Offered Securities will be made in
immediately available funds. All payments by the Company to DTC of principal and
interest will be made in immediately available funds.
So long as any Offered Securities are represented by Global Offered
Securities registered in the name of DTC or its nominee, such Offered Securities
will trade in DTC's Same-Day Funds Settlement system, and secondary market
trading activity in such Offered Securities will therefore be required by DTC to
settle in immediately available funds. No assurance can be given as to the
effect, if any, of settlement in immediately available funds on trading activity
in the Offered Securities.
CONCERNING THE TRUSTEE
Except during the continuance of an Event of Default, the Trustee shall
perform only such duties as are specifically set forth in the Indenture. During
the continuance of any Event of Default, the Trustee shall exercise such of the
rights and powers vested in it under the Indenture and use the same degree of
care and skill in their exercise, as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.
The Trustee may acquire and hold Offered Securities and, subject to certain
conditions, otherwise deal with the Company as if it were not Trustee under the
Indenture.
The Company and its subsidiaries currently conduct banking transactions
with the Trustee in the ordinary course of business.
S-16
<PAGE> 17
PLAN OF DISTRIBUTION
This Prospectus Supplement has been prepared for use by DLJSC in connection
with offers and sales of the Offered Securities in market-making transactions by
or through DLJSC, at negotiated prices relating to prevailing market prices at
the time of sale or otherwise. DLJSC may act as principal or agent in such
transactions. The Offered Securities may be offered in negotiated transactions
or otherwise. DLJSC has no obligation to make a market in the Offered Securities
and may discontinue market-making activities at any time without notice at its
sole discretion.
LEGAL OPINIONS
The validity of the Offered Securities has been passed upon for the Company
by Debevoise & Plimpton, 875 Third Avenue, New York, New York 10022.
ERISA MATTERS
The Company and certain affiliates of the Company, including Equitable
Life, Alliance and DLJ, may each be considered a "party in interest" within the
meaning of ERISA or a "disqualified person" within the meaning of the Internal
Revenue Code of 1986, as amended (the "Code"), with respect to many employee
benefit plans. Prohibited transactions within the meaning of ERISA or the Code
may arise, for example, if the Offered Securities are acquired by or on behalf
of a pension or other employee benefit plan with respect to which the Company or
any of its affiliates is a service provider, unless such Offered Securities are
acquired pursuant to an exemption for transactions effected on behalf of such
plan by a "qualified professional asset manager" or pursuant to any other
available exemption. Any such pension or employee benefit plan or other person
proposing to invest in the Offered Securities should consult with its legal
counsel.
S-17
<PAGE> 18
PROSPECTUS
$1,000,000,000
THE EQUITABLE COMPANIES INCORPORATED
DEBT SECURITIES
The Equitable Companies Incorporated (the "Company") may from time to time
offer senior or subordinated debt securities (the "Senior Debt Securities" and
the "Subordinated Debt Securities" respectively, and collectively, the "Debt
Securities").
The Debt Securities offered pursuant to this Prospectus may be issued in
one or more series or issuances in U.S. dollars or in one or more foreign
currencies or currency units. By separate prospectus, the form of which is
included in the Registration Statement of which this Prospectus forms a part,
four Delaware statutory business trusts (the "Trusts"), which are wholly owned
subsidiaries of the Company, may from time to time severally offer preferred
securities guaranteed by the Company to the extent set forth therein and the
Company may offer from time to time junior subordinated debt securities to a
Trust. The aggregate initial public offering price of the securities to be
offered by this Prospectus and such other prospectus shall not exceed
$1,000,000,000 (or its equivalent in one or more foreign currencies or currency
units).
Specific terms of the particular series of Debt Securities in respect of
which this Prospectus is being delivered (the "Offered Securities") will be set
forth in an accompanying Prospectus Supplement (the "Prospectus Supplement"),
which will describe, without limitation and where applicable, the following: the
ranking as senior or subordinated debt securities, the specific designation,
aggregate principal amount, denominations, maturity, premium, if any, interest
rate (which may be fixed or variable) or method of calculating interest, if any,
place or places where principal, premium, if any, and interest, if any, will be
payable, currency in which principal, premium, if any, and interest, if any,
will be payable, any terms of redemption, any sinking fund provisions, any
listing on a securities exchange, initial public offering or purchase price,
conversion rights, methods of distribution and other specific terms of the
offering.
The Debt Securities will be unsecured and, because the Company is a
non-operating holding company, will be effectively subordinated to all
liabilities of the Company's subsidiaries, including liabilities under contracts
of insurance and annuities written by the Company's insurance subsidiaries.
Accordingly, holders of the Debt Securities should look only to the assets of
the Company for payments of interest and principal. Unless otherwise specified
in a Prospectus Supplement, the Senior Debt Securities will rank equally with
all other unsecured and unsubordinated indebtedness of the Company. The
Subordinated Debt Securities will be subordinated in right of payment to all
Senior Debt (as defined herein) of the Company to the extent described herein
and in the Prospectus Supplement relating thereto.
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 has been prepared for Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJSC") in connection with offers and sales of the
Offered Securities which may be made by it from time to time in market-making
transactions at negotiated prices relating to prevailing market prices at the
time of sale. The Company has been advised by DLJSC that it currently intends to
make a market in the Offered Securities; however, it is not obligated to do so.
Any such market-making may be discontinued at any time, and there is no
assurance as to the liquidity of, or trading market for, the Offered Securities.
DLJSC may act as principal or agent in such transactions. See "Plan of
Distribution." This Prospectus may not be used to consummate sales of Offered
Securities unless accompanied by a Prospectus Supplement.
THE DATE OF THIS PROSPECTUS IS MARCH 27, 1998
<PAGE> 19
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"). The registration
statement of which this Prospectus forms a part, as well as reports, proxy
statements and other information filed by the Company, may be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549; 7 World
Trade Center, 13th Floor, Suite 1300, New York, New York 10048; and Suite 1400,
Northwestern Atrium Center, 14th Floor, 500 West Madison Street, Chicago,
Illinois 60611. Copies of such material can be obtained at prescribed rates from
the Public Reference Section of the Commission at Room 1024, 450 Fifth Street,
N.W., Judiciary Plaza, Washington, D.C. 20549. Such material may also be
accessed electronically by means of the Commission's home page on the Internet
at http://www.sec.gov. The Company's common stock, par value $0.01 per share
(the "Common Stock"), is listed on the New York Stock Exchange, Inc. and reports
and other information concerning the Company can also be inspected at the office
of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
This Prospectus constitutes a part of the Registration Statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") filed with the Commission under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Offered Securities. This
Prospectus does not contain all of the information set forth in such
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. Reference is made to such
Registration Statement and to the exhibits relating thereto for further
information with respect to the Company and the Offered Securities. Any
statements contained herein concerning the provisions of any document filed as
an exhibit to the Registration Statement or otherwise filed with the Commission
or incorporated by reference herein are not necessarily complete, and in each
instance reference is made to the copy of such document so filed for a more
complete description of the matter involved. Each such statement is qualified in
its entirety by such reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 31,
1997 and Registration Statement on Form 8-A, dated May 26, 1992, incorporating
the description of the Company's Common Stock in the Company's Registration
Statement on Form S-1 (Registration No. 33-48115), each previously filed by the
Company with the Commission, are incorporated by reference in this Prospectus.
All documents filed by the Company after the date of this Prospectus
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the termination of the offering of the Offered Securities offered hereby, shall
be deemed to be incorporated herein by reference and to be a part hereof from
the date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statements as modified or superseded shall
be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon written or oral request of such person, a
copy of any or all of the documents referred to above which have been or may be
incorporated by reference in this Prospectus (other than certain exhibits to
such documents). Requests for such documents should be directed to The Equitable
Companies Incorporated, 1290 Avenue of the Americas, New York, New York 10104,
Attention: Corporate Secretary (Telephone: (212) 314-3914).
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
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<PAGE> 20
COMPANY, OR ANY UNDERWRITER, AGENT OR DEALER. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THAT THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION.
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<PAGE> 21
THE EQUITABLE
For the purpose of this Prospectus, the term "The Equitable" refers to The
Equitable Companies Incorporated (the "Company") and its subsidiaries.
The Equitable is a diversified financial services organization serving a
broad spectrum of insurance, investment management and investment banking
customers. The Equitable Life Assurance Society of the United States ("Equitable
Life"), a subsidiary of the Company, was established in the State of New York in
1859. For more than 100 years it has been among the largest life insurance
companies in the United States. Equitable Life and its subsidiaries distribute a
variety of insurance, annuity and investment products.
At December 31, 1997, the Company's holdings in its investment subsidiaries
included an approximately 72% interest in Donaldson, Lufkin & Jenrette, Inc.
("DLJ") and an approximately 58% interest in Alliance Capital Management L.P.
("Alliance"). The Company's investment subsidiaries provide investment
management and investment banking services to institutional and individual
clients, including the Company's insurance subsidiaries.
AXA is the Company's largest stockholder, beneficially owning at December
31, 1997 approximately 59% of the outstanding shares of common stock, par value
$.01, of the Company (the "Common Stock"). The Company is a Delaware corporation
with its principal headquarters located at 1290 Avenue of the Americas, New
York, New York 10104 (Telephone: (212) 554-1234).
USE OF PROCEEDS
The Equitable Companies Incorporated will not receive any proceeds from the
sale of the Offered Securities in any market-making transaction with which this
Prospectus may be delivered.
RATIOS OF EARNINGS
TO FIXED CHARGES AND EARNINGS TO COMBINED
FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth the ratios of earnings to fixed charges and
earnings to combined fixed charges and preferred stock dividends for the Company
for the periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1993 1994 1995 1996 1997
-----------------------------------------
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges(1).............. 1.287 1.294 1.239 1.174 1.263
Ratio of earnings to combined fixed charges and
preferred stock dividends(1)..................... 1.212 1.229 1.222 1.159 1.256
</TABLE>
- --------------------------------------------------------------------------------
(1) For purposes of determining the historical ratios of earnings to fixed
charges, and of earnings to combined fixed charges and preferred stock
dividends, earnings consist of earnings from continuing operations before
Federal income taxes, minority interest and cumulative effect of accounting
change adjusted for (i) excess of equity in income of unconsolidated
investees over distributed income and (ii) equity in losses of
unconsolidated investees, plus fixed charges. Fixed charges consist of
interest expense on long and short-term debt, amortization of deferred debt
expenses plus the portion of operating lease rentals, net of income from
subleases, representative of the interest factor. The inclusion of Interest
Credited to Policyholders' Account Balances in the ratios presented above
would not have a material effect on such ratios.
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<PAGE> 22
DESCRIPTION OF DEBT SECURITIES
The Senior Debt Securities offered hereby are to be issued in one or more
series under the Senior Indenture, dated as of December 1, 1993, as supplemented
(as so supplemented, the "Senior Indenture"), between the Company and The Chase
Manhattan Bank, formerly known as Chemical Bank, as trustee (the "Trustee"). The
Subordinated Debt Securities offered hereby are to be issued under the
Subordinated Indenture, dated as of October 22, 1994 (the "Subordinated
Indenture" and, together with the Senior Indenture, the "Indentures"), between
the Company and State Street Bank and Trust Company, as successor to Shawmut
Bank Connecticut, National Association, as trustee (the "Trustee"), copies of
which have been incorporated by reference as exhibits to the Registration
Statement of which this Prospectus forms a part.
The statements herein relating to the Debt Securities and the following
summaries of certain provisions of the Indentures do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all the
provisions of the Indentures (as they may be amended or supplemented from time
to time) and the Trust Indenture Act of 1939, as amended (the "TIA"). Whenever
particular sections or defined terms of the Indentures (as they may be amended
or supplemented from time to time) are referred to herein or in a Prospectus
Supplement, such sections or defined terms are incorporated herein or therein by
reference.
GENERAL
The Debt Securities will be unsecured obligations of the Company. The
Senior Debt Securities will be unsecured and will rank on a parity with all
other unsecured and unsubordinated obligations of the Company. The Subordinated
Debt Securities will be subordinate and junior in right of payment to the extent
and in the manner set forth in the Subordinated Indenture to all Senior Debt (as
defined below) of the Company. As of December 31, 1997, the Company had $569.0
million aggregate principal amount of Senior Debt outstanding and no
Subordinated Debt Securities were outstanding. As a non-operating holding
company most of the assets of the Company are owned by its subsidiaries.
Accordingly, the Debt Securities will be effectively subordinated to all
existing and future liabilities of the Company's subsidiaries, including
liabilities under contracts of insurance and annuities written by the Company's
insurance subsidiaries, primarily Equitable Life, and holders of Debt Securities
should look only to the assets of the Company for payments of interest and
principal. The Indentures do not limit the aggregate amount of Debt Securities
which may be issued thereunder. Except as otherwise provided in the applicable
Prospectus Supplement, the Indentures, as they apply to any series of Debt
Securities, also do not limit the amount of other secured or unsecured debt
which may be issued or incurred by the Company. See "-- Certain Covenants" and
"-- Subordination of Subordinated Debt" and the Prospectus Supplement relating
to any offering of Subordinated Debt.
The Debt Securities will be issuable in one or more series pursuant to an
indenture supplemental to the Senior Indenture or the Subordinated Indenture, as
the case may be, or a resolution of the Company's Board of Directors or a
committee thereof. (Section 3.1 of each Indenture.)
Reference is made to the applicable Prospectus Supplement which will
accompany this Prospectus for a description of the specific series of Debt
Securities being offered thereby, including: (1) the title of such Debt
Securities; (2) any limit upon the aggregate principal amount of such Debt
Securities; (3) the date or dates on which the principal of and premium, if any,
on such Debt Securities will mature or the method of determining such date or
dates; (4) the rate or rates (which may be fixed or variable) at which such Debt
Securities will bear interest, if any, or the method of calculating such rate or
rates; (5) the date or dates from which interest, if any, will accrue or the
method by which such date or dates will be determined; (6) the date or dates on
which interest, if any, will be payable and the record date or dates therefor;
(7) the place or places where principal of, premium, if any, and interest, if
any, on such Debt Securities will be payable; (8) the period or periods within
which, the price or prices at which, the currency or currencies (including
currency unit or units) in which, and the terms and conditions upon which, such
Debt Securities may be redeemed, in whole or in part, at the option of the
Company; (9) the obligation, if any, of the Company to redeem or purchase such
Debt Securities pursuant to any sinking fund or analogous provisions or upon the
happening of a specified event or at the option of a Holder thereof and the
period or periods within which, the price or prices at which and the other terms
and conditions upon which, such Debt Securities shall be redeemed or
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<PAGE> 23
purchased, in whole or in part, pursuant to such obligation; (10) the
denominations in which such Debt Securities are authorized to be issued; (11)
the currency or currency unit for which Debt Securities may be purchased or in
which Debt Securities may be denominated and/or the currency or currencies
(including currency unit or units) in which principal of, premium, if any, and
interest, if any, on such Debt Securities will be payable and whether the
Company or the holders of any such Debt Securities may elect to receive payments
in respect of such Debt Securities in a currency or currency unit other than
that in which such Debt Securities are stated to be payable; (12) if the amount
of principal of, or any premium or interest on, any of such Debt Securities may
be determined with reference to an index or pursuant to a formula, the manner in
which such amounts will be determined; (13) if other than the principal amount
thereof, the portion of the principal amount of such Debt Securities which will
be payable upon declaration of the acceleration of the maturity thereof or the
method by which such portion shall be determined; (14) any addition to, or
modification or deletion of, any Event of Default or any covenant of the Company
specified in the Indenture with respect to such Debt Securities; (15) the
application, if any, of such means of defeasance or covenant defeasance as may
be specified for such Debt Securities; (16) whether such Debt Securities are to
be issued in whole or in part in the form of one or more temporary or permanent
global securities and, if so, the identity of the depository for such global
security or securities; (17) in the case of the Subordinated Indenture, the
relative degree to which such Debt Securities of the Series shall be senior to
or be subordinated to other series of such Debt Securities in right of payment,
whether such other series of Debt Securities are outstanding or not; (18) in the
case of the Subordinated Indenture, the terms, if any, upon which such Debt
Securities may be converted or exchanged, at the option of the holders thereof,
into or for Common Stock of the Company or other securities or property; and
(19) any other terms not inconsistent with the terms of the Indentures
pertaining to such Debt Securities. (Section 3.1 of each Indenture.)
Unless otherwise specified in the applicable Prospectus Supplement, Debt
Securities will be issued in fully-registered form without coupons in
denominations of $1,000 or any integral multiples of $1,000. (Section 3.2 of
each Indenture.) Where Debt Securities of any series are issued in bearer form,
the special restrictions and considerations, including special offering
restrictions and special federal income tax considerations, applicable to any
such Debt Securities and to payment on and transfer and exchange of such Debt
Securities will be described in the applicable Prospectus Supplement. Bearer
Debt Securities will be transferable by delivery. (Section 3.5 of each
Indenture.)
Debt Securities may be sold at a substantial discount below their stated
principal amount, bearing no interest or interest at a rate which at the time of
issuance is below market rates. Certain federal income tax consequences and
special considerations applicable to any such Debt Securities will be described
in the applicable Prospectus Supplement.
If the purchase price of any of the Debt Securities is payable in one or
more foreign currencies or currency units or if any Debt Securities are
denominated in one or more foreign currencies or currency units or if the
principal of, premium, if any, or interest, if any, on any Debt Securities is
payable in one or more foreign currencies or currency units, the restrictions,
elections, certain federal income tax considerations, specific terms and other
information with respect to such issue of Debt Securities and such foreign
currencies or currency units will be set forth in the applicable Prospectus
Supplement.
If any index is used to determine the amount of payments of principal of,
premium, if any, or interest on any series of Debt Securities, special federal
income tax, accounting and other considerations applicable thereto will be
described in the applicable Prospectus Supplement.
The general provisions of the Indentures do not afford holders of the Debt
Securities protection in the event of a highly leveraged or other transaction
involving the Company that may adversely affect holders of the Debt Securities.
PAYMENT, REGISTRATION, TRANSFER AND EXCHANGE
Unless otherwise provided in the applicable Prospectus Supplement, payments
in respect of the Debt Securities will be made in the designated currency at the
office or agency of the Company maintained for that purpose as the Company may
designate from time to time, except that, at the option of the Company, interest
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<PAGE> 24
payments, if any, on Debt Securities in registered form may be made (i) by
checks mailed to the holders of Debt Securities entitled thereto at their
registered addresses or (ii) by wire transfer to an account maintained by the
person entitled thereto as specified in the Register. (Sections 3.7(a) and 9.2
of each Indenture.) Unless otherwise indicated in an applicable Prospectus
Supplement, payment of any installment of interest on Debt Securities in
registered form will be made to the person in whose name such Debt Security is
registered at the close of business on the regular record date for such
interest. (Section 3.7(a) of each Indenture.)
Payment in respect of Debt Securities in bearer form will be made in the
currency and in the manner designated in the Prospectus Supplement, subject to
any applicable laws and regulations, at such paying agencies outside the United
States as the Company may appoint from time to time. The paying agents outside
the United States, if any, initially appointed by the Company for a series of
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 agents, except that, if Debt Securities of a series are issuable as
Registered Securities, the Company will be required to maintain at least one
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 a paying agent in a Place of Payment outside the United States where
Debt Securities of such series and any coupons appertaining thereto may be
presented and surrendered for payment. (Section 9.2 of each Indenture.)
Unless otherwise provided in the applicable Prospectus Supplement, Debt
Securities in registered form will be transferable or exchangeable at the agency
of the Company maintained for such purpose as designated by the Company from
time to time. (Sections 3.5 and 9.2 of each Indenture.) Debt Securities may be
transferred or exchanged without service charge, other than any tax or other
governmental charge imposed in connection therewith. (Section 3.5 of each
Indenture.)
BOOK-ENTRY SYSTEM
If so specified in the accompanying Prospectus Supplement, Debt Securities
of any series may be issued under a book-entry system in the form of one or more
global Debt Securities (each a "Global Security"). Each Global Security will be
deposited with, or on behalf of a depositary, which, unless otherwise specified
in the accompanying Prospectus Supplement, will be The Depository Trust Company,
New York, New York (the "Depositary"). The Global Securities will be registered
in the name of the Depositary or its nominee.
The Depositary has advised the Company that the Depositary is a limited
purpose trust company organized under the laws of the State of New York, a
"banking organization" within the meaning of the New York banking law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code, and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. The Depositary
was created to hold securities of its participants and to facilitate the
clearance and settlement of securities transactions among its participants
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, 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.
Upon the issuance of a Global Security in registered form, the Depositary
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 participants. The accounts to be credited will be designated by
the underwriters, dealers or agents. Ownership of beneficial interests in the
Global Security will be limited to participants or persons that may hold
interests through participants. Ownership of beneficial interests by
participants in the Global Security will be shown on, and the transfer of that
ownership interest will be effected only through, records maintained by such
participants. The laws of some jurisdictions may require that certain purchasers
of securities take physical delivery of such securities in definitive form. Such
laws may impair the ability to own, transfer or pledge beneficial interest in a
Global Security.
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<PAGE> 25
So long as the Depositary or its nominee is the registered owner of a
Global Security, it will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
applicable Indenture. Except as set forth below, owners of a beneficial interest
in such Global Security will not be entitled to have the Debt Securities
represented thereby registered in their names, will not receive or be entitled
to receive physical delivery of certificates representing the Debt Securities
represented thereby and will not be considered the owners or holders thereof
under the applicable Indenture. Accordingly, each person owning a beneficial
interest in such Global Security must rely on the procedures of the Depositary
and, if such person is not a participant, on the procedures of the participant
through which such person owns its interest, to exercise any rights of a holder
under the applicable Indenture. The Company understands that under existing
practice, in the event that the Company requests any action of a holder or a
beneficial owner desires to take any action a holder is entitled to take, the
Depositary would act upon the instructions of, or authorize, the participant to
take such action.
Payment of principal of, and interest on, the Debt Securities will be made
to the Depositary or its nominee, as the case may be, as the registered owner
and holder of the Global Security representing such Debt Securities. None of the
Company, the Trustee, any paying agent or registrar for the 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 the Global
Security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
The Company has been advised by the Depositary that the Depositary will
credit participants' accounts with payments of principal or interest on the
payment date thereof in amounts proportionate to their respective beneficial
interests in the principal amount of the Global Security as shown on the records
of the Depositary. The Company expects that payments by participants to owners
of beneficial interests in the 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 registered in "street
name," and will be the responsibility of such participants.
A Global Security may not be transferred except as a whole by the
Depositary to a nominee or successor of the Depositary or by a nominee of the
Depositary to another nominee of the Depositary. A Global Security representing
all but not part of the Debt Securities being offered pursuant to the applicable
Prospectus Supplement is exchangeable for Debt Securities in definitive form of
like tenor and terms if (i) the Depositary notifies the Company that it is
unwilling or unable to continue as depositary for such Global Security or if at
any time the Depositary is no longer eligible to be, or is not in good standing
as, a clearing agency registered under the Exchange Act, and in either case, a
successor depositary is not appointed by the Company within 90 days of receipt
by the Company of such notice or of the Company becoming aware of such
ineligibility, or (ii) the Company in its sole discretion at any time determines
not to have all of the Debt Securities represented by a Global Security and
notifies the Trustee thereof. A Global Security exchangeable pursuant to the
preceding sentence shall be exchangeable for Debt Securities registered in such
names and in such authorized denominations as the Depositary for such Global
Security shall direct.
The Debt Securities of a series may also be issued in whole or in part in
the form of one or more bearer global securities (a "Bearer Global Security")
that will be deposited with a depository, or with a nominee for such depository,
identified in the applicable Prospectus Supplement. Any such Bearer Global
Securities may be issued in temporary or permanent form. (Section 3.4 of each
Indenture.) The specific terms and procedures, including the specific terms of
the depository arrangement, with respect to any portion of a series of Debt
Securities to be represented by one or more Bearer Global Securities will be
described in the applicable Prospectus Supplement.
CERTAIN DEFINITIONS APPLICABLE TO COVENANTS AND EVENTS OF DEFAULT
"Consolidated Tangible Net Worth" shall mean, at any date, the total assets
appearing on the most recently prepared consolidated balance sheet of the
Company and its consolidated subsidiaries as at the end of a fiscal quarter of
the Company, prepared in accordance with generally accepted accounting
principles, less (a) the total liabilities appearing on such balance sheets and
(b) intangible assets. "Intangible assets" means
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<PAGE> 26
the value, as shown on or reflected in such balance sheet, of (i) all trade
names, trademarks, licenses, patents, copyrights and goodwill, (ii)
organizational costs and (iii) unamortized debt discount and expense, less
unamortized premium.
"Designated Subsidiary" shall mean each of Equitable Life, DLJ and
Donaldson, Lufkin & Jenrette Securities Corporation, so long as any such entity
remains a subsidiary, any consolidated subsidiary of the Company the assets of
which constitute 10% or more of the Total Assets, and any subsidiary which is a
successor to all or a principal part of the business or properties of such
subsidiaries.
"Total Assets" shall mean, at any date, the total assets (including assets
held in Separate Accounts) appearing on the most recently prepared consolidated
balance sheet of the Company and its consolidated subsidiaries as at the end of
a fiscal quarter of the Company, prepared in accordance with generally accepted
accounting principles.
CERTAIN COVENANTS
Limitation on Liens. The Senior Indenture provides that for the benefit of
the holders of the Senior Debt Securities issued thereunder, the Company will
not, nor will it permit any Designated Subsidiary to, incur, issue, assume or
guarantee any indebtedness for money borrowed (hereinafter called
"Indebtedness") if such Indebtedness is secured by a pledge, mortgage, deed of
trust or other lien on any shares of stock or Indebtedness of any Designated
Subsidiary (such pledges, mortgages, deeds of trust and other liens being
hereinafter called a "Lien"), without effectively providing that any Senior Debt
Securities (together with, if the Company shall so determine, any other
Indebtedness (or any bonds, debentures, notes or other similar evidences of
indebtedness whether or not for borrowed money) of the Company or such
Designated Subsidiary then existing or thereafter created which is not
subordinate to such Senior Debt Securities) shall be secured equally and ratably
with (or prior to) such secured Indebtedness, so long as such secured
Indebtedness shall be so secured unless, after giving effect thereto, the
aggregate principal amount of all such secured Indebtedness which would
otherwise be prohibited would not exceed 15% of Consolidated Tangible Net Worth;
provided, however, that these restrictions shall not apply to and there shall be
excluded from secured Indebtedness in any computation under these restrictions,
Indebtedness secured by: (i) Liens on any shares of stock or Indebtedness
acquired from a corporation merged with or into the Company or a Designated
Subsidiary, (ii) Liens to secure Indebtedness of a Designated Subsidiary to the
Company or another Designated Subsidiary but only as long as such Indebtedness
is owned or held by the Company or a Designated Subsidiary and (iii) any
extension, renewal or replacement (or successive extensions, renewals or
replacements), in whole or in part, of any Lien referred to in the foregoing
clauses (i) and (ii). (Section 9.8 of the Senior Indenture.)
Consolidation, Merger, Sale, Conveyance and Lease. The Indentures permit
the Company to consolidate or merge with or into any other entity or entities,
or to sell, convey or lease all or substantially all of its property to any
other entity; provided, however, (i) that the person (if other than the Company)
formed by such consolidation, or into which the Company is merged or which
acquires or leases substantially all of the property of the Company, is a
corporation or other entity organized under the laws of the United States, any
state thereof or the District of Columbia and expressly assumes the Company's
obligations on the Debt Securities and under the Indenture and (ii) immediately
after giving effect to such transaction, no Event of Default exists. (Section
7.1 of each Indenture.)
EVENTS OF DEFAULT, NOTICE AND CERTAIN RIGHTS ON DEFAULT
Except as otherwise provided in a Prospectus Supplement relating to the
Debt Securities of a particular series, Events of Default with respect to Debt
Securities of any series are defined in each Indenture as (a) default in the
payment of any interest on any Debt Security of that series, and the continuance
of such default for a period of 30 days; (b) default in the payment of any
installment of the principal of or any premium on any Debt Security of that
series when due, whether at maturity, upon redemption, by declaration or
otherwise; (c) default in any material respect by the Company in the performance
of any other covenant or agreement contained in the Indenture under which the
Debt Securities of that series were issued and the
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<PAGE> 27
continuance of such default for a period of 90 days after written notice as
provided in such Indenture; (d) certain events of bankruptcy, insolvency and
reorganization of the Company; and (e) in the case of the Senior Indenture only,
default by the Company or any Designated Subsidiary in the payment of
outstanding indebtedness for borrowed money when due (and after expiration of
any applicable grace periods) or default by the Company or any Designated
Subsidiary under any indenture or other instrument under which any indebtedness
for borrowed money has been issued or by which it is governed as a result of
which such indebtedness shall have been accelerated, and such failure to pay is
not cured or such acceleration is not rescinded, cured or annulled within 30
days after written notice thereof to the Company by the Trustee for such series
or to the Company and the Trustee of such series by the holders of 25% of the
aggregate principal amount of the Debt Securities of such series then
outstanding, provided that such Event of Default will be cured or waived if the
payment of outstanding debt is made or the default that resulted in the
acceleration of such other indebtedness is cured or waived, as the case may be,
and provided further, that the foregoing shall not apply to (x) any indebtedness
for borrowed money under which the obligee has recourse to the general assets of
the Company or a Designated Subsidiary so long as the aggregate principal amount
of such recourse debt (other than with respect to ancillary matters such as
environmental indemnities, misapplication of funds, costs of enforcement and the
like) so due is $25,000,000 or less, (y) any secured indebtedness for borrowed
money under which the obligee has recourse (exclusive of recourse for ancillary
matters such as environmental indemnities, misapplication of funds, costs of
enforcement and the like) only to the collateral pledged for repayment so long
as the fair market value of such collateral does not exceed 2% of Total Assets
at the time of the default and (z) any indebtedness for borrowed money under
which the obligee has recourse only to assets held in Separate Accounts.
(Section 5.1 of each Indenture.) Events of Default with respect to a specified
series of Debt Securities may be added to the Indenture and, if so added, will
be described in the applicable Prospectus Supplement. (Sections 3.1 and 5.1 of
each Indenture.)
Each Indenture provides that the Trustee will, within 90 days after the
occurrence of a Default with respect to the Debt Securities of any series, give
to the holders of the Debt Securities of that series notice of all Defaults
known to it unless such Default shall have been cured or waived; provided that
except in the case of a Default in payment of principal (and premium, if any) or
interest on the Debt Securities of that series, the Trustee shall be protected
in withholding such notice if it in good faith determines that withholding such
notice is in the interests of all holders of the Debt Securities of that series.
(Section 6.6 of each Indenture.) "Default" means any event which is, or after
notice or passage of time, or both, would be, an Event of Default. (Section 1.1
of each Indenture.)
Each Indenture provides that, if an Event of Default specified therein
occurs with respect to the Debt Securities of any series and is continuing, the
Trustee for such series or the holders of 25% in aggregate principal amount of
all outstanding Debt Securities of that series (calculated as provided for in
each Indenture) may declare the principal of (or, if the Debt Securities of that
series are Original Issue Discount Securities or Indexed Securities, such
portion of the principal amount specified in the Prospectus Supplement) and
accrued interest, if any, on all the Debt Securities of that series to be due
and payable (provided, with respect to any Debt Securities issued under the
Subordinated Indenture, that the payment of principal and interest on such Debt
Securities shall remain subordinated to the extent provided in Article 12 of the
Subordinated Indenture). (Section 5.2 of each Indenture.)
Each Indenture provides that the holders of a majority in aggregate
principal amount of any series of Debt Securities by written notice to the
Trustee for such series may waive, on behalf of the holders of all Debt
Securities of such series, any past Default or Event of Default with respect to
that series and its consequences except a Default or Event of Default in the
payment of the principal of, premium, if any, or interest, if any, on any Debt
Security or with respect to a covenant or provision that cannot be amended or
modified without consent of the holders of each series of Debt Securities
adversely affected. (Section 5.7 of each Indenture.)
Each Indenture provides that, if a default or an Event of Default shall
have occurred and be continuing, the holders of not less than a majority in
aggregate principal amount of the Debt Securities of each series affected (with
each such series voting as a class) may, subject to certain limited conditions,
direct the time, method and place of conducting any proceeding or any remedy
available to the Trustee for such series, or exercising any trust or power
conferred on such Trustee. (Section 5.8 of each Indenture.)
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Each Indenture includes a covenant that the Company will file annually with
the Trustee a certificate as to the presence or absence of certain defaults
under the terms of such Indenture. (Section 9.6 of each Indenture.)
MODIFICATION OF THE INDENTURES
Each Indenture contains provisions permitting the Company and the Trustee
to enter into one or more supplemental indentures without the consent of the
holders of any of the Debt Securities in order (i) to evidence the succession of
another corporation to the Company and the assumption of the covenants of the
Company by a successor to the Company; (ii) to add to the covenants of the
Company or surrender any right or power of the Company; (iii) to add additional
Events of Default with respect to any series of Debt Securities; (iv) to add to
or change any provisions to such extent as necessary to permit and facilitate
the issuance of Debt Securities in bearer form or to facilitate the issuance of
Debt Securities in global form; (v) to change or eliminate any provision
affecting only Debt Securities not yet issued; (vi) to secure the Debt
Securities; (vii) to establish the form or terms of Debt Securities; (viii) to
evidence and provide for successor Trustees or to add or change any provisions
to such extent as necessary to permit and facilitate the appointment of a
separate Trustee or Trustees for specific series of Debt Securities; (ix) to
permit payment in respect of Debt Securities in bearer form in the United
States; (x) to correct any defect or supplement any inconsistent provisions or
to make any other provisions with respect to matters or questions arising under
such Indenture, provided that any such action does not adversely affect the
interests of any holder of Debt Securities of any series then Outstanding; (xi)
to cure any ambiguity or correct any mistake; (xii) in the case of the
Subordinated Indenture, to modify the subordination provisions thereof in a
manner not adverse to the holders of Subordinated Debentures of any series then
Outstanding or (xiii) in the case of the Subordinated Indenture, to make
provision with respect to any conversion or exchange rights of holders not
adverse to the holders of any Subordinated Debt Securities of any series,
including providing for the conversion or exchange of Subordinated Debt
Securities into Equity Securities or property of the Company. (Section 8.1 of
each Indenture.)
Each Indenture also contains provisions permitting the Company and the
Trustee, with the consent of the holders of a majority in aggregate principal
amount of the outstanding Debt Securities affected by such supplemental
indenture (with the Debt Securities of each series voting as a class), to
execute supplemental indentures adding any provisions to or changing or
eliminating any of the provisions of such Indenture or any supplemental
indenture or modifying the rights of the holders of Debt Securities of such
series, except that, without the consent of the holder of each Debt Security so
affected, no such supplemental indenture may: (i) change the time for payment of
principal or premium, if any, or interest on any Debt Security; (ii) reduce the
principal on any Debt Security, or change the manner in which the amount of any
of the foregoing is determined; (iii) reduce the interest rate, or the amount of
premium, if any, payable upon the redemption of any Debt Security; (iv) reduce
the amount of principal payable upon acceleration of the maturity of any
Original Issue Discount or Indexed Security; (v) change the currency or currency
unit in which any Debt Security or any premium or interest thereon is payable;
(vi) impair the right to institute suit for the enforcement of any payment on or
with respect to any Debt Security; (vii) reduce the percentage in principal
amount of the outstanding Debt Securities affected thereby, the consent of whose
holders is required for modification or amendment of such Indenture or for
waiver of compliance with certain provisions of the Indenture or for waiver of
certain defaults; (viii) change the obligation of the Company to maintain an
office or agency in the places and for the purposes specified in such Indenture;
(ix) in the case of the Subordinated Indenture, modify the subordination
provisions thereof in a manner adverse to the holders of Subordinated Debentures
of any series then Outstanding; (x) modify the provisions relating to waiver of
certain defaults or any of the foregoing provisions or (xi) in the case of the
Subordinated Indenture, make any change adversely affecting the rights of the
holders to convert or exchange the Debt Securities. (Section 8.2 of each
Indenture.)
SUBORDINATION OF SUBORDINATED DEBT
In the Subordinated Indenture, the Company has covenanted and agreed that
any Subordinated Debt Securities issued thereunder are subordinate and junior in
right of payment to all Senior Debt to the extent
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provided in the Subordinated Indenture. Upon any payment or distribution of
assets to creditors upon any liquidation, dissolution, winding up,
reorganization, assignment for the benefit of creditors, marshaling of assets or
any bankruptcy, insolvency, debt restructuring or similar proceedings in
connection with any insolvency or bankruptcy proceeding of the Company, the
holders of Senior Debt will first be entitled to receive payment in full of
principal of (and premium, if any) and interest, if any, on such Senior Debt
before the holders of Subordinated Debt Securities will be entitled to receive
or retain any payment in respect of the principal of (and premium, if any) or
interest, if any, on the Subordinated Debt Securities. (Section 12.2 of the
Subordinated Indenture.)
In the event of the acceleration of the maturity of any Subordinated Debt
Securities, the holders of all Senior Debt outstanding at the time of such
acceleration will first be entitled to receive payment in full of all amounts
due thereon (including any amounts due upon acceleration) before the holders of
Subordinated Debt Securities will be entitled to receive any payment upon the
principal of (or premium, if any) or interest, if any, on the Subordinated Debt
Securities. (Section 12.3 of the Subordinated Indenture.)
No payments on account of principal (or premium, if any) or interest, if
any, in respect of the Subordinated Debt Securities may be made if there shall
have occurred and be continuing a default in any payment with respect to Senior
Debt, or an event of default with respect to any Senior Debt resulting in the
acceleration of the maturity thereof, or if any judicial proceeding shall be
pending with respect to any such default. For purposes of the subordination
provisions, the payment, issuance and delivery of cash, property or securities
(other than stock and certain subordinated securities of the Company) upon
conversion of any Subordinated Debt Security will be deemed to constitute
payment on account of the principal of such Subordinated Debt Security.
(Sections 12.4 and 12.16 of the Subordinated Indenture.)
"Debt" means with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent, (i) every
obligation of such Person for money borrowed; (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person; (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such Person; and (vi) every
obligation of the type referred to in clauses (i) through (v) of another Person
and all dividends of another Person the payment of which, in either case, such
Person has guaranteed or is responsible or liable, directly or indirectly, as
obligor or otherwise.
"Senior Debt" means the principal of (and premium, if any) and interest, if
any (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not such
claim for post-petition interest is allowed in such proceeding), on Debt,
whether incurred on or prior to the date of the Indenture or thereafter
incurred, unless, in the instrument creating or evidencing the same or pursuant
to which the same is outstanding, it is provided that such obligations are not
superior in right of payment to the Subordinated Debt Securities or to other
Debt which is pari passu with, or subordinated to, the Subordinated Debt
Securities; provided, however, that Senior Debt shall not be deemed to include
(a) any Debt of the Company which when incurred and without respect to any
election under Section 1111(b) of the Bankruptcy code, was without recourse to
the Company, (b) any Debt of the Company to any of its subsidiaries, (c) Debt to
any employee of the Company, (d) any liability for taxes and (e) indebtedness or
monetary obligations to trade creditors created or assumed by the Company or any
of its subsidiaries in the ordinary course of business in connection with the
obtaining of materials or services.
The Company is a non-operating holding company and most of the assets of
the Company are owned by its subsidiaries. Accordingly, the Subordinated Debt
Securities will be effectively subordinated to all existing and future
liabilities of the Company's subsidiaries, including liabilities under contracts
of insurance and annuities written by the Company's insurance subsidiaries,
primarily Equitable Life, and holders of Subordinated Debt Securities should
look only to the assets of the Company for payments of interest and principal.
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<PAGE> 30
The Subordinated Indenture places no limitation on the amount of additional
Senior Debt that may be incurred by the Company. The Company expects from time
to time to incur additional indebtedness constituting Senior Debt. As of
December 31, 1997, the Company had $569.0 million aggregate principal amount of
Senior Debt outstanding and no Subordinated Debt Securities were outstanding.
The Subordinated Indenture provides that the foregoing subordination
provisions, insofar as they relate to any particular issue of Subordinated Debt
Securities, may be changed prior to such issuance. Any such change would be
described in the Prospectus Supplement relating to such Subordinated Debt
Securities. (Section 3.1 of the Subordinated Indenture.)
DEFEASANCE AND COVENANT DEFEASANCE
Defeasance and Discharge. Each Indenture provides that the Company will be
discharged from any and all obligations in respect of the Debt Securities of or
within any series (except for certain obligations to register the transfer or
exchange of Debt Securities, to replace stolen, lost or mutilated Debt
Securities, to maintain paying agencies and to hold monies for payment in trust
and for obligations in connection with a conversion of Debt Securities) upon the
deposit with the Trustee, in trust, of money and/or U.S. Government Obligations
(as defined in each Indenture) which through the payment of interest and
principal in respect thereof in accordance with their terms will provide money
in an amount sufficient to pay the principal of and each installment of interest
on such Debt Securities on the stated maturity of such payments in accordance
with the terms of such Indenture and such Debt Securities. (Sections 3.1 and 4.4
of each Indenture.) Such a trust may only be established if, among other things,
the Company delivers to the relevant Trustee an Officers' Certificate and
opinion of counsel (who may be counsel to the Company) stating that either (i)
the Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (ii) since the date of the Indenture there has been
a change in the applicable Federal income tax law, to the effect that holders of
such Debt Securities will not recognize income, gain or loss for Federal income
tax purposes as a result of such defeasance and will be subject to Federal
income tax on the same amount and in the same manner and at the same times, as
would have been the case if such defeasance had not occurred. (Section 4.6 of
each Indenture.)
Defeasance of Certain Covenants and Certain Events of Default. Each
Indenture provides that the Company may omit to comply with certain covenants
applicable to the Debt Securities of or within any series and any such
non-compliance shall not constitute an event of default described in clause (c)
under the caption "Events of Default, Notice and Certain Rights on Default"
above, upon the deposit with the relevant Trustee, in trust, of money and/or
U.S. Government Obligations which through the payment of interest and principal
in respect thereof in accordance with their terms will provide money in an
amount sufficient to pay the principal of and each installment of interest on
such Debt Securities on the stated maturity of such payments in accordance with
the terms of such Indenture and such Debt Securities. The obligations of the
Company under such Indenture and such Debt Securities, other than with respect
to the covenants referred to above, and the Events of Default, other than the
Events of Default referred to above, shall remain in full force and effect.
(Sections 3.1 and 4.5 of each Indenture.) Such a trust may only be established
if, among other things, the Company has delivered to the relevant Trustee an
opinion of counsel (who may be counsel to the Company) to the effect that
holders of such Debt Securities will not recognize income, gain, or loss for
Federal income tax purposes as a result of such defeasance of certain covenants
and Events of Default and will be subject to Federal income tax on the same
amounts and in the same manner and at the same times, as would have been the
case if such deposit and defeasance had not occurred. (Section 4.6 of each
Indenture.)
In addition, with respect to the Subordinated Indenture, it is a condition
to defeasance and covenant defeasance that no default in the payment of
principal of (or premium, if any) or interest on any Senior Debt shall have
occurred or be continuing or no other Event of Default with respect to the
Senior Debt shall have occurred or be continuing and shall have resulted in such
Senior Debt becoming or being declared due and payable prior to the date it
would have become due and payable. (Section 4.6 of the Subordinated Indenture.)
In the event the Company exercises its option to omit compliance with
certain covenants of the Indenture with respect to such Debt Securities as
described in the preceding paragraphs and such Debt Securities are
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declared due and payable because of the occurrence of any Event of Default other
than an Event of Default described in clause (c) under the caption "Events of
Default, Notice and Certain Rights on Default" above, the amount of money and
U.S. Government Obligations on deposit with the relevant Trustee will be
sufficient to pay amounts due on such Debt Securities at the time of their
stated maturity but may not be sufficient to pay amounts due on such Debt
Securities at the time of the acceleration resulting from such Event of Default.
However, the Company would remain liable for any such deficiency.
NOTICES
Notices to holders of registered Debt Securities will be given by mail to
the addresses of such holders as they may appear in the Register. (Section 1.6
of each Indenture.)
TITLE
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name a Debt Security is registered as the absolute
owner thereof (whether or not such Debt Security may be overdue) for the purpose
of receiving payment and for all other purposes. (Section 3.8 of each
Indenture.)
GOVERNING LAW
The Indentures and the Debt Securities will be governed by, and construed
in accordance with, the laws of the State of New York. (Section 1.11 of each
Indenture.)
THE TRUSTEES
The Chase Manhattan Bank, formerly known as Chemical Bank, is the Trustee
under the Senior Indenture. State Street Bank and Trust Company, as successor to
Shawmut Bank Connecticut, National Association is the Trustee under the
Subordinated Indenture. The Company and its subsidiaries currently conduct
banking and other commercial relationships with The Chase Manhattan Bank and
State Street Bank and Trust Company in the ordinary course of business. The
Indentures contain certain limitations on the right of each Trustee, should it
become a creditor of the Company, to obtain payment of claims in certain cases,
or to realize for its own account on certain property received in respect of any
such claim as security or otherwise. Each Trustee will be permitted to engage in
certain other transactions; however, if it acquires any conflicting interest and
there is a default under the Debt Securities, it must eliminate such conflict or
resign.
PLAN OF DISTRIBUTION
This Prospectus has been prepared for use by DLJSC in connection with
offers and sales of the Offered Securities in market-making transactions at
negotiated prices related to prevailing market prices at the time of the sale.
DLJSC may act as principal or agent in such transactions. DLJSC has advised the
Company that it currently intends to make a market in the Offered Securities,
but it is not obligated to do so and may discontinue any such market-making at
any time without notice. Accordingly, no assurance can be given as to the
liquidity of, or the trading market for, the Offered Securities.
LEGAL MATTERS
Unless otherwise indicated in the applicable Prospectus Supplement, the
validity of the Offered Securities will be passed upon for the Company by
Debevoise & Plimpton, New York, New York. Debevoise & Plimpton from time to time
provides legal services to the Company and its subsidiaries.
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EXPERTS
The consolidated financial statements and consolidated financial statement
schedules of the Company 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 and in the Registration Statement in reliance upon the report
of Price Waterhouse LLP, independent certified public accountants, incorporated
herein by reference, and upon the authority of said firm as experts in
accounting and auditing.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES
DESCRIBED IN THIS PROSPECTUS SUPPLEMENT OR AN OFFER TO SELL OR THE SOLICITATION
OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND
THE ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE EQUITABLE COMPANIES INCORPORATED SINCE THE DATE HEREOF OR THEREOF
OR THAT THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE HEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
<S> <C>
The Equitable......................... S-3
Risk Factors.......................... S-5
Capitalization........................ S-8
Use of Proceeds....................... S-9
Selected Consolidated Financial
Data................................ S-9
Description of the Offered
Securities.......................... S-13
Plan of Distribution.................. S-17
Legal Opinions........................ S-17
ERISA Matters......................... S-17
PROSPECTUS
Available Information................. 2
Incorporation of Certain Information
by Reference........................ 2
The Equitable......................... 4
Use of Proceeds....................... 4
Ratios of Earnings to Fixed Charges
and Earnings to Combined Fixed
Charges and Preferred Stock
Dividends........................... 4
Description of Debt Securities........ 5
Plan of Distribution.................. 14
Legal Matters......................... 14
Experts............................... 15
</TABLE>
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[THE EQUITABLE COMPANIES LOGO]
CERTAIN DEBT SECURITIES
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PROSPECTUS SUPPLEMENT
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DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
APRIL 14, 1998
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