PROSPECTUS Dated March 26, 1998 Pricing Supplement No. 18 to
PROSPECTUS SUPPLEMENT Registration Statement No. 333-46935
Dated April 6, 1998 Dated May 14, 1998
Rule 424(b)(3)
LIT 5,000,000,000
Morgan Stanley Dean Witter & Co.
MEDIUM-TERM NOTES, SERIES E
EQUITY LINKED NOTES DUE 2002
--------------
The Equity Linked Notes due 2002 (the "Notes" ) are Medium-Term
Notes, Series E of Morgan Stanley Dean Witter & Co. (the "Company" ), as
further described herein and in the Prospectus Supplement under
"Description of Notes--Fixed Rate Notes" and "--Notes Linked to Commodity
Prices, Single Securities, Baskets of Securities or Indices." The Notes are
being issued in minimum denominations of Italian lire ("LIT ") 50,000,000
and will mature on June 3, 2002 (the "Maturity Date"). The Issue Price of
each Note will be LIT 50,000,000 (100% of the principal amount) (the
"Issue Price"), and there will be no payments of interest prior to the
maturity of the Notes.
The Notes will not be redeemable by the Company in whole or in
part prior to the Maturity Date other than under the circumstances described
under "Description of Notes--Tax Redemption" in the accompanying Prospectus
Supplement. The Notes will be issued only in bearer form, which form is
further described under "Description of Notes--Forms, Denominations,
Exchange and Transfer" in the accompanying Prospectus Supplement. Notes in
bearer form will not be exchangeable at any time for Notes in registered
form.
On the Maturity Date, the holder of each Note will receive (i)
the par amount of such Note (LIT 50,000,000) ("Par") plus (ii) an amount (the
"Supplemental Redemption Amount") based on the percentage increase, if any, in
the value of the Dow Jones Euro STOXX 50 (price return) ("DJES50"), as
calculated by STOXX Ltd. (the "Underlying Index").
The Supplemental Redemption Amount payable with respect to each
Note at maturity will equal the product of (i) the par amount of such Note and
(ii) the greater of (x) 6% and (y) 78% of the DJES50 Change Percentage. The
DJES50 Change Percentage is the amount by which the Final Average Value of the
DJES50 differs from the Initial Value of the DJES50, expressed as a
percentage of such Initial Value. The Initial Value of the Underlying Index
will be the arithmetic average of the values of such Underlying Index on each
of the Initial Index Dates (as defined herein). The Final Average Value of
each Underlying Index will equal the arithmetic average of the closing values
of the Underlying Index on the thirtieth day of each March, June, September
and December, commencing June 30, 1998, and ending March 30, 2002 (the
"Determination Dates"), except in the case of certain Market Disruption
Events.
For information as to the calculation of the Supplemental
Redemption Amount and certain tax consequences to beneficial owners of the
Notes, see "Supplemental Redemption Amount," "Final Average Value,"
"Determination Dates" and "United States Federal Taxation" in this Pricing
Supplement.
The Company will cause the "Supplemental Redemption Amount" to
be determined by Morgan Stanley & Co. International Limited (the "Calculation
Agent") for The Chase Manhattan Bank, as Trustee under the Senior Debt
Indenture.
An investment in the Notes entails risks not associated with similar
investments in a conventional debt security, as described under "Risk Factors"
on PS-5 through PS-7 herein.
MORGAN STANLEY DEAN WITTER
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES OR THE
INDIVIDUAL STOCKS UNDERLYING THE DJES50. SPECIFICALLY, THE AGENT MAY
OVERALLOT IN CONNECTION WITH THE OFFERING, AND MAY BID FOR, AND PURCHASE, THE
NOTES OR INDIVIDUAL STOCKS UNDERLYING THE DJES50 IN THE OPEN MARKET. FOR A
DESCRIPTION OF THESE ACTIVITIES SEE "USE OF PROCEEDS AND HEDGING."
Capitalized terms not defined herein have the meanings given to such terms in
the accompanying Prospectus Supplement.
Principal Amount.............. LIT 5,000,000,000
Maturity Date................. June 3, 2002.
Interest Rate................. There will be no periodic payments of
interest. See "Supplemental Redemption
Amount."
Specified Currency............ Italian lire ("LIT")
Price to Public............... 100%
Settlement Date (Original
Issue Date)................. June 3, 1998
Common Code................... 8751781
ISIN.......................... XS0087517818
Senior Note or Subordinated
Note........................ Senior
Minimum Denominations......... LIT 50,000,000
Agent......................... Morgan Stanley & Co. International Limited
Trustee....................... The Chase Manhattan Bank
Maturity Redemption Amount.... On the Maturity Date, the holder of each Note
will receive (i) the par amount of such Note
LIT 50,000,000 ("Par") plus (ii) the
Supplemental Redemption Amount.
Supplemental Redemption Amount The Supplemental Redemption Amount payable
with respect to each Note at maturity will be
an amount equal to the product of (i) the par
amount of such Note and (ii) the greater of
(x) 6% and (y) 78% of the DJES50 Change
Percentage. The Supplemental Redemption
Amount is described by the following formula:
PAR x MAX [ 6%, 78% x (Final Average Value - Initial Value) ]
[ ----------------------------------- ]
[ Initial Value ]
The Company will cause the Calculation Agent
to provide written notice to the Trustee at
its London office, on which notice the
Trustee may conclusively rely, of the
Supplemental Redemption Amount, on or prior
to 11:00 a.m. on the Business Day preceding
the Maturity Date. See "Discontinuance of
Underlying Index; Adjustments to Underlying
Index" below.
All percentages resulting from any
calculation with respect to the Notes will be
rounded to the nearest one hundred-thousandth
of a percentage point, with five
one-millionths of a percentage point rounded
upwards (e.g., 9.876545% (or .9876545) would
be rounded to 9.87655% (or .987655)), and all
lira amounts used in or resulting from such
calculation will be rounded to the nearest
lira with one-half lira being rounded
upwards.
DJES50 Change Percentage...... The amount by which (A) the Final Average
Value of the DJES50 differs from (B) the
Initial Value of the DJES50, expressed as a
percentage of such Initial Value.
Initial Value................. The arithmetic average of the values of the
Underlying Index at the regular official
weekday close of trading on each of the
Initial Index Dates
Initial Index Dates........... The "Initial Index Dates" are (i)
June 2, 1998; and (ii) June 3, 1998,
unless there is a Market Disruption Event
on either such date. If a Market
Disruption Event occurs on either June 2
or June 3, 1998, then the next succeeding
Trading Day during which no Market
Disruption Event will have occurred shall
be an Initial Index Date in lieu of such
date; provided that if a Market Disruption
Event has occurred on each of the five
Trading Days immediately succeeding June 2
or June 3, 1998, as the case may be, then
(i) such fifth succeeding Trading Day will
be deemed to be an Initial Index Date,
notwithstanding the occurrence of a Market
Disruption Event on such day and (ii) with
respect to any such fifth Trading Day on
which a Market Disruption Event occurs,
the Calculation Agent will determine the
value of the Underlying Index on such
fifth Trading Day in accordance with the
formula for and method of calculating the
Underlying Index last in effect prior to
the commencement of the Market Disruption
Event, using the closing price (or, if
trading in the relevant securities has
been materially suspended or materially
limited, its good faith estimate of the
closing price that would have prevailed
but for such suspension or limitation) on
such Trading Day of each security most
recently comprising the Underlying Index.
Final Average Value........... The arithmetic average of the Index Closing
Values of the Underlying Index on each of the
Determination Dates, as determined by the
Calculation Agent
Index Closing Value........... As of any Determination Date, the closing
value of the Underlying Index or any
Successor Index (as defined below) at the
regular official weekday close of trading on
such Determination Date. See "Discontinuance
of the Underlying Index; Adjustments to
Underlying Index."
References herein to the Underlying Index
will be deemed to include any Successor Index
to the Underlying Index, unless the context
requires otherwise.
Underlying Index.............. The Dow Jones Euro Stoxx 50 ("DJES50")
published by Stoxx Ltd. (as further described
herein) and whose primary exchange is the
Frankfurt Stock Exchange ("FSE"), or any
replacement index as may be chosen by the
Determination Agent as provided under
"Discontinuance of Underlying Index;
Adjustments to Underlying Index."
Exchange...................... The FSE or its successors
Underlying Index Publisher.... Stoxx Ltd. or its successors
Trading Day................... A day on which trading is generally conducted
(i) on the Exchange and (ii) on any exchange
on which futures or options contracts related
to the Underlying Index are traded, other
than a day on which trading on the Exchange
is scheduled to close prior to its regular
weekday closing time, as determined by the
Calculation Agent.
Determination Dates........... The Determination Dates will be the thirtieth
day of each March, June, September and
December, commencing June 30, 1998 and ending
March 30, 2002, and, if any such date is not
a Trading Day, the Determination Date shall
be the next succeeding Trading Day, unless
there is a Market Disruption Event on any
such Trading Day. If a Market Disruption
Event occurs on any such Trading Day, such
Determination Date will be the immediately
succeeding Trading Day during which no Market
Disruption Event will have occurred; provided
that if a Market Disruption Event has
occurred on each of the five Trading Days
immediately succeeding any of the scheduled
Determination Dates, then (i) such fifth
succeeding Trading Day will be deemed to be
the relevant Determination Date
notwithstanding the occurrence of a Market
Disruption Event on such day and (ii) with
respect to any such fifth Trading Day on
which a Market Disruption Event occurs, the
Calculation Agent will determine the value of
the Underlying Index on such fifth Trading
Day in accordance with the formula for and
method of calculating the Underlying Index
last in effect prior to the commencement of
the Market Disruption Event, using the
closing price (or, if trading in the relevant
securities has been materially suspended or
materially limited, its good faith estimate
of the closing price that would have
prevailed but for such suspension or
limitation) on such Trading Day of each
security most recently comprising the
Underlying Index.
Acceleration of the Notes..... In case an Event of Default with respect to
any Notes shall have occurred and be
continuing, the amount declared due and
payable upon any acceleration of the Notes
will be determined by the Calculation Agent
and will be equal to the par amount plus the
Supplemental Redemption Amount determined as
though each of the Determination Dates
scheduled to occur on or after such date of
acceleration were the date of acceleration.
Market Disruption Event....... "Market Disruption Event" means the
occurrence or existence of either of the
following events on a Determination Date or
on an Initial Index Date as determined by the
Calculation Agent:
(i) a suspension, material limitation or
absence of trading on the Exchange of
stocks then constituting 20% or more, by
weight, of the Underlying Index (or the
relevant Successor Index) for more than
two hours of trading or during the
one-half hour period preceding the close
of trading on the Exchange; or
(ii) the suspension or material limitation
on any major securities market of trading
in futures or options contracts related to
the Underlying Index (or the relevant
Successor Index) for more than two hours
of trading or during the one-half hour
period preceding the close of trading on
such market.
For the purpose of determining whether a
Market Disruption Event exists at any time,
if trading in a security included in the
Underlying Index is materially suspended or
materially limited at that time, then the
relevant percentage contribution of that
security to the level of the Underlying Index
shall be based on a comparison of (x) the
portion of the level of the Underlying Index
attributable to that security relative to (y)
the overall level of the Underlying Index, in
each case immediately before that suspension
or limitation.
Calculation Agent............. Morgan Stanley & Co. International Limited
("MSIL")
All determinations made by the Calculation
Agent will be at the sole discretion of the
Calculation Agent and will, in the absence of
manifest error, be conclusive for all
purposes and binding on the Company and
holders of the Notes.
Because the Calculation Agent is an affiliate
of the Company, potential conflicts of
interest may exist between the Calculation
Agent and the holders of the Notes, including
with respect to certain determinations and
judgments that the Calculation Agent must make
in determining the Final Average Value or
whether a Market Disruption Event has
occurred. See "Discontinuance of Underlying
Index; Adjustments to Underlying Index" below
and "Market Disruption Event" above. MSIL is
required to maintain policies and procedures
regarding the handling and use of
confidential proprietary information, and
such policies and procedures will be in effect
throughout the term of the Notes to restrict
the use of information relating to the
calculation of the Final Average Value that
the Calculation Agent may be required to make
prior to its dissemination. MSIL is
obligated to carry out its duties and
functions as Calculation Agent in good faith
and using its reasonable judgment.
Risk Factors.................. An investment in the Notes entails
significant risks not associated with similar
investments in a conventional debt security
including the following.
Because the Final Average Value will be based
upon an average of closing values for the
Underlying Index on specified days (the
Determination Dates), a significant increase
in the Underlying Index as measured on the
Determination Date in the final month, or in
any earlier month, may be substantially or
entirely offset by the values of the
Underlying Index on the Determination Dates
in other months.
The DJES50 does not reflect the payment of
dividends on the stocks underlying it and
therefore the yield to maturity of the Notes
based on the DJES50 will not produce the same
yield as if such underlying stocks were
purchased and held for a similar period.
Furthermore, an investment in the underlying
stocks would, unlike the calculation of the
Supplemental Redemption Percentage with
respect to the Notes, be affected by any
fluctuations in the exchange rate between the
ECU, the Euro or other currencies in European
countries, as the case may be, and the
Italian lire.
There can be no assurance as to how the Notes
will trade in the secondary market or whether
such market will be liquid or illiquid. It
is expected that the secondary market value
for the Notes will be affected by the
creditworthiness of the Company and by a
number of factors, including, but not limited
to, the volatility of the Underlying Index,
dividend rates on the stocks comprising the
Underlying Index, the time remaining to the
Determination Dates and to the maturity of
the Notes and market interest rates in the
United States and Europe. In addition, the
Final Average Value depends on a number of
interrelated factors, including economic,
financial and political events, over which
the Company has no control. The historical
experience of the Underlying Index should not
be taken as an indication of its future
performances during the term of any Note.
The underlying stocks that constitute the
DJES50 have been issued by companies in
various European countries. Investments in
securities indexed to the value of such
country's equity securities involve certain
risks associated with the securities market
in such country, including the risks of
volatility in such markets, government
intervention in such markets,
cross-shareholdings in companies in certain
countries, legal requirements concerning
public information about companies in
European countries that are less exhaustive
than similar requirements concerning
companies that file reports with the United
States Securities and Exchange Commission
(the "SEC") and accounting and financial
standards that differ from country to country
and from those applicable to companies in the
United States.
Securities prices in each country are subject
to political, economic, financial and social
factors in that country that could negatively
affect securities markets in such country.
Moreover, the economies in such countries may
differ favorably or unfavorably from
economies in the United States in such
respects as growth of gross national product,
rate of inflation, capital reinvestment,
resources and self-sufficiency.
The historical values of the Underlying Index
should not be taken as an indication of the
future performance of the Underlying Index
during the term of the Notes. While the
trading prices of the stocks comprising the
Underlying Index will determine the value of
the Underlying Index, it is impossible to
predict whether the value of the Underlying
Index will fall or rise. Trading prices of
the stocks comprising the Underlying Index
will be influenced by both the complex and
interrelated political, economic, financial
and other factors that can affect the capital
markets generally and the equity trading
markets on which the such stocks are traded,
and by various circumstances that can
influence the values of stocks in a specific
market segment or of a particular stock.
The policies of the Underlying Index
Publisher concerning additions, deletions and
substitutions of the stocks comprising the
Underlying Index and the manner in which the
Underlying Index Publisher takes account of
certain changes affecting such underlying
stocks may affect the value of the Underlying
Index. The policies of the Underlying Index
Publisher with respect to the calculation of
the Underlying Index could also affect the
value of the Underlying Index. The
Underlying Index Publisher may discontinue or
suspend calculation or dissemination of the
Underlying Index. Any such actions could
affect the value of the Notes. See
"Underlying Index" and "Discontinuance of
Underlying Index; Adjustments to Underlying
Index" below.
Because the Calculation Agent is an affiliate
of the Company, potential conflicts of
interest may exist between the Calculation
Agent and the holders of the Notes, including
with respect to certain determinations and
judgments that the Calculation Agent must make
in determining the Final Average Value or
whether a Market Disruption Event has
occurred. See "Discontinuance of Underlying
Index; Adjustments to Underlying Index" below
and "Market Disruption Event" above.
It is suggested that prospective investors
who consider purchasing the Notes should
reach an investment decision only after
carefully considering the suitability of the
Notes in light of their particular
circumstances.
Investors should also consider the tax
consequences of investing in the Notes. See
"United States Federal Taxation" below.
Underlying Index.............. All information regarding the DJES50 set
forth herein, including, without limitation,
its make-up, method of calculation and changes
in its components, has been derived from
publicly available information. Such
information reflects the policies of, and are
subject to change by, the publisher of the
Underlying Index. Stoxx Ltd. does not have
any obligation to continue to publish, and may
discontinue publication of, the Underlying
Index.
Dow Jones Euro STOXX 50
The DJES50 is a capitalization-weighted index
which measures the composite price
performance of stocks of the 50 largest
companies (determined on the basis of market
capitalization) included in the Dow Jones
Euro STOXX, a broad index consisting of
companies from those countries in Western
Europe which will likely be part of the EMU.
Dow Jones Euro STOXX is a subset of Dow Jones
STOXX, which seeks to include in its index
the largest and most liquid securities in
Western Europe. The DJES50, the Dow Jones
Euro STOXX and the Dow Jones STOXX are
indices created by STOXX Ltd. ("STOXX"), a
company jointly founded by Schwizer Borse,
SBF- Bourse de Paris, Deutsche Borse and Dow
Jones & Company, Inc. ("Dow Jones").
Publication of the DJES50 began on December
31, 1991, based on an initial DJES50 value of
1,000.
The DJES50 is calculated by (i) multiplying
the per share price of each stock included in
the DJES50 by the number of outstanding
shares (and, if the stock is not quoted in
euro, then multiplied by the country currency
and an exchange factor which reflects the
exchange rate between the country currency
and the euro (or, prior to January 1, 1999,
the ECU)) (ii) calculating the sum of all
these products (such sum being hereinafter
the "DJES50 Aggregate Market Capitalization")
and (iii) dividing the DJES50 Aggregate Market
Capitalization by a divisor which represents
the DJES50 Aggregate Market Capitalization on
the base date of the DJES50 and which can be
adjusted to allow changes in the issued share
capital of individual underlying stocks
(including the deletion and addition of
stocks, the substitution of stocks, stock
dividends and stock splits) to be made
without distorting the DJES50. Because of
such capitalization weighting, movements in
share prices of companies with relatively
greater market capitalization will have a
greater effect on the level of the entire
DJES50 than will movements in share prices of
companies with relatively smaller market
capitalization. In addition, other
statistics based on the DJES50 may be found
in a variety of publicly available sources.
A current list of the issuers of the DJES50,
as of May 14, 1998, is set forth below.
Current
Issuer of Component Stock Weight in
Stock Exchange DJES50
- ------------------------------ ----------------------------- ---------
ABN-AMRO Hldg NV Amsterdam Stock Exchange 2.4003%
Aegon NV Amsterdam Stock Exchange 2.6017%
Ahold NV Amsterdam Stock Exchange 1.0886%
Air Liquide SA Paris Bourse 0.8773%
Akzo Nobel Amsterdam Stock Exchange 0.9079%
Alcatel Alsthom SA Paris Bourse 2.0130%
Allianz AG Frankfurt Stock Exchange 5.1807%
Allied Irish Bank PLC London Stock Exchange 0.7706%
Assicurazioni Generali S.p.A. Milan Stock Exchange 2.1553%
AXA-UAP SA Amsterdam Stock Exchange 2.6093%
Banco Bilbao Vizcaya SA SIBE 2.2418%
Bayer AG Frankfurt Stock Exchange 2.1330%
Carrefour Paris Bourse 1.4426%
Credito Italiano S.p.A. Milan Stock Exchange 1.0757%
Daimler-Benz AG Frankfurt Stock Exchange 3.5707%
Deutsche Telecom Frankfurt Stock Exchange 4.3545%
Lufthansa Frankfurt Stock Exchange 0.5606%
Deutsche Bank Frankfurt Stock Exchange 2.9121%
Compaigne Generale des Eaux Paris Bourse 1.5873%
Electrabel SA Brussels Stock Exchange 0.9164%
ELF Aquitaine Paris Bourse 2.2060%
Elsevier NV Amsterdam Stock Exchange 0.7201%
Endesa SA SIBE 1.7701%
ENI S.p.A. Milan Stock Exchange 3.5308%
Fiat S.p.A. Milan Stock Exchange 1.1444%
Fortis AG Brussels Stock Exchange 0.7991%
France Telecom Paris Bourse 3.5521%
ING Groep NV Amsterdam Stock Exchange 3.6547%
Koninklijke PTT NV Amsterdam Stock Exchange 1.5493%
LVMH Moet-Hennesey
Louis Vuitton Paris Bourse 1.1053%
L'Oreal Paris Bourse 2.0964%
Mannesmann AG Frankfurt Stock Exchange 2.0166%
Metro AG Frankfurt Stock Exchange 0.6694%
Nokia Ab Oy A Helsinki Stock Exchange 1.7514%
Paribas Paris Bourse 1.1962%
Petrofina SA Brussels Stock Exchange 0.5794%
Philips Electronics NV Amsterdam Stock Exchange 1.7002%
Portugal Telecom SA Lisbon 0.6958%
Repsol SA SIBE 1.0698%
Rhone Poulenc A Paris Bourse 1.1238%
Royal Dutch Petroleum Amsterdam Stock Exchange 7.9720%
RWE AG Frankfurt Stock Exchange 1.1024%
Schneider SA Paris Bourse 0.7295%
Siemens AG Frankfurt Stock Exchange 2.3911%
Societe Generale Paris Bourse 1.3158%
Cie de St-Gobain Paris Bourse 0.9531%
Telecom Italia Milan Stock Exchange 2.9050%
Telefonica de Espana SIBE 2.9473%
Unilever NV Amsterdam Stock Exchange 3.0861%
Veba AG Frankfurt Stock Exchange 2.2675%
(Source: Stoxx Ltd.)
The composition of the DJES50 is reviewed
annually, and changes are implemented on the
third Friday in September, using market data
from the end of July as the basis for the
review process. Changes in the composition
of the DJES50 are made to ensure that the
index includes those companies which, within
the eligible countries and within each
industry sector, have the greatest market
capitalization. Changes in the composition
of the DJES50 are made entirely by STOXX Ltd.
without consultation with the corporations
represented in the DJES50 or the Company.
The DJES50 is also reviewed on an ongoing
basis, and change in the composition of the
index may be necessary if there have been
extraordinary events for one of the index
companies (e.g. delisting, bankruptcy,
merger, takeover etc.) In these cases, the
event is taken into account as soon as it is
effective. The component stocks of the
DJES50 may be changed at any time for any
reason. Neither STOXX Ltd. nor any of its
founders is affiliated with the Company and
has participated in any way in the creation
of the Notes.
The table below summarizes the adjustments to
any component stock made for corporate
actions and the effect of such adjustment on
the base value, where "p" is the price of
such component stock and "q" is the number of
shares of such stock.
<TABLE>
<CAPTION>
Impact
on
base
Events Adjustment Factor value
------ ----------------- ------
<S> <C> <C>
Special cash p before dividend - dividend Decrease
dividend (from adj. for p = ----------------------------
non-operating p before dividend
income)
Stock Dividend & 1 None
Split (the same adj. for p = ----------------------------
security) 1 + no. of new shares (%)
adj. for q = 1 + no. of new shares (%)
Reverse Split 1 None
adj. for p = ----------------------------
1 - no. of new shares (%)
adj. for q = 1 - no. of new shares (%)
Stock Dividend of a p before distribution - cash equivalent Decrease
different company adj. for p = ----------------------------------------
security p before distribution
cash equivalent = other sec.p no. of distributed stocks (%)
Rights Offering adj. p Increase
adj. for p = ----------------------------
last cum rights p
last cum rights p + subscription p rights (%)
adj. p = ----------------------------------------------
1 + rights (%)
adj. for q = 1 + rights (%)
If the new shares have a dividend disadvantage, then the
subscription price will be adjusted.
Combination: adj. p Increase
stock distribution adj. for p = ----------------------------
(stock dividend or last cum rights p
split) and rights
offering -- one last cum rights p + subscription p (1 + stock
action applicable to subscription (%)) rights (%)
other (if rights adj. p = ---------------------------------------------
applicable after (1 + stock distribution (%)) (1 + rights (%))
stock distribution)
adj. for q = (1 + stock distribution (%)) (1 + rights (%))
Combination: stock adj. p Increase
distribution (stock adj. for p = ----------------------------
dividend or split) last cum rights p
and rights offering
- -- one action
applicable to other last cum rights p - subscription p rights (%)
(if stock adj. p = -----------------------------------------------
distribution (1 + rights (%)) (1 + stock distribution (%))
applicable after
rights) adj. for q = (1 + stock distribution (%))(1 + rights (%))
Combination: stock adj. p Increase
distribution (stock adj. for p = ----------------------------
dividend or split) last cum rights p
and rights issues --
neither action is last cum rights p + subscription p rights (%)
applicable to the adj. p = -----------------------------------------------
other (1 + rights (%) + stock distribution (%))
adj. for q = (1 + stock distribution (%) + rights (%))
Spin-off p before spinoff - cash equivalent Decrease
adj. for p = ----------------------------------
p before spinoff
cash equivalent = spinoff stock p no. of spinoff stocks (in %)
Repurchase shares- p after tender Decrease
self tender adj. for p = ----------------------------
p before tender
p after
(p before tender) (no. of q before tender)
tender = (tender p no. of tendered q)
-------------------------------------------
(no. of q before tender) no. of tendered q
no. of q after tender
ad. q = ----------------------
</TABLE> no. of q before tender
The Company or its affiliates may presently
or from time to time engage in business with
the publishers, owners, founders or creators
of the Underlying Index or any of its
successors or one or more of the issuers of
the component stocks of the Underlying Index,
including extending loans to, making equity
investments in or providing advisory
services, including merger and acquisition
advisory services, to such publishers, their
successors, founders or creators or to any of
such issuers. In the course of such business
with issuers, the Company or its affiliates
may acquire non-public information with
respect to such issuers. The Company may
also act as market maker for the common
stocks of such issuers. The Company does not
make any representation to any purchaser of
Notes with respect to any matters whatsoever
relating to any of such publishers, their
successors, founders or creators or to any of
such issuers. Any prospective purchaser of
Notes should undertake such an independent
investigation of the issuers of the component
stocks of the Underlying Index and with
respect to the competency of its publisher
to formulate and calculate the Underlying
Index as in its judgment is appropriate to
make an informed decision with respect to an
investment in the Notes. The composition of
the Underlying Index does not reflect any
investment or sell recommendations of the
Company or its affiliates.
Historical Information........ The following table sets forth the high and
low daily closing values, as well as
end-of-quarter closing values, of the DJES50
(price return) for each quarter in the period
from January 1, 1993 through May 14, 1998.
The historical values of the DJES50 should
not be taken as an indication of future
performance, and no assurance can be given as
to the level of the DJES50 as of any
Determination Date.
<TABLE>
<CAPTION>
Daily Closing Values In ECU
-----------------------------------
High Low Period End
-------- ----- ----------
<S> <C> <C> <C>
1993
1st Quarter...... 1148.63 1014.66 1140.82
2nd Quarter...... 1161.96 1102.94 1157.58
3rd Quarter...... 1321.88 1144.93 1285.92
4th Quarter...... 1433.34 1287.49 1433.34
1994
1st Quarter...... 1459.27 1347.84 1365.74
2nd Quarter...... 1441.33 1272.00 1284.60
3rd Quarter...... 1401.79 1286.05 1320.53
4th Quarter...... 1344.61 1268.62 1320.59
1995
1st Quarter...... 1348.10 1274.57 1300.13
2nd Quarter...... 1400.60 1298.18 1362.52
3rd Quarter...... 1469.19 1362.52 1419.60
4th Quarter...... 1509.91 1367.15 1506.82
1996
1st Quarter...... 1612.24 1507.65 1612.24
2nd Quarter...... 1691.04 1619.33 1665.90
3rd Quarter...... 1694.51 1563.32 1694.51
4th Quarter...... 1859.10 1693.99 1850.32
1997
1st Quarter...... 2169.71 1824.52 2137.28
2nd Quarter...... 2438.38 2026.91 2398.41
3rd Quarter...... 2699.78 2407.58 2581.36
4th Quarter...... 2641.68 2241.21 2531.99
1998
1st Quarter...... 3179.72 2466.81 3153.32
2nd Quarter (through
May 14, 1998).. 3345.86 3061.04 3305.41
(Source: DataStream)
</TABLE>
Discontinuance of Underlying
Index; Adjustments to
Underlying Index............. If the Underlying Index Publisher
discontinues publication of the Underlying
Index and the Underlying Index Publisher or
another entity publishes a successor or
substitute index that the Calculation Agent
determines, in its sole discretion, to be
comparable to the Underlying Index (such
index being referred to herein as a
"Successor Index"), then the Index Closing
Value will be determined by reference to the
value of such Successor Index at the close of
trading on the relevant exchange or market
for the Successor Index on the Determination
Dates.
Upon any selection by the Calculation Agent
of a Successor Index, the Calculation Agent
will cause written notice thereof to be
furnished to the Trustee, to the Company and
to the holders of the Notes within three
Trading Days of such selection.
If the Underlying Index Publisher
discontinues publication of the Underlying
Index prior to, and such discontinuance is
continuing on, any of the Determination Dates
and the Calculation Agent determines that no
Successor Index is available at such time,
then on each Determination Date until a
determination by the Calculation Agent that a
Successor Index is available, the Calculation
Agent will determine the Index Closing Value
that would be used in computing the
Supplemental Redemption Amount on each
Determination Date. The Index Closing Value
will be computed by the Calculation Agent in
accordance with the formula for and method of
calculating the Underlying Index last in
effect prior to such discontinuance, using
the closing price (or, if trading in the
relevant securities has been materially
suspended or materially limited, its good
faith estimate of the closing price that
would have prevailed but for such suspension
or limitation) on such Determination Date of
each security most recently comprising the
Underlying Index. The Calculation Agent will
cause notice of each such Index Closing Value
to be provided to the holders of the Notes on
each succeeding Determination Date until and
including March 30, 2002 (unless a Successor
Index is prior thereto determined to be
available). Notwithstanding these
alternative arrangements, discontinuance of
the publication of the Underlying Index may
adversely affect the value of the Notes.
If at any time the method of calculating the
Underlying Index or a Successor Index, or the
value thereof, is changed in a material
respect, or if the Underlying Index or a
Successor Index is in any other way modified
so that such index does not, in the opinion
of the Calculation Agent, fairly represent
the value of the Underlying Index or such
Successor Index had such changes or
modifications not been made, then, from and
after such time, the Calculation Agent will,
at the close of business in London on each
Determination Date on which an Index Closing
Value is to be calculated, make such
calculations and adjustments as, in the good
faith judgment of the Calculation Agent, may
be necessary in order to arrive at a value of
a stock index comparable to the Underlying
Index or such Successor Index, as the case
may be, as if such changes or modifications
had not been made, and calculate the
Supplemental Redemption Amount with reference
to the Underlying Index or such Successor
Index, as adjusted. Accordingly, if the
method of calculating the Underlying Index or
a Successor Index is modified so that the
value of such index is a fraction of what it
would have been if it had not been modified
(e.g., due to a split in the index), then the
Calculation Agent will adjust such index in
order to arrive at a value of the Underlying
Index such Successor Index as if it had not
been modified (e.g., as if such split had not
occurred).
Use of Proceeds and Hedging... The net proceeds to be received by the
Company from the sale of the Notes will be
used for general corporate purposes and,
in part, by the Company or one or more of
its affiliates in connection with hedging
the Company's obligations under the Notes,
including hedging market risks associated
with the Supplemental Redemption Amount.
On or near the date of this Pricing
Supplement, the Company, through its
subsidiaries or others, hedged its
anticipated exposure in connection with
the Notes by taking positions in exchange-
traded or over the counter options on the
DJES50 or individual stocks included in
the DJES50, futures contracts on the
DJES50 and options on such futures
contracts or any other instruments that it
used in connection with such hedging. The
Company, through its subsidiaries, is
likely to modify its hedge position
throughout the life of the Notes,
including on the Determination Dates, by
purchasing and selling such instruments.
Although the Company has no reason to
believe that its hedging activity will
have a material impact on the price of
such options, stocks, futures contracts,
and options on futures contracts, there
can be no assurance that the Company will
not affect such prices as a result of its
hedging activities. See also "Use of
Proceeds" in the accompanying Prospectus.
License Agreements............ License Agreement for the DJES50
STOXX Ltd. and MS & Co. have entered into a
non-exclusive license agreement providing for
the license to MS & Co., in exchange for a
fee, of the right to use the DJES50, which is
owned and published by STOXX, in connection
with certain securities, including the Notes.
The license agreement between STOXX and MS &
Co. provides that the following language must
be set forth in the Pricing Supplement:
The Notes are not sponsored, endorsed, sold
or promoted by STOXX or Dow Jones. Neither
STOXX nor Dow Jones makes any representation
or warranty, express or implied, to the
owners of the Notes or any member of the
public regarding the advisability of
investing in securities generally or in the
Notes particularly. The only relationship of
STOXX to the Company is as the licensor of the
Dow Jones Euro STOXX 50(TM) and of certain
trademarks, trade names and service marks of
STOXX, and as the sublicensor of the Dow
Jones STOXX(SM), the Dow Jones Euro STOXX(SM)
and of certain trademarks, trade names and
service marks of Dow Jones. The
aforementioned Indexes are determined,
composed and calculated by STOXX or Dow
Jones, as the case may be, without regard to
the Company or the Notes. Neither STOXX nor
Dow Jones is responsible for or has
participated in the determination of the
timing of, prices at, or quantities of the
Notes to be issued or in the determination or
calculation of the equation by which the
Notes are to be converted into cash. Neither
STOXX nor Dow Jones has any obligation or
liability in connection with the
administration, marketing or trading of the
Notes.
NEITHER STOXX NOR DOW JONES GUARANTEES THE
ACCURACY AND/OR THE COMPLETENESS OF THE
INDEXES OR ANY DATA INCLUDED THEREIN AND
NEITHER SHALL HAVE ANY LIABILITY FOR ANY
ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN.
NEITHER STOXX NOR DOW JONES MAKES ANY
WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS
TO BE OBTAINED BY THE COMPANY, OWNERS OF THE
NOTES, OR ANY OTHER PERSON OR ENTITY FROM THE
USE OF THE INDEXES OR ANY DATA INCLUDED
THEREIN. DOW JONES MAKES NO EXPRESS OR
IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS
ALL WARRANTIES, OR MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR USE WITH RESPECT
TO THE INDEXES OR ANY DATA INCLUDED THEREIN.
WITHOUT LIMITING ANY OF THE FOREGOING, IN NO
EVENT SHALL EITHER STOXX OR DOW JONES HAVE
ANY LIABILITY FOR ANY LOST PROFITS OR
INDIRECT, PUNITIVE, SPECIAL OR CONSEQUENTIAL
DAMAGES, EVEN IF NOTIFIED OF THE POSSIBILITY
THEREOF. THERE ARE NO THIRD PARTY
BENEFICIARIES OF ANY AGREEMENTS OR
ARRANGEMENTS BETWEEN STOXX AND THE COMPANY.
The Dow Jones Euro STOXX 50 is owned by STOXX
Ltd. and is a service mark of Dow Jones &
Company, Inc., and has been licensed for
certain purposes by the Company. [Copyright]
1998 by STOXX Ltd. All rights reserved.
The Dow Jones STOXX and the Dow Jones Euro
STOXX are service marks of Dow Jones &
Company, Inc., and have been licensed for
certain purposes by the Company. [Copyright]
1998 by Dow Jones & Company, Inc. All rights
reserved.
United States Federal Taxation The investor should refer to the discussion
under "United States Federal Taxation" in the
accompanying Prospectus Supplement.
