<PAGE> 1
PURSUANT TO RULE 424(B)(2)
REGISTRATION NOS. 333-30175 and 333-17831
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JULY 17, 1997)
$200,000,000
SMITH BARNEY HOLDINGS INC.
6 3/8% NOTES DUE OCTOBER 1, 2004
------------------
Smith Barney Holdings Inc. (the "Company") is offering $200,000,000
principal amount of its 6 3/8% Notes due October 1, 2004 (the "Notes"). Interest
on the Notes is payable on April 1 and October 1, commencing April 1, 1998. The
Notes may not be redeemed prior to maturity. See "Description of Notes."
The Notes will be issued in fully registered form only in denominations of
$1,000 or integral multiples thereof. The Notes will be initially represented by
one or more global notes registered in the name of The Depository Trust Company
("DTC") or its nominee. Beneficial interests in the Notes will be shown on, and
transfers thereof will be effected only through, records maintained by DTC and
its participants. Owners of beneficial interests in Notes will be entitled to
physical delivery of Notes in certificated form equal in principal amount to
their respective beneficial interests only under the limited circumstances
described herein. See "Description of Notes -- Book-Entry Notes."
Settlement for the Notes will be made in immediately available funds. The
Notes will trade in the Same-Day Funds Settlement System of DTC, and, to the
extent that secondary market trading activity in the Notes is effected through
the facilities of DTC, such trades will be settled in immediately available
funds. All payments of principal and interest will be made by the Company in
immediately available funds.
------------------
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 PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
===================================================================================================
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note 99.361% .550% 98.811%
- ---------------------------------------------------------------------------------------------------
Total $198,722,000 $1,100,000 $197,622,000
===================================================================================================
</TABLE>
(1) Plus accrued interest, if any, from October 1, 1997 to the date of
delivery.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(3) Before deducting expense payable by the Company estimated to be $75,000.
---------------------
The Notes are offered by the Underwriters named herein, subject to prior
sale, when, as and if accepted by the Underwriters and subject to certain
conditions. It is expected that delivery of the Notes in book-entry form will
be made through the facilities of DTC, on or about October 8, 1997.
---------------------
SMITH BARNEY INC.
CHASE SECURITIES INC.
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
MORGAN STANLEY DEAN WITTER
NATIONSBANC MONTGOMERY SECURITIES INC.
SALOMON BROTHERS INC
October 3, 1997
<PAGE> 2
Certain persons participating in this offering may engage in transactions
that stabilize, maintain, or otherwise affect the price of the Notes, including
over-allotment, stabilizing transactions and covering transactions. For a
description of these activities, see "Underwriting."
------------------------
RECENT DEVELOPMENTS
On September 24, 1997, Travelers Group Inc. ("Travelers Group") and Salomon
Inc ("Salomon") announced that they have entered into a definitive agreement
pursuant to which a wholly owned subsidiary of Travelers Group will merge with
and into Salomon and Salomon will become a wholly owned subsidiary of Travelers
Group. After the merger, it is anticipated that Salomon and the Company will
merge to form Salomon Smith Barney Holdings Inc.
The transaction is expected to be completed by year-end 1997. It is subject
to various regulatory approvals, including the Hart-Scott-Rodino Antitrust
Improvements Act and by certain regulatory entities, and approval by Salomon
stockholders. The merger will be a tax-free exchange and will be accounted for
on a "pooling of interests" basis.
The consolidated financial statements of Salomon and its subsidiaries as of
December 31, 1996 and 1995 and for each of the three years in the period ended
December 31, 1996, the unaudited consolidated financial statements of Salomon
and its subsidiaries as of June 30, 1997 and for the six-month periods ended
June 30, 1997 and 1996 and certain PRO FORMA financial information with respect
to the proposed transaction have been filed by the Company with a Current Report
on Form 8-K dated September 24, 1997, which Form 8-K is incorporated herein by
reference.
The PRO FORMA financial data is not necessarily indicative of the results
of operations that would have occurred had the merger been consummated or of
future operations of the combined companies.
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company at June 30, 1997, and as adjusted to give effect to the issuance and
sale of the Notes, the issuance and sale of additional long-term debt of the
Company after June 30, 1997 through the date hereof, and the application of the
proceeds from each of these transactions to the repayment of short-term
borrowings, as if such transactions had occurred on June 30, 1997.
<TABLE>
<CAPTION>
AT JUNE 30, 1997
---------------------------
(UNAUDITED)
OUTSTANDING AS ADJUSTED
----------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Short-term borrowings................................................ $ 4,268 $ 3,731
Notes payable........................................................ 10 10
Long-term debt....................................................... 2,725 3,262
Subordinated indebtedness............................................ 224 224
------ ------
Total debt................................................. $ 7,227 $ 7,227
====== ======
Stockholder's equity
Common stock ($.10 par value; authorized -- 1,000 shares; issued
and outstanding -- 100 shares).................................. -- --
Additional paid-in capital........................................... 1,803 1,803
Retained earnings.................................................... 1,183 1,183
Cumulative translation adjustment.................................... 5 5
------ ------
Total stockholder's equity................................. 2,991 2,991
------ ------
Total capitalization................................................. $10,218 $10,218
====== ======
</TABLE>
S-2
<PAGE> 3
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, -----------------------------------------
1997 1996 1995 1994 1993 1992
--------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges... 1.82 1.93 1.71 1.81 2.68 2.06
</TABLE>
The ratio of earnings to fixed charges has been computed by dividing
earnings before income taxes and fixed charges by the fixed charges. For
purposes of this ratio, fixed charges consist of interest expense and that
portion of rentals deemed representative of the appropriate interest factor.
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the Notes
will be used for general corporate purposes, which may include capital
contributions to subsidiaries of the Company and/or the reduction or refinancing
of borrowings of the Company or its subsidiaries. In order to fund its
investment brokerage business, the Company expects to incur additional
indebtedness in the future.
DESCRIPTION OF NOTES
THE FOLLOWING DESCRIPTION OF THE TERMS OF THE NOTES OFFERED HEREBY
(REFERRED TO IN THE PROSPECTUS AS THE "OFFERED SECURITIES") SUPPLEMENTS THE
DESCRIPTION OF THE GENERAL TERMS OF SECURITIES SET FORTH IN THE PROSPECTUS, TO
WHICH DESCRIPTION REFERENCE IS HEREBY MADE. THE FOLLOWING SUMMARY OF THE NOTES
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE THERETO AND TO THE INDENTURE REFERRED
TO THEREIN.
The Notes will be limited to $200,000,000 in aggregate principal amount, as
a result of which, as of October 3, 1997, $462,681,555 aggregate principal
amount of Debt Securities remains currently available to be offered by the
Company under the Registration Statement of which this Prospectus Supplement and
the accompanying Prospectus form a part. The Notes will be issued only in fully
registered form without coupons, in denominations of $1,000 and integral
multiples thereof. Initially, the Notes will be issued in the form of one or
more global notes (each, a "Book-Entry Note") registered in the name of DTC or
its nominee, as described below. The Notes will bear interest from October 1,
1997, at the annual rate set forth on the cover page of this Prospectus
Supplement. The Notes will mature on October 1, 2004. Interest on the Notes will
be payable semiannually on April 1, and October 1, commencing April 1, 1998, to
the persons in whose names the Notes are registered at the close of business on
the preceding March 15 or September 15, respectively. The Notes will not be
redeemable prior to maturity and will not be subject to any sinking fund.
Principal of and interest on the Notes will be payable at the office or
agency of the Company to be maintained in the Borough of Manhattan, The City of
New York, initially at the Corporate Trust Office of the Trustee, 111 Wall
Street, Fifth Floor, New York, New York; PROVIDED, HOWEVER, that at the option
of the Company, payment of interest may be made by check mailed to the address
of the person entitled thereto as such address shall appear in the register of
holders of Notes. Notwithstanding the foregoing, payments of principal of and
interest on Book-Entry Notes will be made as described below.
The Indenture permits the defeasance of Debt Securities upon the
satisfaction of the conditions described under "Description of Securities --
Defeasance" in the Prospectus. The Notes are subject to these defeasance
provisions.
BOOK-ENTRY NOTES
The Notes will initially be issued in the form of one or more Book-Entry
Notes, which will be deposited with, or on behalf of, DTC and registered in the
name of DTC or its nominee. Except as set forth below, Book-Entry Notes may not
be transferred except as a whole by DTC to a nominee of DTC or by a nominee of
DTC to DTC or another nominee of DTC or by DTC or any nominee to a successor of
DTC or a nominee of such successor.
S-3
<PAGE> 4
Principal and interest payments on the Notes represented by one or more
Book-Entry Notes will be made by the Company to DTC or its nominee, as the case
may be, as the registered owner of the related Book-Entry Note or Notes. The
Company expects that DTC or its nominee, upon receipt of any payment of
principal or interest in respect of Book-Entry Notes, will credit immediately
the accounts of the related participants with payment in amounts proportionate
to their respective holdings in principal amount of beneficial interests in such
Book-Entry Notes as shown on the records of DTC. Neither the Company nor the
Trustee or any Paying Agent will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests of Book-Entry Notes, or for maintaining, supervising or
reviewing any records relating to such beneficial interests. The Company also
expects that payments by participants to owners of beneficial interests in
Book-Entry Notes held through such participants will be governed by standing
customer instructions and customary practices, as is the case with securities
registered in "street name." Such instructions will be the responsibility of
such participants.
If DTC is at any time unwilling, unable or ineligible to continue as
depositary and a successor depositary is not appointed by the Company within 90
days, the Company will issue Notes in certificated form in exchange for
beneficial interests in the Book-Entry Notes. In addition, the Company may at
any time determine not to have its Notes represented by one or more Book-Entry
Notes, and, in such event, will issue Notes in certificated form in exchange for
beneficial interests in Book-Entry Notes. In any such instance, an owner of a
beneficial interest in a Book-Entry Note will be entitled to physical delivery
in certificated form of Notes equal in principal amount to such beneficial
interest and to have such Notes registered in its name. Notes so issued in
certificated form will be issued in denominations of $1,000 or any amount in
excess thereof that is an integral multiple of $1,000 and will be issued in
registered form only, without coupons.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriters in immediately
available funds. All payments of principal and interest will be made by the
Company in immediately available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing-house or next-day funds. In contrast, the Notes
are expected to trade in the Same-Day Funds Settlement System of DTC until
maturity, and, to the extent that secondary market trading activity in the Notes
is effected through the facilities of DTC, such trades will be settled 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 Notes.
UNDERWRITING
Subject to the terms and conditions set forth in the Terms Agreement dated
October 3, 1997, which incorporates by reference the Underwriting Agreement
Basic Provisions dated October 29, 1993 (together, the "Underwriting
Agreement"), the Company has agreed to sell to each of the Underwriters named
below, and each of the Underwriters has severally agreed to purchase, the
principal amount of Notes set forth opposite its name below:
<TABLE>
<CAPTION>
UNDERWRITER PRINCIPAL AMOUNT
----------- ----------------
<S> <C>
Smith Barney Inc. ................................................... $ 28,574,000
Chase Securities Inc. ............................................... 28,571,000
Goldman, Sachs & Co. ................................................ 28,571,000
Lehman Brothers Inc. ................................................ 28,571,000
Morgan Stanley & Co. Incorporated.................................... 28,571,000
NationsBanc Montgomery Securities Inc. .............................. 28,571,000
Salomon Brothers Inc ................................................ 28,571,000
------------
Total...................................................... $200,000,000
============
</TABLE>
S-4
<PAGE> 5
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the Notes are subject to the
approval of certain legal matters by their counsel and to certain other
conditions. The Underwriters are committed to take and pay for all of the Notes
if any are taken.
The Underwriters propose to offer part of the Notes directly to the public
at the public offering price set forth on the cover page hereof and part to
certain dealers at a price that represents a concession not in excess of .350%
of the principal amount under the public offering price. The Underwriters may
allow, and such dealers may reallow, a concession not in excess of .200% of the
principal amount to certain other dealers.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
The Underwriters may engage in over-allotment, stabilizing transactions and
covering transactions in accordance with Regulation M under the Securities
Exchange Act of 1934, as amended. Over-allotment involves sales in excess of the
offering size, which creates a short position for the Underwriters. Stabilizing
transactions involve bids to purchase the underlying security so long as the
stabilizing bids do not exceed a specified maximum. Covering transactions
involve purchases of the Notes in the open market after the distribution has
been completed in order to cover short positions. Such stabilizing transactions
and covering transactions may cause the price of the Notes to be higher than it
would otherwise be in the absence of such transactions.
The Company does not intend to apply for listing of the Notes on a national
securities exchange, but has been advised by the Underwriters that they
presently intend to make a market in the Notes, as permitted by applicable laws
and regulations. The Underwriters are not obligated, however, to make a market
in the Notes, and any such market making may be discontinued at any time at the
sole discretion of the Underwriters. Accordingly, no assurance can be given as
to the liquidity of, or trading markets for, the Notes.
Smith Barney Inc., a member of the National Association of Securities
Dealers, Inc. (the "NASD") and a wholly owned subsidiary of the Company, may
participate in distributions of the Notes. Accordingly, the offerings of Notes
will conform with the requirements of Rule 2720 of the Conduct Rules of the NASD
regarding a NASD member firm's underwriting of securities of an affiliate.
Certain of the Underwriters or their affiliates engage in transactions (which
may include commercial banking transactions) with and perform services for the
Company or one or more of its affiliates in the ordinary course of business and
may do so in the future.
EXPERTS
The consolidated financial statements and schedules of the Company as of
December 31, 1996 and 1995, and for each of the years in the three-year period
ended December 31, 1996, included in the Company's Annual Report on Form 10-K
for the year ended December 31, 1996, have been incorporated by reference
herein, in reliance upon the report (also incorporated by reference herein) of
Coopers & Lybrand L.L.P., independent auditors, and upon the authority of said
firm as experts in accounting and auditing.
The consolidated financial statements and schedules of Salomon and its
subsidiaries for the fiscal years ended December 31, 1996 and 1995, and for each
of the three years in the period ended December 31, 1996, included in the
Company's Current Report on Form 8-K dated September 24, 1997 have been audited
by Arthur Andersen LLP, independent public accountants, as set forth in their
report thereon included therein and incorporated herein by reference. Such
financial statements referred to above are incorporated by reference herein in
reliance upon such report given upon the authority of said firm as experts in
accounting and auditing.
LEGAL OPINIONS
The validity of the Notes offered hereby will be passed upon for the
Company by A. George Saks, Esq., as counsel for the Company, 388 Greenwich
Street, New York, New York 10013 and for the Underwriters by Skadden, Arps,
Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York 10022. Mr. Saks,
S-5
<PAGE> 6
Executive Vice President and General Counsel of the Company, beneficially owns,
or has rights to acquire under Travelers Group employee benefit plans, an
aggregate of less than 1% of the common stock of Travelers Group, the parent of
the Company. Skadden, Arps, Slate, Meagher & Flom LLP has from time to time
acted as counsel for Travelers Group and certain of its subsidiaries and may do
so in the future. Mr. Kenneth J. Bialkin, a partner in that firm, is a director
of Travelers Group, and he and other attorneys in such firm beneficially own an
aggregate of less than 1% of the common stock of Travelers Group.
S-6
<PAGE> 7
PROSPECTUS
SMITH BARNEY HOLDINGS INC.
DEBT SECURITIES
------------------
Smith Barney Holdings Inc. (the "Company") may offer from time to time its
debt securities (the "Securities") at an aggregate initial offering price not
expected to exceed $750,000,000 (or the equivalent in foreign denominated
currencies or composite currencies, based on the applicable exchange rate at the
time of offering), on terms to be determined by the Company at the time of sale.
When a particular series of Securities is offered (the "Offered Securities"), a
supplement to this Prospectus (the "Prospectus Supplement") will be delivered
with this Prospectus setting forth with respect to such series: the specific
designation, aggregate principal amount, maturity, purchase price,
denominations, currency, rate (which may be fixed or variable) and time of
payment of any interest, any sinking fund, any terms of redemption at the option
of the Company or the holder, any listing on a securities exchange and any other
variable terms.
------------------
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.
------------------
The Offered Securities sold by the Company will be sold directly, or
through agents designated from time to time, or through underwriters or dealers,
which may be a group of underwriters represented by one or more firms. If any
agents of the Company or any underwriters are involved in the sale by the
Company of Offered Securities, the names of such agents or underwriters and any
applicable fee, commission, purchase price or discount arrangements with them
will be set forth, or will be calculable from the information set forth, in the
Prospectus Supplement. The net proceeds to the Company from such sale will be
set forth in the Prospectus Supplement. The Company may also sell Offered
Securities directly to investors on its own behalf. This Prospectus, together
with an appropriate Prospectus Supplement, may also be used by Smith Barney Inc.
("Smith Barney"), a subsidiary of the Company, 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 sale. Smith Barney may
act as principal or agent in such transactions.
July 17, 1997
<PAGE> 8
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR ANY ACCOMPANYING PROSPECTUS
SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR SMITH BARNEY. THIS
PROSPECTUS AND ANY ACCOMPANYING PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER
OF ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH THE PROSPECTUS SUPPLEMENT
RELATES, OR AN OFFER TO ANY PERSON IN ANY JURISDICTION WHERE SUCH OFFER WOULD BE
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT
NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE AFFAIRS OF THE COMPANY
OR ITS SUBSIDIARIES SINCE THE DATE HEREOF.
------------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act"), and in accordance therewith files
reports and other information with the Securities and Exchange Commission (the
"Commission"). Such reports and other information 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; Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511; and Seven World Trade Center,
New York, New York 10048. Copies of such material can also be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission also maintains a
site on the World Wide Web, the address of which is http://www.sec.gov, that
contains reports, proxy and information statements and other information
regarding issuers, such as the Company, that file electronically with the
Commission. Certain of the Company's debt securities are listed on the New York
Stock Exchange, Inc. (the "NYSE") and such reports and other information can
also be inspected at the offices of the NYSE, 20 Broad Street, New York, New
York 10005.
------------------
The Company has filed with the Commission Registration Statements on Form
S-3 under the Securities Act of 1933, as amended (the "Act"), with respect to
the Securities. For further information with respect to the Company and the
Securities, reference is made to the Registration Statements and exhibits
thereto. Statements contained in this Prospectus as to the contents of any
contract or other document are not necessarily complete, and in each instance
reference is made to the copy of such contract or document filed as an exhibit
to the Company's Registration Statements, each such statement being qualified in
all respects by such reference.
------------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES
OFFERED HEREBY, INCLUDING BY ENTERING STABILIZING BIDS, EFFECTING SYNDICATE
COVERING TRANSACTIONS OR IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "PLAN OF DISTRIBUTION."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company incorporates by reference the following documents heretofore
filed with the Commission pursuant to the Exchange Act:
1. Annual Report of the Company on Form 10-K for the fiscal year ended
December 31, 1996.
2. Quarterly Report of the Company on Form 10-Q for the fiscal quarter
ended March 31, 1997.
3. Current Reports of the Company on Form 8-K dated January 21, 1997,
March 6, 1997, March 6, 1997, March 10, 1997, May 14, 1997, July 9,
1997 and July 15, 1997.
2
<PAGE> 9
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the later of (i) the termination of the offering of Offered Securities hereby
and (ii) the date on which Smith Barney ceases offering and selling Offered
Securities pursuant to this Prospectus shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents.
Any statement contained herein or 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,
in an accompanying Prospectus Supplement 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 statement so modified or
superseded shall not be deemed to constitute a part of this Prospectus except as
so modified or superseded.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the written or oral
request of any such person, a copy of any or all of the documents incorporated
by reference in the Registration Statements of which this Prospectus forms a
part other than exhibits to such documents unless such exhibits are specifically
incorporated by reference into such documents. Requests should be directed to
Smith Barney Holdings Inc., 388 Greenwich Street, New York, New York 10013;
Attention: Treasurer; telephone (212) 816-6000.
THE COMPANY
The Company provides investment banking, asset management, brokerage and
other financial services through its wholly owned subsidiaries. Its principal
operating subsidiary is Smith Barney, an investment banking, securities trading
and brokerage firm that traces its origins back to 1873. As of March 31, 1997,
the Company employs approximately 10,500 financial consultants operating out of
approximately 443 branch offices.
The Company is an investment banking and securities trading and brokerage
firm serving United States and foreign corporations, governments and
institutional and individual investors. Its business includes securities,
options and commodities brokerage for domestic and international institutional
and individual clients; underwriting and distribution of securities; arranging
for the private placement of securities; assisting in mergers and acquisitions
and providing financial advisory services; market making and trading in
corporate debt and equity, United States government and agency, mortgage-related
and municipal securities and foreign exchange, futures and forward contracts;
consumer financing activities; securities lending activities; investment
management and advisory services; securities research, and other related
activities.
The Company's investment banking services include the underwriting of debt
and equity issues for United States and foreign corporations and for state,
local and other governmental and government sponsored authorities. Frequently,
the Company acts as managing underwriter in corporate and public securities
offerings. The Company also acts as a private placement agent for various
clients and as such helps to place securities for clients with large
institutions and other qualified investors. The Company also provides financial
advice to investment banking clients on a wide variety of transactions including
mergers and acquisitions, exchanges of securities and corporate restructurings.
The Company provides discretionary and non-discretionary asset management
and consulting services to a wide array of mutual funds and institutional and
individual investors, with respect to domestic and foreign equity and debt
securities, municipal bonds, money market instruments, and related options and
futures contracts. The Company typically receives ongoing fees from its asset
management and consulting clients, generally stated as a percentage of the
client's assets with respect to which the Company's services are rendered. At
March 31, 1997, such client assets in the aggregate exceeded $115 billion.
3
<PAGE> 10
The Company is a wholly owned subsidiary of Travelers Group Inc.
("Travelers Group"), a financial services holding company engaged, through its
subsidiaries, principally in four business segments: (i) Investment Services
(through the Company); (ii) Consumer Finance Services; (iii) Property & Casualty
Insurance Services; and (iv) Life Insurance Services. The periodic reports of
Travelers Group provide additional business and financial information concerning
that company and its consolidated subsidiaries.
The principal offices of the Company are located at 388 Greenwich Street,
New York, New York 10013, telephone (212) 816-6000. The Company was incorporated
in Delaware in 1989.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
THREE
MONTHS
ENDED YEAR ENDED DECEMBER 31,
MARCH 31, ----------------------------------------
1997 1996 1995 1994 1993 1992
--------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges... 1.87 1.93 1.71 1.81 2.68 2.06
</TABLE>
- ---------------
The ratio of earnings to fixed charges has been computed by dividing
earnings before income taxes and fixed charges by the fixed charges. For the
purpose of this ratio, fixed charges consist of interest expense and that
portion of rentals deemed representative of the appropriate interest factor.
USE OF PROCEEDS
Unless otherwise indicated in an accompanying Prospectus Supplement with
respect to the proceeds from the sale of any particular Offered Securities, the
Company intends to apply the net proceeds from the sale of Offered Securities
for general corporate purposes, which may include capital contributions to
subsidiaries of the Company and/or the reduction or refinancing of borrowings of
the Company or its subsidiaries. In order to fund its investment brokerage
business, the Company expects to incur additional indebtedness in the future.
DESCRIPTION OF SECURITIES
The following description of the terms of the Securities sets forth certain
general terms and provisions of the Securities to which any Prospectus
Supplement may relate. The particular terms of the Securities offered by any
Prospectus Supplement (the "Offered Securities") and the extent, if any, to
which such general provisions may apply to the Securities so offered will be
described in the Prospectus Supplement relating to such Securities.
The Securities will be issued under an indenture, between the Company and a
trustee, that has been or will be filed as an exhibit to or incorporated by
reference in the Registration Statements of which this Prospectus forms a part.
Unless otherwise indicated in an accompanying Prospectus Supplement, the
Securities will be issued under an Indenture dated as of May 15, 1993, between
the Company and Citibank, N.A., as Trustee (the "Trustee"), as supplemented by
the First Supplemental Indenture dated as of September 1, 1993, between the
Company and the Trustee and the Second Supplemental Indenture dated as of
December 12, 1996, between the Company and the Trustee (the indenture as so
supplemented is hereinafter referred to as the "Indenture"). The following
summary of certain provisions of the Indenture does not purport to be complete
and is subject to, and qualified in its entirety by reference to, the Indenture,
a copy of which has been incorporated by reference or filed as an exhibit to the
Registration Statements of which this Prospectus forms a part. Capitalized terms
used and not otherwise defined in this section shall have the meanings assigned
to them in the Indenture. Parenthetical section references refer to sections of
the Indenture.
GENERAL
The Securities will be unsecured general obligations of the Company. As a
holding company, the Company's sources of funds are derived principally from
advances and dividends from subsidiaries, certain of
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which are subject to regulatory considerations, and from sales of assets and
investments. The Indenture provides that the Securities and other unsecured debt
securities of the Company, without limitation as to aggregate principal amount,
may be issued in one or more series, and a single series may be issued at
various times, with different maturity dates and different interest rates, in
each case as authorized from time to time by the Company. One or more series of
the Securities may be issued with the same or various maturities at par or at a
discount.
Reference is made to the Prospectus Supplement relating to a particular
series of Securities for the following terms, where applicable, of the Offered
Securities:
(1) the designation of the Offered Securities;
(2) any limit on the aggregate principal amount of the Offered
Securities and, if applicable, the method for determining the amount of
principal payable at maturity;
(3) the date or dates on which the principal of, and premium, if any,
on the Offered Securities shall be payable, or the method by which such
date or dates shall be determined;
(4) the rate or rates (which may be fixed or variable) at which the
Offered Securities shall bear interest, if any, the date or dates from
which any such interest shall accrue, or the method by which such rate or
rates shall be determined, the Interest Payment Dates on which such
interest shall be payable and the Regular Record Date for the interest
payable on any Interest Payment Date;
(5) the place or places where the principal of, premium, if any, and
interest on the Offered Securities shall be payable;
(6) if applicable, the period or periods within which or the date or
dates on which, the price or prices at which and the terms and conditions
upon which the Offered Securities may be redeemed, in whole or in part, at
the option of the Company;
(7) the obligation, if any, of the Company to redeem or purchase the
Offered Securities pursuant to any sinking fund or analogous provisions or
at the option of a Holder thereof and the period or periods within which,
the price or prices at which and the terms and conditions upon which the
Offered Securities shall be redeemed or purchased, in whole or in part,
pursuant to such obligation;
(8) any special provisions relating to the issuance of any Bearer
Securities of any series;
(9) if other than Dollars, the currency of denomination of the Offered
Securities, and the currency or currencies in which payment of the
principal of, premium, if any, and interest on the Offered Securities will
be made;
(10) any deletions from, modifications of or additions to the Events
of Default or covenants of the Company set forth in the Indenture
pertaining to the Offered Securities;
(11) the form of the Offered Securities and Coupons, if any, and if
the Offered Securities are to be issuable in definitive form (whether upon
original issue or upon exchange of a temporary Security of such series)
only upon receipt of certain certificates or other documents or
satisfaction of other conditions, the form and/or terms of such
certificates, documents or conditions;
(12) whether the Offered Securities shall be issued in whole or in
part in global form, including Book-Entry Securities, and the Depositary
for such Global Securities; and
(13) any other terms of the Offered Securities not inconsistent with
the provisions of the Indenture (SECTION 301).
Under the Indenture, the Company may authorize the issuance and provide the
terms of a series of Securities pursuant to a supplemental indenture or pursuant
to a resolution of its Board of Directors, any duly authorized committee of the
Board or any committee of officers or other representatives of the Company duly
authorized by the Board of Directors for such purpose. The provisions of the
Indenture provide the Company with the ability, in addition to the ability to
issue Securities with terms different from those of Securities
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previously issued, to "reopen" a previous issue of a series of Securities and to
issue additional Securities of such series.
The Securities will be issuable as Registered Securities, as Bearer
Securities or both. Securities of a series may be issuable in the form of one or
more Global Securities, as described below under "Global Securities." Unless
otherwise provided in the Prospectus Supplement accompanying this Prospectus,
Registered Securities denominated in United States dollars will be issued only
in denominations of $1,000 or any integral multiple thereof, and Bearer
Securities denominated in United States dollars will be issued only in
denominations of $5,000 or any integral multiple thereof (SECTION 302). The
Prospectus Supplement relating to Offered Securities denominated in a foreign or
composite currency will specify the denomination thereof (SECTION 302).
DENOMINATIONS, REGISTRATION AND TRANSFER
At the option of the Holder upon request confirmed in writing, and subject
to the terms of the Indenture, Bearer Securities (with all unmatured Coupons,
except as provided below) of any series will be exchangeable into an equal
aggregate principal amount of Registered Securities or Bearer Securities of the
same series (with the same interest rate and maturity date), and Registered
Securities of any series will be exchangeable into an equal aggregate principal
amount of Registered Securities of the same series (with the same interest rate
and maturity date), of different authorized denominations. If a Holder
surrenders Bearer Securities in exchange for Registered Securities between a
Regular Record Date or, in certain circumstances, a Special Record Date, and the
relevant Interest Payment Date, such Holder will not be required to surrender
the Coupon relating to such interest payment date. Registered Securities may not
be exchanged for Bearer Securities (SECTION 305).
Securities may be presented for exchange, and Registered Securities (other
than a Global Security) may be presented for registration of transfer, at the
office of any transfer agent or at the office of the Security Registrar. No
service charge will be made for any registration of transfer or exchange of
Securities, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith. All Registered
Securities presented or surrendered for registration of transfer or for exchange
shall (if so required by the Company or the Trustee) be duly endorsed by, or
accompanied by a written instrument of transfer in a form satisfactory to the
Company and the Security Registrar duly executed by, the Holder or his attorney
duly authorized in writing (SECTION 305). Bearer Securities will be transferable
by delivery.
Securities may be issued under the Indenture as Original Issue Discount
Securities to be offered and sold at a substantial discount from the principal
amount thereof. If the Offered Securities are Original Issue Discount
Securities, the special Federal income tax, accounting and other considerations
applicable thereto will be described in the Prospectus Supplement relating
thereto. As defined in the Indenture, "Original Issue Discount Security" means
any security which provides for an amount less than the principal amount thereof
to be due and payable upon a declaration of acceleration of the Maturity thereof
upon the occurrence of an Event of Default and the continuation thereof
(SECTIONS 101 AND 502).
PAYMENT AND PAYING AGENTS
Payment of principal of and premium, if any, on Registered Securities
(other than a Global Security) will be made in the designated currency against
surrender of such Securities at the principal corporate trust office of the
Trustee in The City of New York. Unless otherwise indicated in the Prospectus
Supplement, payment of any installment of interest on Registered Securities will
be made to the person in whose name such Security is registered at the close of
business on the Regular Record Date for such interest. Unless otherwise
indicated in the Prospectus Supplement, payments of such interest will be made
at the principal corporate trust office of the Trustee in The City of New York,
or by a check mailed to the Holder at such Holder's registered address (SECTIONS
307 AND 901).
Payment of principal of and premium, if any, and interest on Bearer
Securities will be payable 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.
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The paying agents outside the United States initially appointed by the Company
for a series of Securities will be named in the Prospectus Supplement. The
Company may terminate the appointment of any of the paying agents from time to
time, except that the Company will maintain at least one paying agent in The
City of New York for payments with respect to Registered Securities and such
other paying agents as shall be required (SECTION 902).
All moneys paid by the Company to a paying agent for the payment of
principal of or premium, if any, or interest on any Security that remain
unclaimed at the end of two years after such principal, premium or interest
shall have become due and payable will be repaid to the Company together with
interest accrued thereon, if any, and the Holder of such Security or any Coupon
appertaining thereto will thereafter look only to the Company for payment
thereof (SECTION 903).
GLOBAL SECURITIES
The Securities of a series may be issued in whole or in part in the form of
one or more Global Securities that will be deposited with, or on behalf of, a
depository identified in the Prospectus Supplement relating to such series
(SECTION 301 AND 303).
The specific terms of the depository arrangement with respect to a series
of Offered Securities will be described in the Prospectus Supplement relating to
such series. Unless otherwise indicated in any accompanying Prospectus
Supplement, the following provisions will apply to any depository arrangements.
Global Securities will be deposited with, or on behalf of, The Depository
Trust Company ("DTC") and registered in the name of DTC or its nominee. Except
as set forth below or in an accompanying Prospectus Supplement, Global
Securities may not be transferred except as a whole by DTC to a nominee of DTC
or by a nominee of DTC to DTC or another nominee of DTC or by DTC or any nominee
to a successor of DTC or a nominee of such successor.
DTC has advised the Company that it 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 Exchange Act. DTC holds securities that its participants
("Participants") deposit with DTC. 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. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations ("Direct Participants"). DTC is owned by a number of its Direct
Participants and by the NYSE, the American Stock Exchange, Inc. and the National
Association of Securities Dealers, Inc. (the "NASD"). Access to the DTC 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.
The rules applicable to DTC and its Participants are on file with the
Commission.
Upon the issuance by the Company of a Global Security, DTC will credit, on
its book-entry registration and transfer system, the respective principal
amounts of the Securities represented by such Global Security to the accounts of
participants. Ownership of beneficial interests in a Global Security will be
limited to participants or persons that may hold interests through participants.
Ownership of beneficial interests in Global Securities will be shown on, and the
transfer of such interests will be effected only through, records maintained by
DTC or its nominee (with respect to beneficial interests of participants) or by
participants or persons that may hold interests through participants (with
respect to beneficial interests of beneficial ownership). The laws of some
states may require that certain purchasers of securities take physical delivery
of such securities in certificated form. Such limits and such laws may impair
the ability to transfer beneficial interests in Global Securities.
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So long as DTC or its nominee is the registered owner of the Global
Securities, DTC or its nominee, as the case may be, will be considered the sole
owner or holder of the Securities represented by such Global Securities for all
purposes under the Indenture. Except as provided in an accompanying Prospectus
Supplement, owners of beneficial interests in Global Securities will not be
entitled to have Securities represented by such Global Securities registered in
their names, will not receive or be entitled to receive physical delivery of
such Securities in certificated form and will not be considered the owners or
holders thereof under the Indenture.
COVENANTS
Limitations on Liens. The Company has agreed that it will not, and will
not permit any Subsidiary to, incur, issue, assume or guarantee any Indebtedness
if such Indebtedness is secured by a pledge of, lien on, or security interest in
any shares of Voting Stock of any Significant Subsidiary, whether such Voting
Stock is now owned or is hereafter acquired, without providing that each series
of Securities issued under the Indenture (together with, if the Company shall so
determine, any other indebtedness or obligations of the Company or any
Subsidiary ranking equally with such Securities and then existing or thereafter
created) shall be secured equally and ratably with such Indebtedness. The
foregoing limitation shall not apply to indebtedness secured by a pledge of,
lien on or security interest in any shares of Voting Stock of any corporation at
the time it becomes a Significant Subsidiary (SECTION 905).
Limitations on Mergers and Sales of Assets. The Company may not
consolidate or merge with or into any other corporation or sell, lease, transfer
or otherwise dispose of all or substantially all its assets to another Person
unless (a) the successor Person (if other than the Company) is organized and
existing under the laws of the United States of America or a State thereof or
the District of Columbia and assumes payment of the principal of and interest on
the Securities and the performance and the observance of the Indenture and (b)
such successor Person (or the Company) shall not, immediately after such merger
or consolidation, be in default in the performance of any covenant or condition
of the Indenture (SECTION 701).
Limitation on Indebtedness of a Subsidiary. As of September 1, 1993, the
First Supplemental Indenture, among other things, added a covenant of the
Company to the effect that for so long as any Securities are Outstanding, the
Company will not permit Smith Barney (Delaware) Inc. (formerly Smith Barney
Inc.), one of its Subsidiaries, to incur or suffer to exist any Indebtedness
(SECTION 908).
Certain Definitions. The term "Indebtedness" means any and all obligations
of a corporation for money borrowed which in accordance with generally accepted
accounting principles would be reflected on the balance sheet of such
corporation as a liability on the date as of which Indebtedness is to be
determined. The term "Significant Subsidiary" means a Subsidiary, including its
Subsidiaries, which meets any of the following conditions: (a) the Company's and
its other Subsidiaries' investments in and advances to the Subsidiary exceed 10
percent of the total assets of the Company and its Subsidiaries consolidated as
of the end of the most recently completed fiscal year; (b) the Company's and its
other Subsidiaries' proportionate share of the total assets (after intercompany
eliminations) of the Subsidiary exceeds 10 percent of the total assets of the
Company and its Subsidiaries consolidated as of the end of the most recently
completed fiscal year; or (c) the Company's and its other Subsidiaries' equity
in the income from continuing operations before income taxes, extraordinary
items and cumulative effect of a change in accounting principles of the
Subsidiary exceeds 10 percent of such income of the Company and its Subsidiaries
consolidated for the most recently completed fiscal year. The term "Subsidiary"
means a corporation more than 50% of the outstanding Voting Stock of which is
owned, directly or indirectly, by the Company or by one or more other
Subsidiaries, or by the Company and one or more other Subsidiaries. The term
"Voting Stock" means capital stock the holders of which have general voting
power under ordinary circumstances to elect at least a majority of the board of
directors of a corporation, provided that, for the purposes of such definition,
capital stock which carries only the right to vote conditioned on the happening
of an event shall not be considered voting stock whether or not such event shall
have happened (SECTIONS 101 AND 905).
The use of the term "all or substantially all" in Indenture provisions such
as the covenant regarding the limitations on mergers and sales of assets has not
been interpreted under New York law (which is the
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governing law of the Indenture) to represent a specific quantitative test.
Accordingly, there may be a degree of uncertainty in ascertaining whether a
particular transaction would involve a disposition of "all or substantially all"
of the assets of a person, which uncertainty should be considered by prospective
purchasers of Offered Securities.
MODIFICATION AND WAIVER OF THE INDENTURE
Modifications and amendments to the Indenture may be made by the Company
and the Trustee with the consent of the Holders of a majority in principal
amount of the Outstanding Securities of each series affected thereby; provided,
however, that no such modification or amendment may, without the consent of the
Holder of each Outstanding Security affected thereby, (a) change the stated
maturity date of the principal of, or any installment of principal of or
interest on, any Security issued under the Indenture, (b) reduce the principal
amount of, or the premium, if any, or interest, if any, on, any Security, (c)
reduce the amount of principal of any Original Issue Discount Security payable
upon acceleration of the Maturity thereof, (d) change the coin or currency in
which any Securities or premium, if any, or interest, if any, thereon is
payable, or (e) reduce the percentage in principal amount of Outstanding
Securities of any series, the consent of the Holders of which is required for
modification or amendment of the Indenture or for waiver of compliance with
certain provisions of the Indenture or for waiver of certain defaults (SECTION
802).
Modifications and amendments of the Indenture may be made by the Company
and the Trustee without the consent of any Holder to evidence a successor to the
Company, to add to the Company's covenants or Events of Default, to permit or
facilitate Securities to be issued by book-entry or in bearer form or relating
to the place of payment thereof, to provide for a successor trustee, to
establish forms or terms of Securities, to change or eliminate any provision not
adversely affecting any interests of Holders of Outstanding Securities in any
material respect or to cure any ambiguity or inconsistency (SECTION 801).
The Holders of a majority in principal amount of the Outstanding Securities
of any series may on behalf of the Holders of all Securities of that series
waive, insofar as that series is concerned, compliance by the Company with
certain restrictive provisions of the Indenture (SECTION 906). The Holders of a
majority in principal amount of the Outstanding Securities of any series may on
behalf of the Holders of all Securities of that series waive any past default
under the Indenture with respect to Securities of that series, except a default
in the payment of the principal of, or premium, if any, or interest, if any, on,
any Security of that series or in respect of any provision which under the
Indenture cannot be modified or amended without the consent of the Holder of
each Outstanding Security of that series affected (SECTION 511).
EVENTS OF DEFAULT
The following are Events of Default under the Indenture with respect to
Securities of any series: (a) failure to pay principal of or premium, if any, on
any Security of that series at its Maturity; (b) failure to pay any interest on
any Security of that series when due, continued for 30 days; (c) failure to
deposit any sinking fund payment, when due, in respect of any Security of that
series; (d) any other defaults in the performance, or breach, of any covenant of
the Company in the Indenture, continued for 60 days after written notice of such
default or breach from the Trustee or the Holders of at least 25% in principal
amount of the Outstanding Securities of that series; (e) the occurrence of a
default in payment of any debt that results from borrowings in excess of
$50,000,000 or any interest thereon, for a period longer than the specified
period of grace, which default shall have resulted in acceleration of the
maturity of such debt without such acceleration having been rescinded after due
notice in writing to the Company of such default by the Trustee or by such
notice to the Company and the Trustee by Holders of at least 10% of the
principal amount of the Outstanding Securities of that series; (f) certain
events of bankruptcy, insolvency or reorganization; and (g) any other Event of
Default provided with respect to Securities of that series (SECTION 501).
In accordance with applicable provisions of the Trust Indenture Act of
1939, as amended (the "TIA"), the Trustee is required to give the Holders notice
of all defaults known to the Trustee within 90 days after the occurrence
thereof, in the manner and to the extent provided by the TIA. The TIA further
provides that except in the case of default in the payment of the principal of
or interest on any indenture security, or in the
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payment of any sinking fund or purchase fund installment, the Trustee shall not
be required to give such notice if it determines that withholding the notice is
in the interests of the indenture security holders.
If an Event of Default with respect to Outstanding Securities of any series
shall occur and be continuing, either the Trustee or the Holders of at least 25%
in principal amount of the Outstanding Securities of that series may declare the
principal amount (or, if the Securities of that series are Original Issue
Discount Securities, such portion of the principal amount as may be specified in
the terms of that series) of all Securities of that series to be due and payable
immediately. However, at any time after a declaration of acceleration with
respect to Securities of any series has been made, but before a judgment or
decree based on such acceleration has been obtained, the Holders of a majority
in principal amount of Outstanding Securities of that series may, under certain
circumstances, rescind and annul such acceleration (SECTION 502). For
information as to waiver of defaults, see "Modification of the Indenture,"
above. Reference is made to the Prospectus Supplement relating to each series of
Offered Securities that are Original Issue Discount Securities for the
particular provisions relating to acceleration of the Maturity of a portion of
the principal amount of such Original Issue Discount Securities upon the
occurrence of an Event of Default and the continuation thereof.
The Indenture provides that, subject to the provisions of the TIA, the
Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request or direction of any of the Holders, unless
such Holders shall have offered to the Trustee reasonable indemnity (Section
601). Subject to such provisions for indemnification of the Trustee, the Holders
of a majority in principal amount of the Outstanding Securities of any series
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee, with respect to the Securities of that series
(SECTION 510).
The Company will be required to furnish to the Trustee annually a statement
as to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance (SECTION 907).
DEFEASANCE
The Indenture provides that, if specified with respect to the Securities of
a particular series, the Company (a) shall be discharged from its obligations in
respect of the Securities of such series ("defeasance and discharge"), or (b)
may cease to comply with the restrictive covenants ("covenant defeasance") in
Article Seven (Consolidation, Merger or Sale), Section 905 (Limitations on
Liens) and Section 908 (Limitation on Indebtedness of Smith Barney (Delaware)
Inc. (formerly Smith Barney Inc.)), and any such omission shall not be an Event
of Default with respect to the Securities of such series, in each case at any
time prior to the Stated Maturity or redemption thereof, when the Company has
irrevocably deposited with the Trustee, in trust, (i) sufficient funds in the
currency or currency unit in which the Securities are denominated to pay the
principal of (and premium, if any), and interest to Stated Maturity (or
redemption) on, the Securities of such series, or (ii) such amount of direct
obligations of, or obligations the principal of and interest on which are fully
guaranteed by, the government which issued the currency in which the Securities
are denominated, and which are not subject to prepayment, redemption or call, as
will, together with the predetermined and certain income to accrue thereon
without consideration of any reinvestment thereof, be sufficient to pay when due
the principal of (and premium, if any), and interest to Stated Maturity (or
redemption) on, the Securities of such series. Such defeasance and discharge and
covenant defeasance are conditioned upon the Company's delivery of an opinion of
counsel that the Holders of the Securities of such series will have no federal
income tax consequences as a result of such deposit, and will be taxed in the
same manner as if no defeasance and discharge or covenant defeasance, as the
case may be, had occurred. Upon such defeasance and discharge, the Holders of
the Securities of such series shall no longer be entitled to the benefits of the
Indenture, except for the purposes of registration of transfer and exchange of
the Securities of such series and replacement of lost, stolen or mutilated
Securities and shall look only to such deposited funds or obligations for
payment (SECTION 403).
CONCERNING THE TRUSTEE
Citibank, N.A. is the Trustee under the Indenture. The Company and its
affiliates have and may from time to time in the future have banking
relationships with the Trustee in the ordinary course of business.
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PLAN OF DISTRIBUTION
The Company may offer the Securities in any of the following ways: (i)
through underwriters or dealers; (ii) directly; (iii) through agents; or (iv)
through a combination of any such methods of sale. The Prospectus Supplement
with respect to an offering of Offered Securities will set forth the terms of
such offering, including the name or names of any underwriters, the purchase
price of the Offered Securities and the proceeds to the Company from such sale,
any underwriting discounts and other items constituting underwriters'
compensation, any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers and any securities exchanges on which
such Offered Securities may be listed.
If underwriters are used in an offering of Securities, such Securities will
be acquired by the underwriters for their own account and may be resold from
time to time in one or more transactions, including negotiated transactions, at
a fixed public offering price or at varying prices determined at the time of
sale. The Securities may be either offered to the public through underwriting
syndicates represented by one or more managing underwriters or by underwriters
without a syndicate. Unless otherwise set forth in the Prospectus Supplement,
the obligations of the underwriters to purchase Offered Securities will be
subject to certain conditions precedent and the underwriters will be obligated
to purchase all such Offered Securities if any are purchased. Any initial public
offering price and any discounts or concessions allowed or reallowed or paid to
dealers may be changed from time to time.
In connection with underwritten offerings of the Securities and in
accordance with applicable law and industry practice, underwriters may
over-allot or effect transactions which stabilize, maintain or otherwise affect
the market price of the Securities at levels above those which might otherwise
prevail in the open market, including by entering stabilizing bids, effecting
syndicate covering transactions or imposing penalty bids. A stabilizing bid
means the placing of any bid, or the effecting of any purchase, for the purpose
of pegging, fixing or maintaining the price of a security. A syndicate covering
transaction means the placing of any bid on behalf of the underwriting syndicate
or the effecting of any purchase to reduce a short position created in
connection with the offering. A penalty bid means an arrangement that permits
the managing underwriter to reclaim a selling concession from a syndicate member
in connection with the offering when Securities originally sold by the syndicate
member are purchased in syndicate covering transactions. Such transactions may
be effected in the over-the-counter market or otherwise. Underwriters are not
required to engage in any of these activities. Any such activities, if
commenced, may be discontinued at any time.
Offered Securities also may be sold directly by the Company or through
agents designated by the Company from time to time. Any agent involved in the
offer or sale of the Offered Securities in respect of which this Prospectus is
delivered will be named, and the terms of any such agency (including any
commissions payable by the Company to such agent) will be set forth, in the
applicable Prospectus Supplement. Unless otherwise indicated in such Prospectus
Supplement, any such agent will be acting on a best efforts basis for the period
of its appointment.
As one of the means of direct issuance of Offered Securities, the Company
may utilize the services of an entity through which it may conduct an electronic
"dutch auction" or similar offering of the Offered Securities among potential
purchasers who are eligible to participate in the auction or offering of such
Offered Securities, if so described in the applicable Prospectus Supplement.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize agents, underwriters or dealers to solicit offers by certain specified
institutions to purchase Offered Securities from the Company at the public
offering price set forth in such Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in the
future. Such contracts will be subject only to those conditions set forth in the
Prospectus Supplement and the Prospectus Supplement will set forth the
commission payable for solicitation of such contracts.
The anticipated date of delivery of Offered Securities will be as set forth
in the Prospectus Supplement relating to the offering of such Securities.
This Prospectus together with an applicable Prospectus Supplement may also
be used by Smith Barney, a subsidiary of the Company, in connection with offers
and sales of the Securities in market-making transactions
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at negotiated prices related to prevailing market prices at the time of sale.
Smith Barney may act as principal or agent in such transactions. Smith Barney
has no obligation to make a market in any of the Securities and may discontinue
any market-making activities at any time without notice, at its sole discretion.
The Securities issued hereunder will be new issues of securities with no
established trading market, and no assurance can be made as to the existence or
liquidity of a trading market for such Securities.
Smith Barney, a member of the NASD and an affiliate of the Company, may
participate in distributions of the Offered Securities. Accordingly, the
offerings of Offered Securities will conform with the requirements of Rule 2720
of the Conduct Rules of the NASD regarding a NASD member firm's underwriting of
securities of an affiliate.
Underwriters, dealers and agents may be entitled, under agreements entered
into with the Company, to indemnification by the Company against certain civil
liabilities, including liabilities under the Act. Underwriters, dealers and
agents may engage in transactions with, or perform services for, the Company and
affiliates of the Company.
ERISA MATTERS
By virtue of the Company's affiliation with certain of its subsidiaries and
certain subsidiaries of Travelers Group, including insurance company
subsidiaries and Smith Barney, that provide services to many employee benefit
plans, including investment advisory and asset management activities, the
Company, Travelers Group and any direct or indirect subsidiary of either of them
may each be considered a "party in interest" within the meaning of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and a
"disqualified person" under corresponding provisions of the Internal Revenue
Code of 1986 (the "Code"), with respect to many employee benefit plans.
"Prohibited transactions" within the meaning of ERISA and the Code may result if
the Securities are acquired by an employee benefit plan with respect to which
the Company, Travelers Group or any direct or indirect subsidiary of either is a
party in interest, unless such Securities are acquired pursuant to an applicable
exemption. Any employee benefit plan or other entity subject to such provisions
of ERISA or the Code proposing to acquire the Securities should consult with its
legal counsel.
LEGAL MATTERS
The validity of the Offered Securities will be passed upon for the Company
by A. George Saks, Esq., General Counsel of the Company, Smith Barney Holdings
Inc., 388 Greenwich Street, New York, New York 10013, or by counsel to be
identified in the Prospectus Supplement. Mr. Saks, Executive Vice President,
General Counsel and Secretary of Smith Barney, beneficially owns, or has rights
to acquire under Travelers Group's employee benefit plans, an aggregate of less
than 1% of Travelers Group Common Stock.
The validity of the Offered Securities will be passed upon for the
underwriters or agents by counsel to be identified in the Prospectus Supplement.
EXPERTS
The consolidated financial statements and financial statement schedules of
the Company as of December 31, 1996 and 1995, and for each of the years in the
three-year period ended December 31, 1996, included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996, have been incorporated
by reference herein, in reliance upon the report (also incorporated by reference
herein) of Coopers & Lybrand L.L.P., independent auditors, and upon the
authority of said firm as experts in accounting and auditing.
12
<PAGE> 19
======================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION, OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED
IN THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR BY THE UNDERWRITERS. NEITHER THIS PROSPECTUS SUPPLEMENT NOR
THE PROSPECTUS CONSTITUTES AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH
IT RELATES OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THOSE TO
WHICH IT RELATES IN ANY STATE TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE
SUCH OFFER IN SUCH STATE. THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION CONTAINED IN EITHER
IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Recent Developments................... S-2
Capitalization........................ S-2
Ratio of Earnings to Fixed Charges.... S-3
Use of Proceeds....................... S-3
Description of Notes.................. S-3
Underwriting.......................... S-4
Experts............................... S-5
Legal Opinions........................ S-5
PROSPECTUS
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
The Company........................... 3
Ratio of Earnings to Fixed Charges.... 4
Use of Proceeds....................... 4
Description of Securities............. 4
Plan of Distribution.................. 11
ERISA Matters......................... 12
Legal Matters......................... 12
Experts............................... 12
</TABLE>
======================================================
======================================================
$200,000,000
SMITH BARNEY
HOLDINGS INC.
6 3/8% NOTES DUE OCTOBER 1, 2004
------------
PROSPECTUS SUPPLEMENT
OCTOBER 3, 1997
(INCLUDING PROSPECTUS
DATED JULY 17, 1997)
------------
SMITH BARNEY INC.
CHASE SECURITIES INC.
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
MORGAN STANLEY DEAN WITTER
NATIONSBANC MONTGOMERY SECURITIES INC.
SALOMON BROTHERS INC
======================================================
