PROSPECTUS Dated May 5, 1999 Pricing Supplement No. 26 to
PROSPECTUS SUPPLEMENT Registration Statement No. 333-75289
Dated May 6, 1999 Dated October 7, 1999
Rule 424(b)(3)
$5,003,408
Morgan Stanley Dean Witter & Co.
MEDIUM-TERM NOTES, SERIES E
Euro Fixed Rate Senior Bearer Notes
11.129% REVERSE EXCHANGEABLE NOTES DUE NOVEMBER 3, 2000
Exchangeable at the Option of Morgan Stanley Dean Witter & Co.
for Shares of Common Stock of The Gillette Company
The notes will pay 11.129% interest per year but do not guarantee any return
of principal at maturity. Instead we will redeem the notes at maturity by
electing either to pay to you the principal amount of each note in cash or, if
permitted under the terms of the notes described below, to exchange each note
for 100 shares of the common stock of The Gillette Company. If we elect to
deliver a fixed number of shares of Gillette common stock at maturity in
exchange for each note, the value of those shares will be less than the
principal amount of each note and could be zero.
o The principal amount and issue price of each note is $3,494.
o At maturity, we will pay 11.129% interest per year on the $3,494 principal
amount of each note. You will be entitled to receive an interest payment at
maturity on the principal amount of your notes whether or not we elect to
deliver shares of Gillette common stock.
o At maturity, we will either pay to you an amount per note equal to the
principal amount of $3,494, or
o if on any trading day from and including October 7, 1999 to and
including October 27, 2000, the price of one share of Gillette common
stock is equal to or less than $29.1225, which is approximately 75% of
the price of Gillette common stock at the time we priced the notes on
October 7, 1999, and
o if on October 27, 2000, the closing price of one share of Gillette
common stock is equal to or less than $34.94, which is approximately 90%
of the price of Gillette Stock at the time we priced the notes on
October 7, 1999,
we may elect to deliver to you at maturity instead 100 shares of Gillette
common stock per note plus interest on the original principal amount of
$3,494.
o The price of Gillette common stock was $38.83 at the time we priced the
notes on October 7, 1999.
o If we elect to deliver shares of Gillette common stock rather than cash at
the maturity of the notes, we will give you notice of the election through
the Euroclear Operator or Cedelbank.
Investing in the notes is not equivalent to investing in Gillette common stock.
The Gillette Company is not involved in this offering of the notes in any way
and will have no financial obligation with respect to the notes.
We will issue the notes in bearer form only. You may not exchange notes in
bearer form for notes in registered form.
We may not redeem the notes 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 not be listed on any securities or other exchange.
You should read the more detailed description of the notes in this pricing
supplement. In particular, you should review and understand the descriptions
in "Summary of Pricing Supplement" and "Description of Notes."
The notes are riskier than ordinary debt securities. See "Risk Factors"
beginning on PS-5.
----------------
PRICE 100%
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MORGAN STANLEY DEAN WITTER
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SUMMARY OF PRICING SUPPLEMENT
The following summary describes the notes we are offering to you in
general terms only. You should read the summary together with the more
detailed information that is contained in the rest of this pricing supplement
and in the accompanying prospectus and prospectus supplement. You should
carefully consider, among other things, the matters set forth in "Risk
Factors."
The notes offered are medium-term debt securities of Morgan Stanley Dean
Witter & Co. These notes combine limited features of debt and equity. They
offer a fixed interest rate on the principal amount, but the payment at
maturity is determined by the performance of the common stock of The Gillette
Company, which we refer to as Gillette Stock, and may be paid in Gillette
Stock.
The Notes
Each note costs $3,494 We, Morgan Stanley Dean Witter & Co., are
offering 11.129% Reverse Exchangeable
Notes due November 3, 2000. The principal
amount and issue price of each note is
$3,494.
No guaranteed Unlike ordinary debt securities, the notes
return of principal do not guarantee any return of principal
at maturity. Instead, if the price of
Gillette Stock declines to or below
specified levels over the life of the
notes and trades at or below a specified
level at maturity, we may elect either to
pay to you at maturity the principal
amount of the notes in cash or to deliver
to you 100 shares of Gillette Stock, which
number of shares is subject to adjustment
for certain corporate events. If we decide
to redeem the notes by delivering shares
of Gillette Stock, the market value of the
Gillette Stock is very likely to be less
than the principal amount of the notes and
could be zero.
11.129% coupon on the When the notes mature on November 3, 2000,
principal amount we will pay interest on the principal
amount of the notes at the rate of 11.129%
per year.
Payment at Maturity
If Gillette Stock declines At maturity, we will pay to you, at our
to specified levels, we may option:
deliver Gillette Stock worth
less than $3,494 o the principal amount of each note in
cash
OR
o if
o at any time on any trading day from
and including October 7, 1999 to
and including October 27, 2000, the
price of one share of Gillette
Stock is equal to or less than
$29.1225 and
o on October 27, 2000, the closing
price of one share of Gillette
Stock is equal to or less than
$34.94,
we may elect to deliver to you 100
shares of Gillette Stock per note,
which number of shares is subject to
adjustment for certain corporate
events.
If we deliver shares If we elect to deliver shares of Gillette
of Gillette Stock Stock, we will:
o notify the principal paying agent, the
Euroclear Operator and Cedelbank of
the election on or prior to 4:00 p.m.
(Brussels time) on October 30, 2000
and
o deliver the shares of Gillette Stock
to the principal paying agent for
delivery to the holders
The Initial Reference Price The price of Gillette Stock at the time we
of Gillette Stock is $38.83 a priced the notes on the date of this
share pricing supplement was $38.83, which we
refer to as the Initial Reference Price.
You can review the publicly-reported
prices of Gillette Stock on the New York
Stock Exchange for the last three years in
the "Historical Information" section of
this pricing supplement.
The calculation agent We have appointed Morgan Stanley & Co.
International Limited and its successors,
which we refer to as MSIL, to act as
calculation agent for The Chase Manhattan
Bank, the trustee for our senior notes. As
calculation agent, MSIL will adjust the
exchange factor for certain corporate
events that could affect the price of the
Gillette Stock and that we describe in the
section called "Description of
Notes--Antidilution Adjustments" in this
pricing supplement.
No affiliation with The Gillette Company, which we refer to as
Gillette Gillette, is not an affiliate of ours and
is not involved with this offering in any
way. The obligations represented by these
equity-linked notes are obligations of
Morgan Stanley Dean Witter & Co. and not
of Gillette.
More information The notes are senior notes issued as part
on the notes of our Series E medium-term note program.
You can find a general description of our
Series E medium-term note program in the
accompanying prospectus supplement dated
May 6, 1999. We describe the basic
features of this type of note in the
sections called "Description of
Notes--Fixed Rate Notes" and
"--Exchangeable Notes."
Because this is a summary, it does not
contain all of the information that may
be important to you, including the
specific circumstances under which we
may elect to deliver Gillette Stock at
maturity. You should read the
"Description of Notes" section in this
pricing supplement. You should also read
about some of the risks involved in
investing in the notes in the section
called "Risk Factors." We urge you to
consult with your investment, legal,
tax, accounting and other advisers with
regard to any investment in the notes.
How to reach us You may contact us at our principal
executive offices at 1585 Broadway, New
York, New York 10036 (telephone number
(212) 761-4000).
<PAGE>
RISK FACTORS
The notes are not secured and are riskier than ordinary debt securities. This
section describes the most significant risks relating to the notes. You
should carefully consider whether the notes are suited to your particular
circumstances before you decide to purchase them.
The notes are not The terms of the notes differ from those of
ordinary senior notes ordinary debt securities in that we may not
- -- no guaranteed pay to you a fixed amount at maturity. If on
return of principal any trading day from and including October
7, 1999 to and including October 27, 2000,
the price of Gillette Stock declines from
the Initial Reference Price of $38.83 to or
below $29.1225 and the closing price of
Gillette Stock on October 27, 2000 is at or
below $34.94, we may choose to deliver to
you at maturity 100 shares of Gillette
Stock. In that event the market value of the
Gillette Stock delivered to you, determined
as of October 27, 2000, is very likely to be
less than the principal amount of the notes.
An investment in the notes may result in a
total loss of your principal.
In addition, if Gillette Stock has
appreciated above its current level at
October 27, 2000, the payment you receive at
maturity will not reflect such appreciation.
Notes may not be There may be little or no secondary market
actively traded for the notes. The notes will not be listed
on any securities or other exchange. Even if
there is a secondary market, it may not
provide significant liquidity. MSIL
currently intends to act as a market maker
for the notes but is not required to do so.
Market price of notes Several factors, many of which are beyond
influenced by many our control, will influence the value of the
unpredictable factors notes, including:
o the market price of Gillette Stock
o the volatility (frequency and magnitude
of changes in price) of the Gillette
Stock
o the dividend rate on the Gillette Stock
o economic, financial, political and
regulatory or judicial events that
affect stock markets generally and which
may affect the market price of the
Gillette Stock
o interest and yield rates in the market
o the time remaining to the maturity of
the notes
o our creditworthiness
These factors will influence the price that
you will receive if you sell your notes
prior to maturity. For example, you may have
to sell your notes at a substantial discount
from the issue price if the market price of
the Gillette Stock is below the price of
Gillette Stock at pricing, especially if the
price of Gillette Stock has declined below
$29.1225 per share at any time on or after
October 7, 1999.
You cannot predict the future performance of
Gillette Stock based on its historical
performance. The price of Gillette Stock may
decrease so that you will receive at
maturity less than the principal amount of
the notes. We cannot guarantee that the
price of Gillette Stock will stay above
$29.1225 over the life of the notes or that
the price of Gillette Stock will be above
$34.94 on October 27, 2000 so that you will
receive at maturity an amount equal to the
principal amount of the notes.
No affiliation with We are not affiliated with Gillette. We do
Gillette not have any non-public information about
Gillette as of the date of this pricing
supplement, although we or our subsidiaries
may presently or from time to time engage in
business with Gillette, including extending
loans to, or making equity investments in,
Gillette or providing investment advisory
services to Gillette, including merger and
acquisition advisory services. Moreover, we
have no ability to control or predict the
actions of Gillette, including any corporate
actions of the type that would require the
calculation agent to adjust the exchange
factor. Gillette is not involved in the
offering of the notes in any way and has no
obligation to consider your interest as a
holder of these notes in taking any
corporate actions that might affect the
value of your notes. None of the money you
pay for the notes will go to Gillette.
You have no As a holder of notes, you will not have
Shareholder Rights voting rights or the right to receive
dividends or other distributions or any
other rights with respect to Gillette Stock.
Limited antidilution MSIL, as calculation agent, will adjust the
adjustments exchange factor for certain events affecting
the Gillette Stock, such as stock splits and
stock dividends, and certain other corporate
actions involving Gillette, such as mergers.
However, the calculation agent is not
required to make an adjustment for every
corporate event that can affect Gillette
Stock. For example, the calculation agent is
not required to make any adjustments if
Gillette or anyone else makes a partial
tender offer or a partial exchange offer for
Gillette Stock. If an event occurs that does
not require the calculation agent to adjust
the exchange rate, the market price of the
notes may be materially and adversely
affected. In addition, the Calculation Agent
may, but is not required to, make
adjustments for corporate events that can
affect the Gillette Stock other than those
contemplated in this pricing supplement.
Such adjustments will be made to reflect the
consequences of events but not with the aim
of changing relative investment risk. The
determination by the calculation agent to
adjust, or not to adjust, the exchange
factor may materially and adversely affect
the market price of the notes.
Potential Conflicts of As calculation agent, MSIL will calculate
Interest between You and how many shares of Gillette Stock that you
the Calculation Agent and will receive if we elect to redeem your
Other Affiliates of Ours notes for stock and what adjustments should
be made to the exchange factor to reflect
certain corporate and other events. MSIL and
other affiliates may carry out hedging
activities related to the notes, including
trading in Gillette Stock as well as in
other instruments related to Gillette Stock.
MSIL and some of our subsidiaries also trade
Gillette Stock on a regular basis as part of
their general broker-dealer businesses. We
or our affiliates may issue other
instruments linked to the value of Gillette
Stock. Any of these activities and MSIL's
affiliation with us could influence MSIL's
determinations as calculation agent,
including with respect to adjustments to the
exchange factor, and, accordingly, the
amount of stock that you receive if we
redeem the notes for stock. In addition,
such trading activity as well as any related
hedging activity could potentially affect
the price of Gillette Stock and, thereby,
the value of the Gillette Stock that you
will receive if we elect to redeem the notes
for Gillette stock.
Tax Treatment You should also consider the tax
consequences of investing in the notes.
Please read carefully the section
"Description of Notes -- United States
Federal Taxation" in this pricing
supplement.
<PAGE>
DESCRIPTION OF NOTES
Terms not defined herein have the meanings given to such terms in the
accompanying Prospectus Supplement. The term "Notes" refers to each $3,494
principal amount of our 11.129% Reverse Exchangeable Notes due November 3,
2000. In this Pricing Supplement, the "MSDW," "we," "us" and "our" refer to
Morgan Stanley Dean Witter & Co.
Principal Amount.............. $5,003,408
Maturity Date................. November 3, 2000
Interest Rate................. 11.129% per annum
Interest Payment Date......... November 3, 2000
Specified Currency............ U.S. Dollars
Issue Price................... $3,494
Original Issue Date
(Settlement Date)........... October 21, 1999
Minimum Denominations......... $3,494 and integral multiples thereof
Common Code................... 010310857
ISIN.......................... XS0103108576
Clearing Systems.............. We will deposit the Notes with a common
depositary for the Euroclear Operator and
Cedelbank, for credit to the account
designated by or on behalf of the subscribers
thereof.
Initial Reference Price....... $38.83, the price of one share of Gillette
Stock when we priced the Notes on October 7,
1999
Maturity Price................ Maturity Price means the product of (i) the
Closing Market Price and (ii) the Exchange
Factor, each determined as of the
Determination Date.
Trading Price................. Trading Price at any time on any Trading Day
means the product of (i) the Market Price and
(ii) the Exchange Factor, each determined as
of such time on such Trading Day.
Payment at Maturity .......... At maturity, we may redeem the Notes, in
whole but not in part, either (i) by paying
the par amount of each Note in cash or (ii) if
both (A) on any Trading Day from and
including October 7, 1999 to and including
the Determination Date, the Trading Price of
Gillette Stock at any time is equal to or
less than $29.1225 and (B) on the
Determination Date, the Maturity Price of
Gillette Stock is equal to or less than
$34.94, by exchanging each $3,494 principal
amount of such Note for a number of shares of
Gillette Stock at the Exchange Ratio as
determined on the second scheduled Trading Day
immediately prior to the Maturity Date.
If we elect to deliver shares of Gillette
Stock, we will, or will cause the Calculation
Agent to, notify the Trustee, the Euroclear
Operator and Cedelbank of such election on or
prior to 4:00 p.m. (Brussels time) on the
MSDW Notice Date. We will, or will cause the
Calculation Agent to, deliver such shares of
Gillette Stock to the Trustee for delivery to
the holders. References to payment "per
Note" refer to each $3,494 principal amount
of any Note.
Determination Date............ October 27, 2000, or if such day is not a
Trading Day, the Determination Date will be
the immediately succeeding Trading Day;
provided that the Determination Date will be
no later than the second scheduled Trading
Day preceding the Maturity Date,
notwithstanding the occurrence of a Market
Disruption Event on such second scheduled
Trading Day.
Exchange Ratio ............... 100. Solely for purposes of adjustment upon
the occurrence of certain corporate events,
the Exchange Ratio will also be adjusted by
an Exchange Factor, initially set at 1.0. See
"Antidilution Adjustments" below.
Exchange Factor............... The Exchange Factor will be set initially at
1.0, but will be subject to adjustment upon
the occurrence of certain corporate events
affecting Gillette Stock through and
including the second scheduled Trading Day
immediately prior to the Maturity Date. See
"Antidilution Adjustments" below.
MSDW Notice Date ............ October 30, 2000
Business Day.................. Any day, other than a Saturday or a Sunday,
that is neither a legal holiday nor a day on
which banking institutions are authorized or
required by law or regulation to close in The
City of New York or The City of London.
No Fractional Shares ......... If at maturity we choose to deliver shares of
Gillette Stock, we will pay cash in lieu of
delivering fractional shares of Gillette
Stock in an amount equal to the corresponding
fractional Closing Market Price of Gillette
Stock, as determined by the Calculation Agent
on the Determination Date.
Closing Market Price.......... If Gillette Stock (or any other security for
which a Closing Market Price must be
determined) is listed on a U.S. securities
exchange registered under the Securities
Exchange Act of 1934, as amended (the "Exchange
Act"), is a security of The Nasdaq National
Market or is included in the OTC Bulletin Board
Service ("OTC Bulletin Board") operated by the
National Association of Securities Dealers,
Inc. (the "NASD"), the Closing Market Price for
one share of Gillette Stock (or one unit of any
such other security) on any Trading Day means
(i) the last reported sale price, regular way,
on such day on the principal securities
exchange registered on which Gillette Stock (or
any such other security) is listed or admitted
to trading or (ii) if not listed or admitted to
trading on any such securities exchange or if
such last reported sale price is not obtainable
(even if Gillette Stock (or other such
security) is listed or admitted to trading on
such securities exchange), the last reported
sale price on the over-the- counter market as
reported on The Nasdaq National Market or OTC
Bulletin Board on such day. If the last
reported sale price is not available pursuant
to clause (i) or (ii) of the preceding
sentence, the Closing Market Price for any
Trading Day shall be the mean, as determined by
the Calculation Agent, of the bid prices for
Gillette Stock (or any such other security)
obtained from as many dealers in such security
(which may include MSIL or any of our other
subsidiaries or affiliates), but not exceeding
three, as will make such bid prices available
to the Calculation Agent. A "security of The
Nasdaq National Market" shall include a
security included in any successor to such
system and the term "OTC Bulletin Board
Service" shall include any successor service
thereto.
Market Price.................. If Gillette Stock (or any other security for
which a Market Price must be determined) is
listed on a U.S. securities exchange
registered under the Exchange Act, is a
security of The Nasdaq National Market or is
included in the OTC Bulletin Board operated by
the NASD, the Market Price for one share of
Gillette Stock (or one unit of any such other
security) at any time on any Trading Day means
(i) the most recently reported sale price,
regular way, on such day on the principal
securities exchange registered on which
Gillette Stock (or any such other security) is
listed or admitted to trading or (ii) if not
listed or admitted to trading on any such
securities exchange or if a reported sale price
is not obtainable (even if Gillette Stock (or
other such security) is listed or admitted to
trading on such securities exchange), the most
recently reported sale price on the over-the-
counter market as reported on The Nasdaq
National Market or OTC Bulletin Board at such
time on such day. If a reported sale price is
not available pursuant to clause (i) or (ii) of
the preceding sentence, the Market Price for
any time during such Trading Day shall be the
Closing Market Price for such Trading Day.
Trading Day................... A day, as determined by the Calculation
Agent, on which trading is generally conducted
in on the New York Stock Exchange, Inc.
("NYSE"), the American Stock Exchange, Inc.,
The Nasdaq National Market, the Chicago
Mercantile Exchange, the Chicago Board of
Options Exchange and in the over-the-counter
market for equity securities in the United
States and on which a Market Disruption Event
has not occurred.
Book Entry Note or
Certificated Note........... Book Entry through Euroclear or Cedel
Senior Note or Subordinated
Note........................ Senior
Trustee....................... The Chase Manhattan Bank (London Branch)
Agent and initial purchaser
for this Underwritten
Offering of the Notes....... MSIL
Calculation Agent............. 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 you and on us.
Because the Calculation Agent is our affiliate,
potential conflicts of interest may exist
between the Calculation Agent and you as a
holder of the Notes, including with respect to
certain determinations and judgments that the
Calculation Agent must make in making
adjustments to the Exchange Factor or
determining the Market Price, the Closing
Market Price or whether a Market Disruption
Event has occurred. See "Antidilution
Adjustments" and "Market Disruption Event"
below. MSIL is obligated to carry out its
duties and functions as Calculation Agent in
good faith and using its reasonable judgment.
Antidilution Adjustments ..... The Exchange Factor will be adjusted as
follows:
1. If Gillette Stock is subject to a stock
split or reverse stock split, then once such
split has become effective, the Exchange Factor
will be adjusted to equal the product of the
prior Exchange Factor and the number of shares
issued in such stock split or reverse stock
split with respect to one share of Gillette
Stock.
2. If Gillette Stock is subject (i) to a stock
dividend (issuance of additional shares of
Gillette Stock) that is given ratably to all
holders of shares of Gillette Stock or (ii) to
a distribution of Gillette Stock as a result of
the triggering of any provision of the
corporate charter of Gillette, then once the
dividend has become effective and Gillette
Stock is trading ex-dividend, the Exchange
Factor will be adjusted so that the new
Exchange Factor shall equal the prior Exchange
Factor plus the product of (i) the number of
shares issued with respect to one share of
Gillette Stock and (ii) the prior Exchange
Factor.
3. There will be no adjustments to the Exchange
Factor to reflect cash dividends or other
distributions paid with respect to Gillette
Stock other than distributions described in
clauses (i) and (v) of paragraph 5 below and
Extraordinary Dividends as described below. A
cash dividend or other distribution with
respect to Gillette Stock will be deemed to be
an "Extraordinary Dividend" if such dividend or
other distribution exceeds the immediately
preceding non- Extraordinary Dividend for
Gillette Stock by an amount equal to at least
10% of the Closing Market Price of Gillette
Stock (as adjusted for any subsequent corporate
event requiring an adjustment hereunder, such
as a stock split or reverse stock split) on the
Trading Day preceding the ex-dividend date for
the payment of such Extraordinary Dividend (the
"ex-dividend date"). If an Extraordinary
Dividend occurs with respect to Gillette Stock,
the Exchange Factor with respect to Gillette
Stock will be adjusted on the ex-dividend date
with respect to such Extraordinary Dividend so
that the new Exchange Factor will equal the
product of (i) the then current Exchange Factor
and (ii) a fraction, the numerator of which is
the Closing Market Price on the Trading Day
preceding the ex- dividend date, and the
denominator of which is the amount by which the
Closing Market Price on the Trading Day
preceding the ex- dividend date exceeds the
Extraordinary Dividend Amount. The
"Extraordinary Dividend Amount" with respect to
an Extraordinary Dividend for Gillette Stock
will equal (i) in the case of cash dividends or
other distributions that constitute regular
dividends, the amount per share of such
Extraordinary Dividend minus the amount per
share of the immediately preceding
non-Extraordinary Dividend for Gillette Stock
or (ii) in the case of cash dividends or other
distributions that do not constitute regular
dividends, the amount per share of such
Extraordinary Dividend. To the extent an
Extraordinary Dividend is not paid in cash, the
value of the non-cash component will be
determined by the Calculation Agent, whose
determination shall be conclusive. A
distribution on the Gillette Stock described in
clause (i) or clause (v) of paragraph 5 below
that also constitutes an Extraordinary Dividend
shall cause an adjustment to the Exchange
Factor pursuant only to clause (i) or clause
(v) of paragraph 5, as applicable.
4. If Gillette issues rights or warrants to all
holders of Gillette Stock to subscribe for or
purchase Gillette Stock at an exercise price
per share less than the Closing Market Price of
the Gillette Stock on both (i) the date the
exercise price of such rights or warrants is
determined and (ii) the expiration date of such
rights or warrants, and if the expiration date
of such rights or warrants precedes the
maturity of the Notes, then the Exchange Factor
will be adjusted to equal the product of the
prior Exchange Factor and a fraction, the
numerator of which shall be the number of
shares of Gillette Stock outstanding
immediately prior to the issuance of such
rights or warrants plus the number of
additional shares of Gillette Stock offered for
subscription or purchase pursuant to such
rights or warrants and the denominator of which
shall be the number of shares of Gillette Stock
outstanding immediately prior to the issuance
of such rights or warrants plus the number of
additional shares of Gillette Stock which the
aggregate offering price of the total number of
shares of Gillette Stock so offered for
subscription or purchase pursuant to such
rights or warrants would purchase at the
Closing Market Price on the expiration date of
such rights or warrants, which shall be
determined by multiplying such total number of
shares offered by the exercise price of such
rights or warrants and dividing the product so
obtained by such Closing Market Price.
5. If (i) there occurs any reclassification or
change of Gillette Stock, including, without
limitation, as a result of the issuance of any
tracking stock by Gillette, (ii) Gillette or
any surviving entity or subsequent surviving
entity of Gillette (a "Gillette Successor") has
been subject to a merger, combination or
consolidation and is not the surviving entity,
(iii) any statutory exchange of securities of
Gillette or any Gillette Successor with another
corporation occurs (other than pursuant to
clause (ii) above), (iv) Gillette is
liquidated, (v) Gillette issues to all of its
shareholders equity securities of an issuer
other than Gillette (other than in a
transaction described in clauses (ii), (iii) or
(iv) above) (a "Spin-off Event") or (vi) a
tender or exchange offer or going-private
transaction is consummated for all the
outstanding shares of Gillette Stock (any such
event in clauses (i) through (vi) a
"Reorganization Event"), the method of
determining the amount payable upon exchange at
maturity for each Note if we elect to deliver
shares of Gillette Stock will be adjusted to
provide that each holder of Notes will receive
at maturity, in respect of each $3,494
principal amount of each Note, securities, cash
or any other assets distributed to holders of
Gillette Stock in any such Reorganization
Event, including, in the case of the issuance
of tracking stock, the reclassified share of
Gillette Stock and, in the case of a Spin-off
Event, the share of Gillette Stock with respect
to which the spun-off security was issued
(collectively, the "Exchange Property") in an
amount with a value equal to the product of the
Exchange Ratio times the final Exchange Factor
times the Transaction Value. If Exchange
Property consists of more than one type of
property, holders of Notes will receive at
maturity a pro rata share of each such type of
Exchange Property. If Exchange Property
includes a cash component, holders will not
receive any interest accrued on such cash
component. "Transaction Value" at any date
means (i) for any cash received in any such
Reorganization Event, the amount of cash
received per share of Gillette Stock, (ii) for
any property other than cash or securities
received in any such Reorganization Event, the
market value, as determined by the Calculation
Agent, as of the date of receipt, of such
Exchange Property received for each share of
Gillette Stock and (iii) for any security
received in any such Reorganization Event, an
amount equal to the Closing Market Price, as of
the date on which the Transaction Value is
determined, per share of such security
multiplied by the quantity of such security
received for each share of Gillette Stock. In
the event Exchange Property consists of
securities, those securities will, in turn, be
subject to the antidilution adjustments set
forth in paragraphs 1 through 5.
For purposes of paragraph 5 above, in the case
of a consummated tender or exchange offer or
going-private transaction involving Exchange
Property of a particular type, Exchange
Property shall be deemed to include the amount
of cash or other property paid by the offeror
in the tender or exchange offer with respect to
such Exchange Property (in an amount determined
on the basis of the rate of exchange in such
tender or exchange offer or going-private
transaction). In the event of a tender or
exchange offer or a going- private transaction
with respect to Exchange Property in which an
offeree may elect to receive cash or other
property, Exchange Property shall be deemed to
include the kind and amount of cash and other
property received by offerees who elect to
receive cash.
No adjustments to the Exchange Factor will be
required unless such adjustment would require a
change of at least 0.1% in the Exchange Factor
then in effect. The Exchange Factor resulting
from any of the adjustments specified above
will be rounded to the nearest one
hundred-thousandth with five one-millionths
being rounded upward.
No adjustments to the Exchange Factor or method
of calculating the Exchange Factor will be
required other than those specified above.
However, we may, at our sole discretion, cause
the Calculation Agent to make additional
changes to the Exchange Factor upon the
occurrence of corporate or other similar events
that affect or could potentially affect market
prices of, or shareholders' rights in, the
Gillette Stock (or other Exchange Property) but
only to reflect such changes, and not with the
aim of changing relative investment risk. The
adjustments specified above do not cover all
events that could affect the Market Price or
the Closing Market Price of the Gillette Stock,
including, without limitation, a partial tender
or partial exchange offer for the Gillette
Stock.
The Calculation Agent shall be solely
responsible for the determination and
calculation of any adjustments to the Exchange
Factor or method of calculating the Exchange
Factor and of any related determinations and
calculations with respect to any distributions
of stock, other securities or other property or
assets (including cash) in connection with any
corporate event described in paragraph 5 above,
and its determinations and calculations with
respect thereto shall be conclusive.
The Calculation Agent will provide information
as to any adjustments to the Exchange Factor or
method of calculating the Exchange Factor upon
written request by any holder of the Notes.
Market Disruption Event....... "Market Disruption Event" means, with respect
to Gillette Stock:
(i) a suspension, absence or material
limitation of trading of Gillette Stock on
the primary market for Gillette Stock for
more than two hours of trading or during the
one-half hour period preceding the close of
trading in such market; or a breakdown or
failure in the price and trade reporting
systems of the primary market for Gillette
Stock as a result of which the reported
trading prices for Gillette Stock during the
last one-half hour preceding the closing of
trading in such market are materially
inaccurate; or the suspension, absence or
material limitation on the primary market
for trading in options contracts related to
Gillette Stock, if available, during the
one-half hour period preceding the close of
trading in the applicable market, in each
case as determined by the Calculation Agent
in its sole discretion; and
(ii) a determination by the Calculation
Agent in its sole discretion that the event
described in clause (i) above materially
interfered with our ability or any of our
affiliates to unwind or adjust all or a
material portion of the hedge with respect
to the Notes.
For purposes of determining whether a Market
Disruption Event has occurred: (1) a limitation
on the hours or number of days of trading will
not constitute a Market Disruption Event if it
results from an announced change in the regular
business hours of the relevant exchange, (2) a
decision to permanently discontinue trading in
the relevant option contract will not
constitute a Market Disruption Event, (3)
limitations pursuant to NYSE Rule 80A (or any
applicable rule or regulation enacted or
promulgated by the NYSE, any other
self-regulatory organization or the Securities
and Exchange Commission of similar scope as
determined by the Calculation Agent) on trading
during significant market fluctuations shall
constitute a suspension, absence or material
limitation of trading, (4) a suspension of
trading in an options contract on Gillette
Stock by the primary securities market trading
in such options, if available, by reason of (x)
a price change exceeding limits set by such
securities exchange or market, (y) an imbalance
of orders relating to such contracts or (z) a
disparity in bid and ask quotes relating to
such contracts will constitute a suspension,
absence or material limitation of trading in
options contracts related to Gillette Stock and
(5) a suspension, absence or material
limitation of trading on the primary securities
market on which options contracts related to
Gillette Stock are traded will not include any
time when such securities market is itself
closed for trading under ordinary
circumstances.
Alternate Exchange Calculation
in case of an Event of
Default....................... In case an Event of Default with respect to
the Notes shall have occurred and be
continuing, the amount declared due and payable
upon any acceleration of any Note shall be
determined by MSIL, as Calculation Agent, and
shall be equal to the Issue Price of a Note
plus any accrued interest at the Interest Rate
to but not including the date of acceleration.
Gillette Stock; Public
Information................... The Gillette Company develops, manufactures and
markets blades and razors, toiletries and
cosmetics, stationery products, electric
shavers, small household appliances, hair care
appliances, oral care products and alkaline
batteries for consumer products. Gillette Stock
is registered under the Exchange Act. Companies
with securities registered under the Exchange
Act are required to file periodically certain
financial and other information specified by
the Securities and Exchange Commission (the
"Commission"). Information provided to or filed
with the Commission can be inspected and copied
at the public reference facilities maintained
by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549 or at its
Regional Offices located at Suite 1400,
Citicorp Center, 500 West Madison Street,
Chicago, Illinois 60661 and at Seven World
Trade Center, 13th Floor, New York, New York
10048, and copies of such material can be
obtained from the Public Reference Section of
the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. In
addition, information provided to or filed with
the Commission electronically can be accessed
through a Website maintained by the Commission.
The address of the Commission's Website is
http://www.sec.gov. Information provided to or
filed with the Commission by Gillette pursuant
to the Exchange Act can be located by reference
to Commission file number 1-922. In addition,
information regarding Gillette may be obtained
from other sources including, but not limited
to, press releases, newspaper articles and
other publicly disseminated documents. We make
no representation or warranty as to the
accuracy or completeness of such reports.
This pricing supplement relates only to the
Notes offered hereby and does not relate to
Gillette Stock or other securities of Gillette.
We have derived all disclosures contained in
this pricing supplement regarding Gillette from
the publicly available documents described in
the preceding paragraph. Neither we nor the
Agent has participated in the preparation of
such documents or made any due diligence
inquiry with respect to Gillette in connection
with the offering of the Notes. Neither we nor
the Agent makes any representation that such
publicly available documents or any other
publicly available information regarding
Gillette are accurate or complete. Furthermore,
we cannot give any assurance that all events
occurring prior to the date hereof (including
events that would affect the accuracy or
completeness of the publicly available
documents described in the preceding paragraph)
that would affect the trading price of Gillette
Stock (and therefore the Initial Reference
Price and the Exchange Ratio) have been
publicly disclosed. Subsequent disclosure of
any such events or the disclosure of or failure
to disclose material future events concerning
Gillette could affect the value received on any
Exchange Date or Call Date with respect to the
Notes and therefore the trading prices of the
Notes.
Neither we nor any of our affiliates makes any
representation to you as to the performance of
Gillette Stock.
We and/or our subsidiaries may presently or
from time to time engage in business with
Gillette, including extending loans to, or
making equity investments in, Gillette or
providing advisory services to Gillette,
including merger and acquisition advisory
services. In the course of such business, we
and/or our subsidiaries may acquire non-public
information with respect to Gillette and, in
addition, one or more of our affiliates may
publish research reports with respect to
Gillette. The statement in the preceding
sentence is not intended to affect the rights
of holders of the Notes under the securities
laws. As a prospective purchaser of a Note, you
should undertake such independent investigation
of Gillette as in your judgment is appropriate
to make an informed decision with respect to an
investment in Gillette Stock.
Historical Information........ The following table sets forth the published
high and low Closing Market Prices during 1996,
1997, 1998 and 1999 through October 7, 1999.
The Closing Market Price on October 7, 1999 was
$381/2. The price of Gillette Stock at the time
we priced the Notes was $38.83. We obtained the
Closing Market Prices listed below from
Bloomberg Financial Markets and we believe such
information to be accurate. You should not take
the historical prices of Gillette Stock as an
indication of future performance. We cannot
give any assurance that the price of Gillette
Stock will not decrease, such that we will then
not have the option to deliver shares of
Gillette Stock at maturity.
Dividends
Gillette High Low per Share
-------- ---- --- ---------
(CUSIP # 375766102)
1996
First Quarter............... 28 1/2 25 11/16 $0.0750
Second Quarter.............. 31 3/16 24 7/16 0.0500
Third Quarter............... 36 1/16 28 15/16 0.0500
Fourth Quarter.............. 38 7/8 34 7/16 0.0500
1997
First Quarter............... 43 36 5/16 0.0500
Second Quarter.............. 49 5/16 37 13/16 0.1075
Third Quarter............... 52 1/4 39 1/2 0.1075
Fourth Quarter.............. 51 43 0.1075
1998
First Quarter............... 60 23/32 49 1/4 0.1075
Second Quarter.............. 62 9/32 55 1/16 0.1275
Third Quarter............... 62 9/16 36 1/4 0.1275
Fourth Quarter.............. 48 15/16 37 5/16 0.1275
1999
First Quarter............... 64 1/4 45 7/8 0.1275
Second Quarter.............. 59 1/2 40 7/8 0.1475
Third Quarter............... 47 1/4 33 7/16 0.1475
Fourth Quarter
(through October 7, 1999)... 38 9/16 36 1/8
Historical prices have been adjusted for a 2
for 1 stock split of Gillette Stock which
became effective in the second quarter of 1998.
We make no representation as to the amount of
dividends, if any, that Gillette will pay in
the future. In any event, as a holder of a
Note, you will not be entitled to receive
dividends, if any, that may be payable on
Gillette Stock.
Use of Proceeds and Hedging... The net proceeds we receive from the sale of
the Notes will be used for general corporate
purposes and, in part, by us or one or more of
our subsidiaries in connection with hedging our
obligations under the Notes. See also "Use of
Proceeds" in the accompanying Prospectus.
On or prior to the date of this Pricing
Supplement, we, through our subsidiaries and
others, hedged our anticipated exposure in
connection with the Notes by taking positions
in options contracts on Gillette Stock listed
on major securities markets and positions in
other instruments that we deemed appropriate in
connection with such hedging. Such hedging was
carried out in a manner designed to minimize
any impact on the price of Gillette Stock. Our
purchase activity could potentially have
increased the price of Gillette Stock, and
therefore effectively have increased the levels
below which a decline in Gillette Stock would
allow us to deliver to you at maturity a number
of shares of Gillette Stock at the Exchange
Ratio with a value less than the principal
amount of your Notes. Through our subsidiaries,
we are likely to modify our hedge position
throughout the life of the Notes by purchasing
and selling Gillette Stock, options contracts
on Gillette Stock listed on major securities
markets or positions in other securities or
instruments that we may wish to use in
connection with such hedging. Although we have
no reason to believe that our hedging activity
or other trading activities that we, or any of
our affiliates, engaged in or may engage in has
had or will have a material impact on the price
of Gillette Stock, we cannot give any assurance
that we have not or will not affect such price
as a result of our hedging or trading
activities.
Supplemental Information
Concerning Plan of
Distribution.................. The Agent will pay the initial purchaser of the
Notes a placement fee at settlement equal to
1.85% of the Issue Price.
In order to facilitate the offering of the
Notes, the Agent may engage in transactions
that stabilize, maintain or otherwise affect
the price of the Notes or the Gillette Stock.
Specifically, the Agent may overallot in
connection with the offering, creating a short
position in the Notes for its own account. In
addition, to cover allotments or to stabilize
the price of the Notes, the Agent may bid for,
and purchase, the Notes or the Gillette Stock
in the open market. See "Use of Proceeds and
Hedging" above.
We have agreed to indemnify the Agent against
certain liabilities under the Securities Act of
1933, as amended.
ERISA Matters for Pension
Plans And Insurance Companies. We and certain of our subsidiaries and
affiliates, including Morgan Stanley & Co.
Incorporated ("MS & Co.") and Dean Witter
Reynolds Inc. ("DWR"), may each be considered a
"party in interest" within the meaning of the
Employee Retirement Income Security Act of
1974, as amended ("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 Notes are acquired by or with the assets of
a pension or other employee benefit plan with
respect to which MS & Co., DWR or any of their
affiliates is a service provider, unless the
Notes are acquired pursuant to an exemption
from the prohibited transaction rules.
The acquisition of the Notes may be eligible
for one of the exemptions noted below if such
acquisition:
(a) (i) is made solely with the assets of a
bank collective investment fund and (ii)
satisfies the requirements and conditions of
Prohibited Transaction Class Exemption ("PTCE")
91-38 issued by the Department of Labor
("DOL");
(b) (i) is made solely with assets of an
insurance company pooled separate account and
(ii) satisfies the requirements and conditions
of PTCE 90-1 issued by the DOL;
(c) (i) is made solely with assets managed by a
qualified professional asset manager and (ii)
satisfies the requirements and conditions of
PTCE 84-14 issued by the DOL;
(d) is made solely with assets of a
governmental plan (as defined in Section 3(32)
of ERISA) which is not subject to the
provisions of Section 401 of the Code;
(e) (i) is made solely with assets of an
insurance company general account and (ii)
satisfies the requirements and conditions of
PTCE 95-60 issued by the DOL; or
(f) (i) is made solely with assets managed by
an in-house asset manager and (ii) satisfies
the requirements and conditions of PTCE 96-23
issued by the DOL.
Under ERISA, assets of a pension or other
employee benefit plan may include assets held
in the general account of an insurance company
which has issued an insurance policy to such
plan or assets of an entity in which the plan
has invested. In addition to considering the
consequences of holding the Notes, employee
benefit plans subject to ERISA (or insurance
companies deemed to be investing ERISA plan
assets) purchasing the Notes should consider
the possible implications of owning the
Gillette Stock. Thus, any insurance company,
pension or employee benefit plan or entity
holding assets of such a plan proposing to
invest in the Notes should consult with its
legal counsel prior to such investment.
United States Federal
Taxation...................... See "United States Federal Taxation" in the
accompanying Prospectus Supplement for the
principal United States federal income and
estate tax consequences of ownership and
disposition of the Notes.
