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FILED PURSUANT TO RULE 424(b)(3)
REGISTRATION NO. 333-33096
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED APRIL 18, 2000
$1,300,000,000
WELLS FARGO FINANCIAL, INC.
MEDIUM-TERM NOTES, SERIES D
DUE FROM 9 MONTHS TO 30 YEARS FROM DATE OF ISSUE
Wells Fargo Financial, Inc. may offer at various times up to $1,300,000,000
of medium-term notes. We will offer these notes in series, starting with
Series D, in U.S. dollars or any foreign currency.
The following terms may apply to the notes. We will provide the final terms
for each note in a pricing supplement.
- The notes will mature in 9 months to 30 years.
- The notes may be subject to redemption at our option or repayment at the
option of the holders.
- The notes will be senior or subordinated securities.
- The notes will bear interest at either a fixed or floating rate. The
floating interest rate formula may be based on one or more of the
following indices, plus or minus a spread and/or spread multiplier:
<Table>
- CD rate - Treasury rate
- Commercial paper rate - Prime rate
- Federal funds rate - CMT rate
- LIBOR - Any other rate specified by us in the pricing supplement
</Table>
- The currency in which the notes will be denominated, which may be U.S.
dollars or any foreign currency.
- The notes will be in certificated or book-entry form.
- Interest will be paid on fixed rate notes that are senior securities on
April 1 and October 1 of each year or as otherwise specified in the
applicable pricing supplement. Interest will be paid on fixed rate notes
that are subordinated securities on April 15 and October 15 of each year
or as otherwise specified in the applicable pricing supplement. Interest
will be paid on floating rate notes on dates specified in the applicable
pricing supplement.
- The notes will have minimum denominations of $1,000 increased in multiples
of $1,000 or other specified denominations for foreign currencies.
We will specify the formal terms for each note, which may be different from
the terms described in this prospectus supplement, in the applicable pricing
supplement.
We expect to receive between $1,298,375,000 and $1,288,625,000 of proceeds
from the sales of the notes after paying the agents discounts and commissions of
between $1,625,000 and $11,375,000. The exact proceeds from each note will be
set at the time of issuance. We do not expect that any of the notes will be
listed on an exchange and a market for any particular series of notes may not
develop.
----------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement, the accompanying prospectus and any attached pricing
supplement are truthful and complete. Any representation to the contrary is a
criminal offense.
BANC OF AMERICA SECURITIES LLC
BANC ONE CAPITAL MARKETS, INC.
BEAR, STEARNS & CO. INC.
BNP PARIBAS
DEUTSCHE BANC ALEX. BROWN
JPMORGAN
MERRILL LYNCH & CO.
MIZUHO INTERNATIONAL PLC
SALOMON SMITH BARNEY
UTENDAHL CAPITAL PARTNERS, L.P.
WELLS FARGO INSTITUTIONAL BROKERAGE
The date of this prospectus supplement is January 18, 2002
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<Table>
<Caption>
PAGE
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About This Prospectus Supplement And Pricing Supplements.... S-2
Risk Factors................................................ S-3
Description of Notes........................................ S-5
Material U.S. Federal Income Tax Consequences............... S-27
Supplemental Plan Of Distribution........................... S-37
Legal Opinions.............................................. S-39
</Table>
PROSPECTUS
<Table>
Where You Can Find More Information About Wells Fargo
Financial................................................. 2
Incorporation of Information We File with the SEC........... 2
Wells Fargo Financial, Inc.................................. 2
Use of Proceeds............................................. 3
Ratios of Earnings to Fixed Charges......................... 3
Description of the Debt Securities.......................... 3
Plan of Distribution........................................ 10
Legal Opinions.............................................. 11
Experts..................................................... 11
</Table>
You should rely only on the information contained in this prospectus
supplement, the accompanying prospectus and any pricing supplement. We have not
authorized anyone to provide you with information different from that contained
in this prospectus supplement, the accompanying prospectus and any pricing
supplement. We are offering to sell the notes, and seeking offers to buy the
notes, only in jurisdictions where offers and sales are permitted. The
information contained in this prospectus supplement, the accompanying prospectus
and any pricing supplement is accurate only as of their respective dates,
regardless of the time of their delivery or any sale of the notes.
ABOUT THIS PROSPECTUS SUPPLEMENT AND PRICING SUPPLEMENTS
This prospectus supplement sets forth certain terms of the medium-term
notes, Series D, that we may offer and supplements the prospectus that is
attached to the back of this prospectus supplement. This prospectus supplement
supersedes the prospectus to the extent it contains information that is
different from the information in the prospectus.
Each time we offer notes, we will attach a pricing supplement to this
prospectus supplement. The pricing supplement will contain the specific
description of the notes we are offering and the terms of the offering. The
pricing supplement will supersede this prospectus supplement or the prospectus
to the extent it contains information that is different from the information
contained in this prospectus supplement or the prospectus.
It is important for you to read and consider all information contained in
this prospectus supplement and the accompanying prospectus and pricing
supplement in making your investment decision. You should also read and consider
the information contained in the documents identified in "Where You Can Find
More Information" in the prospectus.
S-2
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RISK FACTORS
Your investment in the notes will involve certain risks. This prospectus
supplement does not describe all of those risks, including those that result
from the denomination of or payment on any notes in a foreign currency or that
result from the calculation of any amounts payable under any notes by reference
to one or more interest rates, currencies or other indices or formulas. Neither
we nor the agents will be responsible for advising you of these risks now or how
they may change in the future.
In consultation with your own financial and legal advisors, you should
carefully consider, among other matters, the following discussion of risks
before deciding whether an investment in the notes is suitable for you. The
notes are not an appropriate investment for you if you are unsophisticated with
respect to the significant elements of the notes or financial matters. In
particular, those notes denominated or payable in a foreign currency are not
suitable for you if you are unsophisticated with respect to foreign currency
transactions, and those notes with payments calculated by reference to one or
more interest rates, currencies or other indices or formulas are not suitable
for you if you are unsophisticated with respect to transactions involving the
applicable interest rate index or currency index or other indices or formulas.
STRUCTURE AND MARKET RISKS
AN INVESTMENT IN INDEXED NOTES AND FOREIGN CURRENCY NOTES ENTAILS
SIGNIFICANT RISKS THAT ARE NOT ASSOCIATED WITH AN INVESTMENT IN CONVENTIONAL
FIXED RATE OR FLOATING RATE DEBT SECURITIES. If you invest in notes indexed to
one or more interest rates, currencies or composite currencies, including
exchange rates and swap indices between currencies or composite currencies,
commodities or other indices or formulas, there will be significant risks that
are not associated with similar investments in a conventional fixed rate or
floating rate debt security. These risks include fluctuation of the indices or
formulas and the possibility that you will receive a lower or no amount of
principal, premium or interest, and at different times, than you expected. We
have no control over a number of matters, including economic, financial and
political events that are important in determining the existence, magnitude and
longevity of these risks and their results. In addition, if an index or formula
used to determine any amounts payable in respect of the notes contains a
multiplier or leverage factor, the effect of any change in the index or formula
will be magnified. In recent years, values of certain indices and formulas have
been highly volatile, and volatility in those and other indices and formulas may
be expected in the future. However, past experience is not necessarily
indicative of what may occur in the future.
WE MAY CHOOSE TO REDEEM NOTES WHEN PREVAILING INTEREST RATES ARE RELATIVELY
LOW. If your notes are redeemable, we may choose to redeem your notes from time
to time. In the event that prevailing interest rates are relatively low, you
would not be able to reinvest the redemption proceeds in a comparable security
at an effective interest rate as high as the interest rate on the notes being
redeemed.
WE CANNOT ASSURE YOU THAT A TRADING MARKET FOR YOUR NOTES WILL EVER DEVELOP
OR BE MAINTAINED. We cannot assure you that a trading market for your notes will
ever develop or be maintained. Many factors independent of our creditworthiness
affect the trading market and market value of your notes. These factors include:
- the complexity and volatility of any index or formula applicable to the
notes;
- the method of calculating the principal, premium and interest for the
notes;
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- the time remaining to the maturity of the notes;
- the outstanding amount of the notes;
- the redemption features of the notes;
- the amount of other debt securities linked to any index or formula
applicable to the notes; and
- the level, direction and volatility of market interest rates generally.
In addition, certain notes may have a more limited trading market and
experience more price volatility because they were designed for specific
investment objectives or strategies. There may be a limited number of buyers
when you decide to sell your notes. This may affect the price you receive for
your notes or your ability to sell your notes at all. You should not purchase
notes unless you understand and know you can bear the foregoing investment
risks.
EXCHANGE RATES AND EXCHANGE CONTROLS
INVESTMENT IN FOREIGN CURRENCY NOTES ENTAILS SIGNIFICANT RISKS THAT ARE NOT
ASSOCIATED WITH AN INVESTMENT IN A DEBT SECURITY DENOMINATED AND PAYABLE IN U.S.
DOLLARS. If you invest in notes denominated and/or payable in a currency other
than U.S. dollars, called foreign currency notes, there will be significant
risks that are not associated with an investment in a debt security denominated
and payable in U.S. dollars. These risks include the possibility of material
changes in the exchange rate between U.S. dollars and your payment currency and
the possibility that either the United States or foreign governments will impose
or modify foreign exchange controls.
We have no control over the factors that generally affect these risks, such
as economic, financial and political events and the supply and demand for the
applicable currencies. Moreover, if payments on your foreign currency notes are
determined by reference to a formula containing a multiplier or leverage factor,
the effect of any change in the exchange rates between the applicable currencies
will be magnified. In recent years, the exchange rates between certain
currencies have been highly volatile, and volatility between these currencies or
with other currencies in the past are not necessarily indicative of fluctuations
that may occur in the future. Depreciation of your payment currency would result
in the decrease in the U.S. dollar equivalent yield of your foreign currency
notes, in the U.S. dollar equivalent value of the principal and any premium
payable at maturity or earlier redemption of your foreign currency notes and,
generally, in the U.S. dollar equivalent market value of your foreign currency
notes.
Governmental exchange controls could affect exchange rates and the
availability of your payment currency on a required payment date. Even if there
are no exchange controls, it is possible that your payment currency will not be
available on a required payment date due to circumstances beyond our control or
because the payment currency is no longer in use. In those cases, we will be
allowed to satisfy our obligations on your foreign currency notes in U.S.
dollars.
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DESCRIPTION OF NOTES
The following description of the terms of the notes supplements the general
description of the debt securities provided in the prospectus. However, the
pricing supplement for each offering of notes will contain the specific
information and terms for that offering. The pricing supplement may also add,
update or change information contained in this prospectus supplement. It is
important for you to consider the information contained in the prospectus, this
prospectus supplement and the pricing supplement in making your investment
decision.
GENERAL
THE INDENTURE. We will issue the notes under either a senior indenture
between us and The First National Bank of Chicago (now called Bank One Trust
Company, National Association), as trustee, or a senior subordinated indenture
between us and BNY Midwest Trust Company as successor to Harris Trust and
Savings Bank, as trustee. When we refer to the "applicable trustee" in this
prospectus supplement, we mean Bank One Trust Company, National Association in
connection with the notes that are senior securities or the senior indenture,
and BNY Midwest Trust Company in connection with the notes that are senior
subordinated securities or the senior subordinated indenture. Since we have only
summarized the most significant portions of the indentures below, you may want
to refer to the indentures for more detailed information.
RANKING. The notes will be unsecured obligations of Wells Fargo Financial.
The notes issued under the senior subordinated indenture will rank equally with
all other senior subordinate debt obligations and will be subordinate in right
of payment to the prior payment in full of all of the senior indebtedness. The
notes and the indentures will not limit us from incurring additional debt and
will not place any other financial restrictions on us.
AMOUNT. The amount of notes we may issue under this prospectus supplement
may be reduced when we issue other debt securities under the prospectus.
Initially, the amount of notes we may issue under this prospectus supplement is
$1,300,000,000. We may increase the amount of notes that we may issue under this
prospectus supplement from time to time. Neither indenture limits the amount of
notes we may offer.
MATURITY. Each note will mature on any day from 9 months to 30 years from
its date of issue. However, each note may also be subject to redemption at our
option and repayment at your option.
DENOMINATIONS. The notes will have minimum denominations of $1,000,
increased in multiples of $1,000. The Depository Trust Company currently limits
the maximum denomination of any single global note to $500,000,000.
PRICING SUPPLEMENTS. The pricing supplement relating to a note will
describe the following terms:
- the specified currency;
- whether the note is a senior subordinated security or a senior security;
- whether the note is a fixed rate note, a floating rate note, an indexed
note, a dual currency note, a renewable note, an extendable note or an
amortizing note;
- the issue price;
- the original issue date;
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- the stated maturity date;
- for a fixed rate note, the rate per annum at which it will bear interest,
if any, and the date on which interest will be payable if other than
April 1 and October 1 in the case of a fixed rate note that is a senior
security or April 15 and October 15 in the case of a fixed rate note that
is a senior subordinated security;
- for a floating rate note, the base rate, the initial interest rate, the
interest reset period, the interest payment dates, the index maturity, the
designated LIBOR currency, if any, the maximum interest rate, if any, the
minimum interest rate, if any, the spread and/or spread multiplier, if
any, and any other terms relating to the particular method of calculating
the interest rate for the note;
- whether the note is an original issue discount note;
- for an indexed note, the manner in which interest payments and the
principal amount payable at maturity will be determined;
- if the note is an amortizing note, an amortization schedule;
- whether the note may be redeemed at our option, or repaid at the holder's
option prior to the stated maturity date, and if so, the terms of the
redemption or repayment;
- whether the note is a reopening of notes previously issued; and
- any other terms that do not conflict with the provisions of the
indentures.
FORM OF NOTES
We will issue the notes either pursuant to a book-entry system or in
certificated form.
BOOK-ENTRY NOTES. When we issue notes in book-entry form, we will issue one
or more global certificates representing the entire issue of notes. These
certificates will name a nominee of The Depository Trust Company, New York, New
York as the owner of the notes. DTC maintains a computerized system that will
reflect your ownership of the notes through an account you will maintain with
your broker/dealer, bank, trust company or other representative.
DTC's nominee will be considered the owner of your note in our records and
will be the entity entitled to cast a vote regarding your note. However, DTC and
the broker/dealers, banks, trust companies and other representatives that are
part of DTC's computerized system are required to contact you for voting
instructions.
CERTIFICATED NOTES. When we issue notes in certificated form, you will
receive a certificate evidencing your note. The applicable trustee will issue
certificated notes on our behalf and will only prepare such certificated notes
at our request. The certificate will name you as the owner of the note, unless
you choose to have your broker/dealer, bank, trust company or other
representative hold these certificates for you. If your name appears on the
certificate evidencing your note, then you will be considered the owner of your
note for all purposes under the indentures. For example, if we need to ask the
holders of the notes to vote on a proposed amendment to the notes, you will be
asked to cast the vote regarding your note. If you have chosen to have some
other entity hold the certificates for you, that entity will be considered the
owner of your note in our records and will be entitled to cast the vote
regarding your note. However, this entity is required to contact you for voting
instructions.
S-6
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EXCHANGES. Certificated notes cannot be exchanged for book-entry notes.
Book-entry notes can be exchanged for certificated notes only if DTC notifies us
that it is unwilling or unable to hold global certificates and another
depositary is not appointed, we elect not to have the notes represented by
global certificates held by a depositary or an event of default has occurred and
is continuing with respect to the notes. In these limited circumstances, we will
issue to you certificated notes in exchange for the book-entry notes. There will
be no service charge for this exchange, but if a tax or other governmental
charge is imposed, we may require you to pay it.
REGISTRATION AND TRANSFER OF NOTES
BOOK-ENTRY NOTES. If you transfer your note while it is in book-entry form,
the transfer will be reflected on the computerized system at DTC. Your
broker/dealer, bank, trust company or other representative will arrange for the
transfer to be reflected on DTC's records.
CERTIFICATED NOTES. In addition to acting as trustee under an indenture,
the applicable trustee also acts as our registrar for notes issued in
certificated form. You may go to the applicable trustee's office if you want to:
- register the transfer of any certificated note;
- exchange certificated notes for notes of different denominations;
- deliver payment instructions;
- obtain a new note to replace a note that has been lost or destroyed (you
may be required to provide a document to the applicable trustee and us
agreeing to return the new certificate if the missing one is found); and
- present notes that have matured or been redeemed in exchange for payment.
The office of Bank One Trust Company, National Association is at Bank One,
National Association, 55 Water Street, 1st Floor, Jeanette Park Entrance, New
York, New York 10041. The offices of BNY Midwest Trust Company are at 2 N.
LaSalle Street, Suite 1020, Chicago, Illinois 60602 and The Bank of New York, 15
Broad Street, Lobby, New York, New York 10005.
PAYMENTS AND METHODS OF PAYMENT
METHODS OF PAYMENT. The applicable trustee also acts as our paying agent,
and will make all payments on the notes on our behalf.
BOOK-ENTRY NOTES. The applicable trustee will make payments of principal
and interest on book-entry notes to the account of DTC's nominee by wire
transfer of immediately available funds or in accordance with existing
arrangements between the applicable trustee and DTC. Neither we nor the
applicable trustee will make any payments to owners of beneficial interests in
book-entry notes. Instead, DTC will credit the funds to which you are entitled
to the account of the broker/dealer, bank, trust company or other representative
through which you hold your note. That entity, in turn, will credit these funds
to your account or the account of any other intermediary through which you hold
your note.
We understand that DTC's current practice is to credit interest payments,
including interest payable at maturity or earlier redemption or repayment, and
principal payments in immediately available funds. These payments and credits
will be made pursuant to the rules of DTC, in accordance with any standing
instructions you have with your broker/dealer,
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bank, trust company or other representative or other intermediary and with
customary practice in the broker/dealer industry. Neither we nor the applicable
trustee will be involved with, or responsible for, the movement of funds once
the applicable trustee has paid DTC.
CERTIFICATED NOTES. If you hold certificated notes, payments of principal
and interest due at maturity or earlier redemption or repayment will be paid by
wire transfer of immediately available funds after you present the matured or
redeemed note at the applicable trustee's office. Interest payable at any other
time will be paid by check mailed to your address as it appears in the
applicable trustee's records. However, we may, at our option, pay you interest
prior to maturity (or earlier redemption or repayment) by wire transfer of
immediately available funds if you give the appropriate wire transfer
instructions to the applicable trustee not less than 15 calendar days prior to
the applicable interest payment date. Generally, we will pay interest prior to
maturity (or earlier redemption or repayment) by wire transfer of immediately
available funds to you only if you own an aggregate principal amount of notes
having the same terms and conditions in excess of $5,000,000.
RECIPIENTS OF PAYMENTS. Payments of interest on notes are generally payable
to the person in whose name the note is registered at the close of business on
the record date before each interest payment date. However, interest will be
payable at maturity, or upon earlier redemption or repayment, to the person to
whom principal is payable. The first interest payment on any note originally
issued between a record date and an interest payment date or on an interest
payment date will be made on the interest payment date following the next
succeeding regular record date to the person in whose name the note is
registered at the close of business on that next succeeding regular record date.
Unless otherwise specified in the applicable pricing supplement, the regular
record date with respect to floating rate notes, as those notes are further
described below, will be the date 15 calendar days prior to the interest payment
date, whether or not the record date is a business day. With respect to notes
issued under the indenture with Bank One Trust Company, National Association,
business day means each Monday, Tuesday, Wednesday, Thursday and Friday that is
not a day on which banking institutions are authorized or required by law or
regulation to be closed in the Borough of Manhattan, The City of New York and,
with respect to LIBOR notes, is a London banking day. With respect to notes
issued under the indenture with BNY Midwest Trust Company, business day means
each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which
banking institutions are authorized or required by law or regulation to be
closed in the Borough of Manhattan, The City of New York or the City of Chicago,
Illinois, and, with respect to LIBOR notes, is a London banking day. London
banking day means any day on which dealings in U.S. dollars are transacted in
the London interbank market. Unless otherwise specified in the applicable
pricing supplement, the regular record dates with respect to fixed rate notes
that are senior securities will be the March 15 and September 15 next preceding
the April 1 and October 1 interest payment dates, whether or not the record date
is a business day. Unless otherwise specified in the applicable pricing
supplement, the regular record dates with respect to fixed rate notes that are
senior subordinated securities, will be the April 1 and October 1 next preceding
the April 15 and October 15 interest payment dates, whether or not the record
date is a business day.
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INTEREST RATES: DETERMINATION AND CALCULATION; ACCRUAL AND PAYMENT OF INTEREST
The interest rates we will offer with respect to the notes may differ
depending on, among other things, the aggregate principal amount of notes
purchased in a single transaction.
Each note, other than a zero-coupon note, will bear interest from and
including the date of issue, or in the case of notes issued upon registration of
transfer or exchange from and including the most recent interest payment date to
which interest on the note has been paid or duly provided for. Interest will be
payable at the fixed rate per annum, or at the rate per annum determined
pursuant to the interest rate formula or formulas, stated in the note and in the
applicable pricing supplement until the principal of the note is paid or made
available for payment.
Interest rates we offer on the notes may differ depending upon, among other
things, the aggregate principal amount of notes purchased in any single
transaction. Interest rates, interest rate formulas and other variable terms of
the notes are subject to change by us from time to time, but no change will
affect any note already issued or as to which an offer to purchase has been
accepted by us.
Unless otherwise specified in the applicable pricing supplement, each note,
other than a zero-coupon note, will bear interest at either a fixed rate, in
which case the note is a fixed rate note, or a variable rate, in which case the
note is a floating rate note.
FIXED RATE NOTES. Each fixed rate note will bear interest at the annual
rate specified in the note and in the applicable pricing supplement until the
principal amount of the note is paid or made available for payment. Each fixed
rate note will bear interest from the date of issue, or in the case of notes
issued upon registration of transfer or exchange, from the most recent interest
payment date to which interest on the note has been paid or duly provided for,
at that per annum rate. The date on which interest is payable, called an
interest payment date, for the fixed rate notes that are senior securities will
be April 1 and October 1 of each year and for the fixed rate notes that are
senior subordinated securities will be April 15 and October 15 of each year or
as specified in the applicable pricing supplement, and at maturity or upon
earlier redemption or repayment.
Unless we otherwise specify in the applicable pricing supplement, interest
payments, if any, on a fixed rate note will be the amount of interest accrued
from and including the last date in respect of which interest has been paid or
duly provided for, or from and including the date of issue if no interest has
been paid or provided for with respect to the note, to but excluding the
interest payment date or the date of maturity (or date of redemption or
repayment), as the case may be. Interest on fixed rate notes will be computed on
the basis of a 360-day year of twelve 30-day months.
If any interest payment date or maturity (or date of redemption or
repayment), as the case may be for any fixed rate note falls on a day that is
not a business day, the payment of principal, premium, if any, and interest may
be paid on the next succeeding business day, and no interest on the payment will
accrue for the period from and after the interest payment date or maturity (or
date of redemption or repayment), as the case may be, to the date of payment on
that next succeeding business day.
FLOATING RATE NOTES. Unless we otherwise specify in the applicable pricing
supplement, each floating rate note will bear interest at a variable rate
determined by reference to an interest rate formula or formulas, which may be
adjusted by adding or subtracting the spread and/or multiplying by the spread
multiplier, each as described below. A floating rate note may also have either
or both of the following:
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- a maximum numerical interest rate limitation, or ceiling, on the rate of
interest which may accrue during any interest period; and
- a minimum numerical interest rate limitation, or floor, on the rate of
interest which may accrue during any interest period.
The spread is the number of basis points (or percentage) specified by us in
the applicable pricing supplement as being applicable to the interest rate for
the note and the spread multiplier is the percentage specified by us in the
applicable pricing supplement as being applicable to the interest rate for the
note.
The applicable pricing supplement relating to a floating rate note will
designate an interest rate basis or bases for the floating rate note. The
interest rate basis or bases may be:
- the CD rate, in which case the note will be a CD rate note;
- the commercial paper rate, in which case the note will be a commercial
paper rate note;
- the federal funds rate, in which case the note will be a federal funds
rate note;
- LIBOR, in which case the note will be a LIBOR note;
- the prime rate, in which case the note will be a prime rate note;
- the treasury rate, in which case the note will be a treasury rate note;
- the CMT rate, in which case the note will be a CMT rate note; or
- any other interest rate formula or formulas (which may include a
combination of more than one of the interest rate bases described above)
as may be described in the applicable pricing supplement.
The applicable pricing supplement will also indicate the spread and/or
spread multiplier, if any. In addition, any floating rate note may have a
maximum or minimum interest rate limitation. In addition, in such pricing
supplement we will define or particularize for each note the following terms, if
applicable: initial interest rate, interest payment dates, index maturity, LIBOR
currency (if applicable) and interest reset date with respect to the note.
Index maturity means, with respect to a floating rate note, the period to
maturity of the instrument or obligation on which the interest rate formula is
based, as specified in the applicable pricing supplement.
DATE OF INTEREST RATE CHANGE. The interest rate on each floating rate note
may be reset daily, weekly, monthly, quarterly, semiannually or annually, each
an interest reset period, as specified in the applicable pricing supplement. The
first day of each interest reset period is the interest reset date. Unless we
state otherwise in the applicable pricing supplement, the interest reset dates
will be:
- for floating rate notes that reset daily, each business day;
- for floating rate notes, other than treasury rate notes, that reset
weekly, Wednesday of each week;
- for treasury rate notes that reset weekly, Tuesday of each week, except as
provided below under "Treasury Rate Notes";
- for floating rate notes that reset monthly, the third Wednesday of each
month;
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- for floating rate notes that reset quarterly, the third Wednesday of
March, June, September and December of each year;
- for floating rate notes that reset semi-annually, the third Wednesday of
each of the two months specified in the pricing supplement; and
- for floating rate notes that reset annually, the third Wednesday of the
month specified in the pricing supplement.
In any event, the interest rate in effect from the date of issue to the
first interest reset date with respect to a floating rate note will be the
initial interest rate, as described in the applicable pricing supplement. If any
interest reset date for any floating rate note would otherwise be a day that is
not a business day for the floating rate note, the interest reset date for the
floating rate note will be postponed to the next day that is a business day.
However, in the case of LIBOR notes, if the business day is in the next
succeeding calendar month, the interest reset date will be the immediately
preceding business day, and in the case of treasury rate notes, if the interest
reset date falls on a date which is an auction date, the interest reset date
will be the next day that is a business day.
DATE INTEREST RATE IS DETERMINED. Unless we otherwise specify in the
applicable pricing supplement, the interest determination date pertaining to an
interest reset date for a commercial paper rate note, a federal funds rate note,
a CD rate note, a CMT rate note or a prime rate note will be the second business
day preceding the interest reset date with respect to the note. Unless we
otherwise specify in the applicable pricing supplement, the interest
determination date pertaining to an interest reset date for a LIBOR note will be
the second London banking day next preceding the interest reset date. Unless we
otherwise specify in the applicable pricing supplement, the interest
determination date pertaining to an interest reset date for a treasury rate note
will be the day of the week in which the interest reset date falls on which
treasury bills (as defined below) of the index maturity we specify in the
applicable pricing supplement are auctioned. Treasury bills are normally
auctioned on Monday of each week, unless that day is a legal holiday, in which
case the auction is normally held on the following Tuesday, except that the
auction may be held on the preceding Friday. If, as a result of a legal holiday,
an auction is held on the preceding Friday, that Friday will be the interest
determination date pertaining to the interest reset date occurring in the next
succeeding week.
WHEN INTEREST IS PAID. Unless we state otherwise in the applicable pricing
supplement, we will pay interest on floating rate notes as follows:
- for notes that reset daily, weekly or monthly, on the third Wednesday of
each month or on the third Wednesday of March, June, September and
December of each year specified in the pricing supplement;
- for notes that reset quarterly, on the third Wednesday of March, June,
September, and December of each year specified in the pricing supplement;
- for notes that reset semi-annually, on the third Wednesday of each of two
months of each year specified in the pricing supplement; and
- for notes that reset annually, on the third Wednesday of one month of each
year specified in the pricing supplement.
Each of the above dates is an interest payment date. We will also pay
interest on all notes at maturity or upon earlier redemption or repayment.
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If an interest payment date, other than at maturity (or date of redemption
or repayments), as the case may be, for any floating rate note falls on a day
that is not a business day, the interest payment date will be postponed to the
next succeeding business day, except that, in the case of a LIBOR note, if that
business day would fall in the next calendar month, the interest payment date
will be the immediately preceding business day.
If the date of maturity (or date of redemption or repayment), as the case
may be, for a floating rate note falls on a day that is not a business day, the
payment of principal, premium, if any, and interest may be made on the next
succeeding business day, and no interest on that payment shall accrue for the
period from and after maturity (or date of redemption or repayment), as the case
may be, to the date of such payment on the next succeeding business day.
HOW INTEREST IS CALCULATED. Unless we otherwise specify in the applicable
pricing supplement, interest payments, if any, on a floating rate note will be
the amount of interest accrued from and including the last date in respect of
which interest has been paid or duly provided for, or from and including the
date of issue if no interest has been paid or provided for with respect to the
note, to but excluding the interest payment date or the date of maturity (or
date of redemption or repayment), as the case may be. With respect to a floating
rate note, accrued interest from the date of issue or from the last date to
which interest has been paid is calculated by multiplying the face amount of the
floating rate note by an accrued interest factor. That accrued interest factor
is computed by adding the interest factors calculated for each day in the period
for which accrued interest is being calculated. The interest factor for each day
will be computed by dividing the interest rate applicable to that day by 360, in
the case of commercial paper rate notes, federal funds rate notes, CD rate
notes, prime rate notes or LIBOR notes, or by the actual number of days in the
year, in the case of treasury rate notes or CMT rate notes.
In any calculation of the interest factor for any day or any calculation of
an applicable interest rate requiring the determination of an arithmetic mean, a
money market yield or a bond equivalent yield, as described below, the resulting
number (expressed as a percentage) will be rounded, if necessary, to the nearest
one hundred-thousandth of a percentage point, with five millionths of a
percentage point rounding upwards (e.g., 9.876545% (or .09876545, expressed as a
decimal) being rounded to 9.87655% (or .0987655)), and all currency or currency
unit amounts and resulting from such calculations on the notes will be rounded
to the nearest one-hundredth of a unit (with .005 of a unit being rounded
upwards).
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In addition to any maximum interest rate which may be applicable to any
floating rate note pursuant to the above provisions, the interest rate on the
floating rate notes will in no event be higher than the maximum rate permitted
by New York law, as the same may be modified by U.S. law of general application.
Under present New York law the maximum rate of interest is 25% per annum on a
simple interest basis. The limit may not apply to floating rate notes in which
$2,500,000 or more has been invested or committed.
Unless we otherwise specify in the applicable pricing supplement, the
calculation date pertaining to any interest determination date will be the
earlier of (i) the tenth day after the interest determination date or, if the
calculation date is not a business day, the next succeeding business day or
(ii) the business day preceding the applicable interest payment date or maturity
(or date of redemption or repayment), as the case may be.
Upon the request of the holder of any floating rate note, the calculation
agent, as described below, will provide the interest rate then in effect and, if
different, the interest rate which will become effective as a result of a
determination made on the most recent interest determination date with respect
to the floating rate note. Unless otherwise provided in the applicable pricing
supplement, Bank One Trust Company, National Association will be the calculation
agent with respect to the floating rate notes.
The interest rate(s) on the floating rate notes that are CD rate notes,
commercial paper rate notes, federal funds rate notes, LIBOR notes, prime rate
notes, treasury rate notes or CMT rate notes will be determined as described
under the following captions (references to information services include any
successor information services).
CD RATE NOTES
Each CD rate note will bear interest at the interest rates, calculated with
reference to the CD rate and the spread and/or spread multiplier, if any, and
will be payable on the dates we specify on the face of the CD rate note and in
the applicable pricing supplement.
CD rate means, with respect to any interest determination date relating to a
CD rate note, the rate on that date for negotiable certificates of deposit
having the index maturity we specify in the applicable pricing supplement, as
published by the Board of Governors of the Federal Reserve System in
"Statistical Release H.15(519), Selected Interest Rates," or any successor
publication of the Board of Governors of the Federal Reserve System under the
heading "CDs (secondary market)".
The following procedures will apply if the CD rate cannot be set as
described above:
- if the rate is not published in H.15(519) by 3:00 p.m., New York City
time, on the calculation date pertaining to the CD rate interest
determination date, the CD rate will be the rate on the interest
determination date described in the H.15 daily update, available through
the world wide website of the Board of Governors of the Federal Reserve
System at http://www.federalreserve.gov/releases/H15/update, or any
successor site or publication, or another recognized electronic source
used for the purpose of displaying the applicable rate in respect of
certificates of deposit having the index maturity we specify in the
applicable pricing supplement, under the caption "CDs (secondary market)";
- if the rate is not published either in H.15(519) or the H.15 daily update
by 3:00 p.m., New York City time, on the calculation date, the CD rate
will be the arithmetic mean of the secondary market offered rates as of
10:00 a.m., New York City time, on the interest determination date of
three leading nonbank dealers of negotiable U.S. dollar certificates of
deposit in The City of New York (which may include the agents or
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their affiliates) selected by the calculation agent for negotiable
certificates of deposit of major U.S. money center banks of the highest
credit standing (in the market for negotiable certificates of deposit)
with a remaining maturity closest to the index maturity we specify in the
applicable pricing supplement in a denomination of $5,000,000; and
- if fewer than three dealers are providing quotes, the CD rate will remain
the CD rate then in effect on the interest determination date.
COMMERCIAL PAPER RATE NOTES
Each commercial paper rate note will bear interest at the interest rates,
calculated with reference to the commercial paper rate and the spread and/or
spread multiplier, if any, and will be payable on the dates we specify on the
face of the commercial paper note and in the applicable pricing supplement.
Commercial paper rate means, with respect to any interest determination date
relating to a commercial paper rate note, the money market yield of the rate on
that date for commercial paper having the index maturity we specify in the
applicable pricing supplement as published in H.15(519) under the caption
"Commercial paper--nonfinancial".
The following procedures will apply if the commercial paper rate cannot be
set as described above:
- if the rate is not published in H.15(519) by 3:00 p.m., New York City
time, on the calculation date pertaining to the commercial paper rate
interest determination date, the commercial paper rate will be the money
market yield of the rate on the interest determination date described in
the H.15 daily update for commercial paper having the index maturity we
specify in the applicable pricing supplement under the caption "Commercial
paper--nonfinancial";
- if the rate is not published in H.15(519) or the H.15 daily update by
3:00 p.m., New York City time, on the calculation date, the commercial
paper rate will be the money market yield of the arithmetic mean of the
offered rates, as of 11:00 a.m., New York City time, on the interest
determination date, of three leading dealers of commercial paper in The
City of New York (which may include the agents or their affiliates)
selected by the calculation agent for commercial paper having the index
maturity we specify in the applicable pricing supplement placed for an
industrial issuer whose bond rating is "AA", or the equivalent, by a
nationally recognized rating agency; and
- if fewer than three dealers are providing quotes, commercial paper rate
will remain the commercial paper rate then in effect on the interest
determination date.
The money market yield will be a yield calculated in accordance with the
following formula:
<Table>
D X 360
MONEY MARKET YIELD = ---------------- X 100
360 - (DXM)
</Table>
where "D" refers to the per annum rate of commercial paper quoted on a bank
discount basis and expressed as a decimal; and "M" refers to the actual number
of days in the interest period for which interest is being calculated.
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FEDERAL FUNDS RATE NOTES
Each federal funds rate note will bear interest at the interest rates,
calculated with reference to the federal funds rate and the spread and/or spread
multiplier, if any, and will be payable on the dates, we specify on the face of
the federal funds rate note and in the applicable pricing supplement.
Federal funds rate means, with respect to any interest determination date
relating to a federal funds rate note, the rate on that date for U.S. dollar
funds published in H.15(519) under the heading "Federal funds (effective)", as
that rate is displayed on Moneyline Telerate, or any successor service, on page
120, or any other page that may replace that page on that service.
The following procedures will apply if the federal fund rate cannot be set
as described above:
- if the rate is not published on Moneyline Telerate page 120 by 3:00 p.m.,
New York City time, on the calculation date pertaining to the federal
funds rate interest determination date, the federal funds rate will be the
rate on the interest determination date as published in the H.15 daily
update under the caption "Federal funds (effective)";
- if the rate is not published in H.15(519) or the H.15 daily update by
3:00 p.m., New York City time, on the calculation date, the federal funds
rate will be the arithmetic mean of the rates for the last transaction in
overnight U.S. dollar federal funds arranged by each of three leading
brokers of U.S. dollar federal funds transactions in The City of New York
(which may include the agents or their affiliates) selected by the
calculation agent prior to 3:00 p.m., New York City time, on the interest
determination date; and
- if fewer than three brokers are providing quotes, the federal funds rate
will remain the same federal funds rate then in effect on the interest
determination date.
LIBOR NOTES
Each LIBOR note will bear interest at the interest rates, calculated with
reference to LIBOR, and the spread and/or spread multiplier, if any, and will be
payable on the dates, we specify on the face of the LIBOR note and in the
applicable pricing supplement.
Unless we otherwise indicate in the applicable pricing supplement, LIBOR for
each interest determination date relating to a LIBOR note will be determined by
the calculation agent in the following manner:
- if we specify "LIBOR Reuters" in the applicable pricing supplement, the
arithmetic mean of the offered rates (unless the designated LIBOR page, as
described below, by its terms provides only for a single rate, in which
case the single rate will be used) for deposits in the LIBOR currency
having the index maturity we specify in the applicable pricing supplement,
commencing on the second London banking day immediately following the
LIBOR interest determination date, that appear on the designated LIBOR
page as of 11:00 a.m., London time, on the interest determination date, if
at least two such offered rates appear, unless, as mentioned, only a
single rate is required, on the designated LIBOR page; and
- if we specify "LIBOR Telerate" in the applicable pricing supplement, the
rate for deposits in the LIBOR currency having the index maturity we
specify in the applicable pricing supplement commencing on the second
London banking day
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immediately following the interest determination date that appears on the
designated LIBOR page as of 11:00 a.m., London time, on the interest
determination date.
If we specify neither LIBOR Reuters nor LIBOR Telerate in the applicable
pricing supplement, LIBOR for the applicable LIBOR currency will determined as
if we had specified LIBOR Telerate.
If fewer than two offered rates appear (if we specify LIBOR Reuters in the
applicable pricing supplement), or no rate appears (if we specify LIBOR Telerate
in the applicable pricing supplement), the calculation agent will determine
LIBOR in respect of the related LIBOR interest determination date as follows.
The calculation agent will request the principal London offices of each of
four major reference banks in the London interbank market (which may include the
agents or their affiliates), as selected by the calculation agent, to provide
the calculation agent with its offered quotation for deposits in the LIBOR
currency for the period of the index maturity designated in the applicable
pricing supplement, commencing on the second London banking day immediately
following the interest determination date, to prime banks in the London
interbank market at approximately 11:00 a.m., London time, on the interest
determination date and in a principal of not less than $1,000,000, or the
equivalent in the LIBOR currency, if the LIBOR currency is not the U.S. dollar,
that is representative of a single transaction in that LIBOR currency in that
market at that time.
If at least two quotations are provided, LIBOR determined on the LIBOR
interest determination date will be the arithmetic mean of the quotations.
If fewer than two quotations are provided, LIBOR determined on the LIBOR
interest determination date will be the arithmetic mean of the rates quoted at
approximately 11:00 a.m., or such other time we specify in the applicable
pricing supplement, in the applicable principal financial center for the country
of the LIBOR currency on the interest determination date, by three major banks
(which may include the agents or their affiliates) in the principal financial
center selected by the calculation agent for loans in the LIBOR currency to
leading European banks, having the index maturity we specify in the applicable
pricing supplement and in a principal amount of not less than $1,000,000, or the
equivalent in the LIBOR currency, if the LIBOR currency is not the U.S. dollar,
commencing on the second London banking day immediately following the interest
determination date that is respective for a single transaction in that LIBOR
currency in that market at that time.
If fewer than three banks selected by the calculation agent are quoting as
mentioned above, LIBOR will remain LIBOR then in effect on the interest
determination date.
The LIBOR currency is the currency, including composite currencies, which we
specify in the applicable pricing supplement as the currency for which LIBOR
will be calculated. If we do not specify any currency in the applicable pricing
supplement, the LIBOR currency will be U.S. dollars.
The designated LIBOR page means either:
- if we designate LIBOR Reuters in the applicable pricing supplement, the
display on the Reuters Monitor Money Rates Service, or any successor
service (or any other page that may replace the LIBOR page on that service
for the purpose of displaying the London interbank rates of major banks
for the applicable LIBOR currency); or
- if we designate LIBOR Telerate in the applicable pricing supplement, the
display on Moneyline Telerate, or any successor service, for the purpose
of displaying the London interbank rates of major banks for the applicable
LIBOR currency (if the
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U.S. dollar is the LIBOR currency, LIBOR will be determined as if Page
3750 had been specified). Page 3750 means the display designated as Page
"3750" on Moneyline Telerate, or such other page as may replace the 3750
page on that service or any successor service.
PRIME RATE NOTES
Each prime rate note will bear interest at the interest rates, calculated
with reference to the prime rate, and any spread and/or spread multiplier, if
any and will be payable on the dates, we specify on the face of the prime rate
note and in the applicable pricing supplement.
Prime rate means, with respect to any interest determination date relating
to a prime rate note, the rate on that interest determination date published in
H.15(519) under the caption "Bank prime loan." The following procedures will
apply if the prime rate cannot be set as described above:
- if the rate is not published in H.15(519) on the calculation date
pertaining to the prime rate interest determination date, the prime rate
will be the arithmetic mean of the rates of interest publicly announced by
each bank named on the Reuters Screen USPRIME 1 as that bank's prime rate
or base lending rate as in effect for the interest determination date as
quoted on the Reuters Screen USPRIME 1 on the interest determination date;
- if fewer than four of these rates appear on the Reuters Screen USPRIME 1
for the interest determination date, the rate will be the arithmetic mean
of the prime rates quoted on the basis of the actual number of days in the
year divided by 360 as of the close of business on the interest
determination date by at least two of the three major money center banks
in The City of New York selected by the calculation agent from which
quotations are requested;
- if fewer than two quotations are quoted as mentioned above, the prime rate
for the interest determination date will be calculated by the calculation
agent and will be the arithmetic mean of the prime rates quoted in The
City of New York on that date by the appropriate member of substitute
banks or trust companies organized and doing business under the laws of
the United States, or any state, having total equity capital of at least
$500,000,000 and being subject to supervision or examination by a federal
or state authority, selected by the calculation agent to quote that rate
or rates; or
- if the prime rate is not published in H.15(519) and the banks or trust
companies selected as described above are not quoting as mentioned above,
the prime rate with respect to the interest determination date will remain
be the interest rate otherwise in effect on the interest determination
date.
Reuters Screen USPRIME 1 means the display designated as page "USPRIME 1" on
the Reuters Monitor Money Rates Service, or any successor service, or other page
that may replace page USPRIME 1 on that service for the purpose of displaying
prime rates or base lending rates of major U.S. banks.
TREASURY RATE NOTES
Each treasury rate note will bear interest at the interest rates, calculated
with reference to the treasury rate, and the spread and/or spread multiplier, if
any, and will be payable on the dates, we specify on the face of the treasury
rate note and in the applicable pricing supplement.
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Treasury rate means, with respect to any interest determination date
relating to a treasury rate note, the rate for the auction held on that date of
direct obligations of the United States, known as treasury bills, having the
index maturity we specify in the applicable pricing supplement as that rate
appears on either page 56 or page 57 on the display on Moneyline Telerate, or
any other page or pages as may replace page 56 and/or page 57 on that service or
a successor service, under the caption "Investment Rate." If that rate is not
published by 3:00 p.m., New York City time, on the calculation date pertaining
to the treasury rate interest determination date, the treasury rate will be the
bond equivalent yield of the rate for the applicable treasury bills as published
in the H.15 daily update under the caption "U.S. government securities--Treasury
bills--Auction high."
The following procedures will be followed if the treasury rate cannot be set
as described above:
- if the above rate is not published by 3:00 p.m., New York City time, on
the calculation date pertaining to the treasury rate interest
determination date, the treasury rate will be the bond equivalent yield of
the auction average rate on the interest determination date as otherwise
announced by the U.S. Department of the Treasury;
- if the results of the auction of treasury bills having the index maturity
specified in the applicable pricing supplement are not published or
reported as provided above by 3:00 p.m., New York City time, on the
calculation date, or if no auction is held on the interest determination
date, the treasury rate will be the bond equivalent yield on the interest
determination date of treasury bills having the index maturity we specify
in the applicable pricing supplement as published in H.15(519) under the
caption "U.S. government securities--Treasury bills (secondary market)"
or, if not published by 3:00 p.m., New York City time, on the calculation
date, the bond equivalent yield on the interest determination date of
treasury bills having the index maturity we specify in the applicable
pricing supplement as published in the H.15 daily update under the caption
"U.S. government securities--Treasury bills (secondary market)" or another
recognized electronic source used for the purpose of displaying the
applicable rate;
- if the rate is not yet published either in H.15(519) or in the H.15 daily
update by 3:00 p.m., New York City time, the treasury rate will be the
bond equivalent yield of the arithmetic mean of the secondary market bid
rates, as of approximately 3:30 p.m., New York City time, on the interest
determination date, of three leading primary U.S. government securities
dealers (which may include the agents or their affiliates) selected by the
calculation agent, for the issue of treasury bills with a remaining
maturity closest to the index maturity we specify in the applicable
pricing supplement; and
- if fewer than three dealers selected by the calculation agent are quoting
as mentioned above, the treasury rate will remain the treasury rate then
in effect on the interest determination date.
The bond equivalent yield shall be a yield calculated in accordance with the
following formula:
<Table>
bond equivalent D X N
yield................ = ---------------- X 100
360 - (D X M)
</Table>
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where "D" refers to the applicable per annum rate for treasury bills quoted on a
bank discount basis, "N" refers to 365 or 366, as the case may be, and "M"
refers to the actual number of days in the interest period for which interest is
being calculated.
CMT RATE NOTES
Each CMT rate note will bear interest at the interest rates, calculated with
reference to the CMT rate, and any spread and/or spread multiplier, if any, and
will be payable on the dates, we specify on the face of the CMT rate note and in
the applicable pricing supplement.
CMT rate means, with respect to any interest determination date relating to
a CMT rate note, the rate displayed on the designated CMT Moneyline Telerate
Page as described below under the caption ". . . Treasury Constant Maturities
. . . Federal Reserve Board Release H.15 . . . Mondays Approximately
3:45 p.m.," under the column for the index maturity we specify in the applicable
pricing supplement for:
- if the designated CMT Telerate Page is 7051, the rate on the interest
determination date; and
- if the designated CMT Telerate Page is 7052, the rate for the week, or the
month, as applicable, ended immediately preceding the week or month, as
applicable, in which the related CMT rate interest determination date
occurs.
Designated CMT Telerate Page means the display on Moneyline Telerate, or any
successor service, on the page we specify in the applicable pricing supplement,
or any other page that may replace that page on that service for the purpose of
displaying treasury constant maturities as reported in H.15(519).
The following procedures will apply if the rate cannot be set as described
above:
- if we do not specify any page, the designated CMT Telerate Page will be
7052 for the most recent week. If that rate is no longer displayed on the
relevant page, or if it is not displayed by 3:00 p.m., New York City time,
on the calculation date pertaining to the CMT rate interest determination
date, the CMT rate will be the treasury constant maturity rate for the
index maturity we specify in the applicable pricing supplement as
published in the relevant H.15(519);
- if the rate is no longer published in H.15(519), or is not published by
3:00 p.m., New York City time, on the calculation date, the CMT rate for
the interest determination date will be the treasury constant maturity
rate for the index maturity we specify in the applicable pricing
supplement, or other U.S. treasury rate for that index maturity for the
interest determination date, as may then be published by either the Board
of Governors of the Federal Reserve System or the U.S. Department of the
Treasury that the calculation agent determines to be comparable to the
rate formerly displayed on the designated CMT Telerate Page and published
in the relevant H.15(519); and
- if that information is not provided by 3:00 p.m., New York City time, on
the calculation date, the CMT rate will be the yield to maturity, based on
the arithmetic mean of the secondary market closing offer side prices as
of approximately 3:30 p.m., New York City time, on the interest
determination date of three leading primary U.S. government securities
dealers (which may include the agents or their affiliates), each a
"reference dealer," in The City of New York selected by the calculation
agent. These dealers will be selected from five reference dealers.
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The calculation agent will eliminate the highest quotation, or, in the event
of equality, one of the highest, and the lowest quotation, or, in the event of
equality, one of the lowest, for the most recently issued direct noncallable
fixed rate obligations of the United States ("treasury notes") with an original
maturity of approximately the index maturity specified we specify in the
applicable pricing supplement and a remaining term to maturity of not less than
that index maturity minus one year.
If two treasury notes with an original maturity as described in the
preceding sentence have remaining terms to maturity equally close to the index
maturity we specify in the applicable pricing supplement, the calculation agent
will use the quotes for the treasury note with the shorter remaining term to
maturity.
If the calculation agent cannot obtain three Treasury note quotations, the
CMT rate will be calculated as a yield to maturity based on the arithmetic mean
of the secondary market offer side prices as of approximately 3:30 p.m., New
York City time, on the CMT rate interest determination date of three reference
dealers in The City of New York selected by the calculation agent using the same
method described above, for treasury notes with an original maturity of the
number of years that is the next highest to the index maturity we specify in the
applicable pricing supplement with a remaining term to maturity closest to that
index maturity and in an amount of at least $100,000,000.
If three or four, and not five, of the reference dealers are providing
quotes, then the CMT rate will be based on the arithmetic mean of the offer
prices obtained, and neither the highest nor the lowest of those quotes will be
eliminated.
If fewer than three reference dealers are providing quotes, the rate of
interest on CMT rate notes will remain the CMT rate then in effect on the
interest determination date.
CURRENCY INDEXED NOTES
We may from time to time offer currency indexed notes, the principal amount
payable at maturity (or earlier redemption or repayment) and/or interest rate of
which is determined by reference to the rate of exchange between the specified
currency and the other currency or composite currency we specify as the indexed
currency in the applicable pricing supplement, or as is determined in such other
manner as we may specify in the applicable pricing supplement.
Unless we specify otherwise in the applicable pricing supplement, holders of
currency indexed notes will be entitled to receive:
- an amount of principal exceeding the stated face amount of the principal
of, and/or an amount of interest at an interest rate exceeding the stated
rate of interest on, their currency indexed notes if, at maturity (or
earlier redemption or repayment) or upon the relevant interest payment
date, as the case may be, the rate at which the specified currency can be
exchanged for the indexed currency exceeds the rate of that exchange
designated as the base exchange rate, expressed in units of the indexed
currency per one unit of the specified currency, in the applicable pricing
supplement; or
- an amount of principal less than the stated face amount and/or an amount
of interest at an interest rate less than that stated interest rate if, at
maturity (or earlier redemption or repayment) or upon the relevant
interest payment date, as the case may be, the rate at which the specified
currency can be exchanged for the indexed currency is less than that base
exchange rate.
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We will set forth in the applicable pricing supplement information as to the
payment of principal and interest, the relative historical value, which
information is not necessarily indicative of relative future value, of the
applicable specified currency against the applicable indexed currency, any
exchange controls applicable to the specified currency or indexed currency and
certain tax consequences to holders of currency indexed notes.
OTHER INDEXED NOTES
In addition to currency indexed notes, we may issue notes where the
principal amount payable at maturity and/or the interest rate or premium to be
paid on the notes are to be determined by reference to the relationship between
two or more currencies, to the price of one or more specified securities or
commodities, to one or more securities or commodities exchange indices or other
indices or by other similar methods or formulas. Those notes are called indexed
notes. In the pricing supplement relating to an indexed note, we will describe,
as applicable, the method by which the amount of interest payable on any
interest payment date and the amount of principal payable at maturity in respect
of the indexed note will be determined, certain special tax consequences of the
purchase, ownership or disposition of the indexed notes, certain risks
associated with an investment in the indexed notes and other information
relating to the indexed notes.
REDEMPTION
We may issue notes that permit us to redeem them prior to their maturity.
Any redemption provisions, including the date(s) on which the redemption may
occur, the prices at which we may redeem the notes and whether redemptions may
be made in whole or in part, will be described in the pricing supplement
relating to the specific notes. If we are permitted to redeem any notes, we will
give notice of the redemption to you (or to the entity that is the registered
holder of your notes) by mail at least 30 calendar days and not more than 90
calendar days prior to the date set for redemption. Notes we redeem in this
manner may, at our discretion, be held, resold or surrendered to the trustee for
cancellation. The notes will not be subject to any sinking fund.
REPAYMENT
We may issue notes that permit you to require us to repay them prior to
their maturity. Any repayment provisions, including the date(s) on which the
repayment may occur, the prices at which you may require us to repurchase the
notes and whether repayments may be made in whole or in part, will be described
in the pricing supplement relating to the specific notes. If you are permitted
to require us to repay any notes, you must deliver to the applicable trustee at
least 30 calendar days and not more than 60 calendar days prior to the date set
for redemption:
- in the case of a certificated note, the note with the attached "Option to
Elect Repayment" form completed, or a letter from a broker/dealer, bank or
trust company notifying the applicable trustee of your intent to require
us to repay your note and guaranteeing that you will deliver the note and
the attached "Option to Elect Repayment" form not later than five business
days after the date set for redemption; or
- in the case of a book-entry note, instructions to that effect from the
beneficial owner of the note to DTC and forwarded by DTC to the applicable
trustee.
Any notice of your exercise of your repayment option will be irrevocable.
Notes we repay in this manner may, at our discretion, be held, resold or
surrendered to the trustee for cancellation.
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The depositary or its nominee will be the holder of global notes and
therefore will be the only entity that can exercise a right to repayment with
respect to global notes. In order to ensure that the depositary or its nominee
will timely exercise a right to repayment with respect to a particular
book-entry note, the beneficial owner of the book-entry note must instruct the
broker or other direct or indirect participant through which it holds an
interest in the note to notify the depositary of its desire to exercise a right
to repayment. Different firms have different cut-off times for accepting
instructions from their customers and, accordingly, each beneficial owner should
consult the broker or other direct or indirect participant through which the
beneficial owner holds an interest in a book-entry note to ascertain the cut-off
time by which the instruction must be given for timely notice to be delivered to
the depositary.
Unless we specify otherwise in the applicable pricing supplement, if an
original issue discount note is to be repaid prior to its specified maturity,
the amount of principal due and payable with respect to the note will be limited
to the sum of the principal amount of such note multiplied by the issue price
(expressed as a percentage of the aggregate principal amount), plus the original
issue discount accrued from the date of issue to the date of declaration, which
accrual will be calculated using the "interest method" (computed in accordance
with generally accepted accounting principles) in effect on the date of
declaration.
OPEN-MARKET PURCHASES
We may, at any time, purchase notes at any price from holders of notes in
the open market. If we purchase any of our notes, we may hold them, resell them
or surrender them to the applicable trustee for cancellation.
EXTENSION OF MATURITY
If we have provided in any note the option for us to extend the stated
maturity for one or more periods, each an extension period up to but not beyond
the final maturity date described in the pricing supplement relating to the
note, the pricing supplement will indicate the option and the basis or formula,
if any, for setting the interest rate, in the case of a fixed rate note, or the
spread and/or spread multiplier, in the case of a floating rate note, applicable
to any extension period, and the pricing supplement will describe any special
tax consequences to holders of such notes.
We may exercise the option with respect to an extension of the maturity of a
note by notifying the applicable trustee of the exercise at least 45 but not
more than 60 calendar days prior to the original stated maturity date of the
note in effect prior to the exercise of such option. No later than 40 days prior
to the original stated maturity, the applicable trustee will mail to the holder
of the note an extension notice relating to the extension period, first class,
postage prepaid, setting forth:
- our election to extend the maturity date of the note;
- the new stated maturity date;
- in the case of a fixed rate note, the interest rate applicable to the
extension period or, in the case of a floating rate note, the spread
and/or spread multiplier applicable to the extension period; and
- the provisions, if any, for redemption or repurchase during the extension
period, including the date or dates on which or the period or periods
during which and the
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price or prices at which such redemption or repurchase may occur during
the extension period.
When the applicable trustee has mailed an extension notice to the holder of
a note, the stated maturity of the note will be extended automatically as
described in the extension notice, and, except as modified by the extension
notice and as described in the next paragraph, the note will have the same terms
as prior to the mailing of the extension notice.
Notwithstanding the foregoing, not later than 20 days prior to the original
stated maturity for a note, we may, at our option revoke the interest rate, in
the case of a fixed rate note, or the spread and/or spread multiplier, in the
case of a floating rate note, provided for in the extension notice and establish
a higher interest rate, in the case of a fixed rate note, or a higher spread
and/or spread multiplier, in the case of a floating rate note, for the extension
period by mailing or causing the applicable trustee to mail notice of that
higher interest rate or higher spread and/or spread multiplier, as the case may
be, first class, postage prepaid, to the holder of the note. The notice will be
irrevocable. All notes with respect to which the stated maturity is extended
will bear a higher interest rate, in the case of a fixed rate note, or higher
spread and/or spread multiplier, in the case of a floating rate note, for the
extension period.
If we elect to extend the maturity of a note, the holder of the note will
have the option to elect repayment of the note by us at the original stated
maturity at a price equal to the principal amount of that note plus any accrued
interest to the original stated maturity. In order for a note to be repaid on
the original stated maturity, the direct holder must follow the procedures set
forth above under "Repayment" for repayment, except that the period for delivery
of the note or notification to the applicable trustee must be at least 25 but
not more than 35 calendar days prior to the original stated maturity and except
that a holder who has tendered a note for repayment pursuant to an extension
notice may, by written notice to the applicable trustee, revoke any tender for
repayment until the close of business on the tenth day prior to the original
stated maturity.
BOOK-ENTRY SYSTEM
Upon issuance, all fixed-rate notes, except foreign currency notes issued as
certificated notes, having the same original issuance date, interest rate,
specialized currency and stated maturity and other terms, if any, will be
represented by a global note. In addition, upon issuance, all floating rate
notes, except foreign currency notes issued as certificated notes, having the
same following original terms will be represented by one or more global notes:
- issuance date;
- interest rate basis;
- initial interest rate;
- interest reset dates;
- interest payment dates;
- index maturity;
- maximum interest rate (if any);
- minimum interest rate (if any);
- spread (if any);
- spread multiplier (if any);
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- specified currency;
- stated maturity; and
- other terms (if any).
Each global note will be deposited with, or in behalf of, The Depository
Trust Company, New York, New York, and registered in the name of Cede & Co. as
DTC's nominee. Except as described below, global notes may be transferred, in
whole or in part, only by DTC to itself or another nominee of DTC.
DTC has advised the agents and us as follows: it is a limited-purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934, as amended.
DTC was created to hold securities of institutions that have accounts with DTC
or its nominee. DTC also facilitates the clearance and settlement of securities
transactions among its participants in securities through electronic
computerized book-entry changes in accounts of its participants, thereby
eliminating the need for physical movement of securities certificates. DTC's
direct participants include securities brokers and dealers (including the
agents), banks, trust companies, clearing corporations, and certain other
organizations. DTC is owned by a number of its direct participants and by the
New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the
National Association of Securities Dealers, Inc. Access to the DTC's book-entry
system is also available to others, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a DTC
direct participant, either directly or indirectly. The rules applicable to DTC
and its participants are on file with the Securities and Exchange Commission.
The notes will be represented by one or more global notes that will be
registered in the name of DTC or its nominee. Global notes will be issued in
registered form. Upon the issuance of a global note, DTC or its nominee will
credit, on its book-entry registration and transfer system, the respective
principal amounts of the book-entry notes represented by the global note to the
accounts of the DTC participants. The accounts to be credited will be designated
by the underwriters or agents with respect to the notes, or by us if the notes
are offered and sold directly by us. Ownership of beneficial interests in a
global note will be limited to DTC participants or persons that may hold
interests through DTC participants. Ownership of beneficial interests in the
global note will be shown on, and the transfer of that ownership will be
effected only through, records maintained by DTC or its nominee (with respect to
interests of DTC participants) for the global note and on the records of DTC
participants (with respect to interests of persons other than DTC participants).
Each beneficial owner is expected to receive written confirmations providing
details of the transaction, as well as periodic statements of the beneficial
owner's holdings, from the DTC direct or indirect participant through which the
beneficial owner entered into the transaction. Beneficial owners will not
receive certificates representing their ownership interests in the global note,
except as described below. The laws of some jurisdictions may require that
certain purchasers of securities take physical delivery of their securities in
definitive form. Those limits and laws may impair the ability to transfer
beneficial interests in a global note.
So long as DTC, or its nominee, is the registered holder or owner of a
global note, DTC or the nominee, as the case may be, will be considered the sole
owner or holder of the book-entry notes represented by the global note for all
purposes of the book-entry notes and for all purposes under the indenture
governing the notes. Except as set forth below,
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beneficial owners will not be entitled to have book-entry notes represented by
the global note registered in their names, will not receive or be entitled to
receive physical delivery of certificated notes of the series in definitive form
and will not be considered the owners or holders of the notes under the
applicable indenture governing the notes. Accordingly, each beneficial owner
must rely on the procedures of DTC and, if the person is not a DTC participant,
on the procedures of the DTC participant through which the person owns its
interests, to exercise any rights of a holder of notes under the indentures or
the global note. The book-entry notes permit DTC to grant proxies and otherwise
to authorize DTC participants to take any action which DTC, as the holder of the
global note, is entitled to take under the indentures or the global note. We
understand that under existing industry practice, in the event we request any
action of holders of notes or a beneficial owner desires to take any action that
DTC, as the holder of the global note, is entitled to take, DTC would authorize
the DTC participants to take the action and that the DTC participants would
authorize beneficial owners owning through the DTC participants to take the
action or would otherwise act upon the instructions of beneficial owners owning
through them.
To facilitate subsequent transfers, all global notes deposited by DTC
participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of global notes with DTC and their registration in the
name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual beneficial owners of the interests in the global notes;
DTC's records reflect only the identity of the DTC direct participants to whose
accounts interests in the global notes are credited, which may or may not be the
beneficial owners. The DTC participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants, and by direct
participants and indirect participants to beneficial owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
We will send redemption notices to Cede & Co. If less than all of the
interests in a global note are being redeemed, DTC's practice is to determine by
lot the amount of the interest of each DTC direct participant in the global note
to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to the global
notes. Under its usual procedures, DTC mails an omnibus proxy to us as soon as
possible after the record date. The omnibus proxy assigns Cede & Co.'s
consenting or voting rights to those DTC direct participants to whose accounts
interests in the global notes are credited on the record date (identified in a
listing attached to the omnibus proxy).
We will make principal and interest payments on the global notes to DTC.
DTC's practice is to credit DTC direct participants' accounts on the payment
date in accordance with their respective holdings shown on DTC's records unless
DTC has reason to believe that it will not receive payment on the payment date.
Payments by DTC participants to beneficial owners will be governed by standing
instructions and customary practices, as is the case with securities held for
the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of the DTC participant and not of DTC, the trustee or
us, subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of principal and interest to DTC is the responsibility of
us or the trustee, disbursement of the payments to DTC direct participants shall
be the responsibility of DTC, and disbursement of the payments to the beneficial
owners shall be the responsibility of DTC direct and indirect participants.
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All payments of principal and any interest on foreign currency notes which
are global notes will be made in U.S. dollars unless DTC has received notice in
accordance with its procedures from any DTC participants of their election to
receive all or a specified portion of the payments in the specified currency, in
which case payments in the specified currency will be made directly to those DTC
participants.
The notes represented by one or more global notes are exchangeable for
certificated notes of like tenor as the notes if:
- DTC notifies us that it is unwilling or unable to continue as depositary
for the global notes or if at any time DTC ceases to be a clearing agency
registered under the Securities Exchange Act of 1934, as amended;
- we in our discretion at any time determine not to have all of the notes of
the series represented by one or more global note or notes and notify the
trustee of our determination; or
- an event of default, as described in the accompanying prospectus, has
occurred and is continuing with respect to the notes of the series.
Any note that is exchangeable pursuant to the preceding sentence is
exchangeable for certificated notes issuable in authorized denominations and
registered in the names as the depositary holding the global notes may direct.
The authorized denominations of the notes denominated in U.S. dollars will be
$1,000 or any greater amount that is an integral multiple of $1,000. We will
describe the authorized denominations of notes denominated in a specified
currency other than U.S. dollars in the applicable pricing supplement. Subject
to the foregoing, a global note is not exchangeable, except for a global note or
global notes of the same aggregate denominations to be registered in the name of
DTC or its nominee.
The information in this section concerning DTC and its book-entry system has
been obtained from sources that we believe to be reliable, but we take no
responsibility for the accuracy of that information.
OTHER PROVISIONS APPLICABLE TO NOTES
Any provisions with respect to the notes, including the determination and/or
specification of an interest rate basis or the calculation of the interest rate
applicable to a floating rate note, the interest payment dates, the maturity or
any other matter relating to the note, may be modified by the terms specified
under "Other Provisions" on the face of the note or in an addendum relating to
the note, if we so specify on the face of the note and in the applicable pricing
supplement.
CONCERNING THE TRUSTEES
Bank One Trust Company, National Association has extended a line of credit
to us. We and our affiliates maintain bank accounts, borrow money and engage in
general financing and banking transactions with Bank One Trust Company, National
Association in the ordinary course of business. Banc One Capital Markets, Inc.,
one of the agents, is an affiliate of Bank One Trust Company, National
Association.
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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
The following section summarizes certain U.S. federal income tax
consequences relating to the ownership of the notes as of the date of this
prospectus supplement. This section does not apply to you if you are subject to
special tax rules, such as those that apply to:
- brokers and security dealers;
- traders in securities that elect to mark to market;
- banks;
- life insurance companies;
- tax-exempt organizations;
- persons who will hold the notes as part of a hedging, straddle, integrated
or conversion transaction; or
- persons whose functional currency for tax purposes is not the U.S. dollar.
This section is based upon the laws, regulations, rulings and decisions
currently in effect, which could change at any time (possibly with retroactive
effect). The discussion does not address foreign, state and local tax issues and
does not address estate, gift or alternative minimum tax issues. Additionally,
this section, except as otherwise noted, deals only with persons who will hold
their notes as capital assets. You should consult with your own tax advisor
concerning all of the tax consequences of owning a note.
U.S. BENEFICIAL OWNERS
This section describes your tax consequences if you are a "U.S. beneficial
owner." You are a U.S. beneficial owner if you are a beneficial owner of a note
and you are, for U.S. federal income tax purposes:
- a citizen or resident of the United States;
- a domestic corporation;
- a domestic partnership (except as may be provided in U.S. Treasury
Regulations); or
- an estate or trust whose income is subject to U.S. federal income tax on a
net income basis in respect of the note.
If you are not a U.S. beneficial owner, this section does not apply to you, and
you should refer to the section entitled "Non-U.S. beneficial owners."
INTEREST. Except as set forth below, for U.S. federal income tax purposes,
interest on the notes will be taxable to you as ordinary income when it is
received or accrued, depending upon your method of tax accounting. Special rules
governing the treatment of notes issued at an original issue discount are
described under "Original Issue Discount" below.
ORIGINAL ISSUE DISCOUNT--GENERAL TREATMENT. The following is a summary of
the principal U.S. federal income tax consequences of the ownership of notes
issued with original issue discount. A note that has an issue price of less than
its stated redemption price at maturity generally will be issued with original
issue discount for federal income tax purposes in the amount of the difference.
The issue price of a note generally is the first price at which a substantial
amount of the issue of notes is sold to the public (excluding bond houses,
brokers or similar persons acting in the capacity of underwriters or
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wholesalers). The stated redemption price at maturity is the total amount of all
payments provided by the note other than qualified stated interest payments.
Qualified stated interest generally is stated interest that is unconditionally
payable at least annually either at a single fixed rate, or, to the extent
described below, at a qualifying variable rate. Qualified stated interest will
be taxable to a U.S. holder when accrued or received in accordance with the U.S.
holder's method of tax accounting.
A note will be considered to have DE MINIMIS original issue discount if the
excess of its stated redemption price at maturity over its issue price is less
than the product of .25 percent of the stated redemption price at maturity and
the number of complete years to maturity (or the weighted average maturity in
the case of a note that provides for payment of an amount other than qualified
stated interest before maturity). U.S. holders of notes having DE MINIMIS
original issue discount generally must include a proportionate amount of each
payment of stated principal in income as a payment received in retirement of the
note.
U.S. holders of notes issued with original issue discount that is not DE
MINIMIS original issue discount and that mature more than one year from the date
of issuance will be required to include the original issue discount in gross
income for federal income tax purposes as it accrues (regardless of such
holder's method of accounting), in advance of receipt of the cash attributable
to such income. Original issue discount accrues based on a compounded, constant
yield to maturity; accordingly, U.S. holders of notes issued at an original
issue discount will generally be required to include in income increasingly
greater amounts of original issue discount in successive accrual periods.
The annual amount of original issue discount includable in income by the
initial U.S. holder of a note issued at an original issue discount will equal
the sum of the daily portions of the original issue discount with respect to the
note for each day on which the holder held the note during the taxable year.
Generally, the daily portions of the original issue discount are determined by
allocating to each day in an accrual period the ratable portion of the original
issue discount allocable to such accrual period. The term "accrual period" means
an interval of time with respect to which the accrual of original issue discount
is measured, and which may vary in length over the term of the note provided
that each accrual period is no longer than one year and each scheduled payment
of principal or interest occurs on either the first or final day of an accrual
period.
The amount of original issue discount allocable to an accrual period will be
the excess of the product of the adjusted issue price of the note at the
commencement of the accrual period and its yield to maturity over the amount of
any qualified stated interest payments allocable to the accrual period. The
adjusted issue price of the note on the first day of the first accrual period is
its issue price, and, on any day after the first day of the first accrual
period, it is the sum of the issue price and the amount of the original issue
discount previously includable in the gross income of any holder (without regard
to any acquisition premium), reduced by the amount of any payment other than a
payment of qualified stated interest previously made with respect to the note.
There is a special rule for determining the original issue discount allocable to
an accrual period if an interval between payments of qualified stated interest
contains more than one accrual period. The yield to maturity of the note is the
yield to maturity computed on the basis of a constant interest rate, compounding
at the end of each accrual period. The constant yield, however, must take into
account the length of the particular accrual period. If all accrual periods are
of equal length except for an initial or an initial and final shorter accrual
period(s), the amount of original issue discount allocable to the initial period
may be computed using any reasonable method. The original issue discount
allocable to the final accrual period is in any event the difference between the
amount payable at maturity (other than a payment of qualified stated interest)
and the adjusted issue price at the beginning of the final accrual period.
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If a portion of the initial purchase price of a note is attributable to
pre-issuance accrued interest, the first stated interest payment on the note is
to be made within one year of the note's issue date, and the payment will equal
or exceed the amount of pre-issuance accrued interest, then the U.S. holder may
elect to decrease the issue price of the note by the amount of pre-issuance
accrued interest. In that event, a portion of the first stated interest payment
will be treated as a return of the excluded pre-issuance accrued interest and
not as an amount payable on the note.
If a note provides for an alternative payment schedule or schedules
applicable upon the occurrence of a contingency or contingencies (other than a
remote or incidental contingency), whether the contingency relates to payments
of interest or of principal, if the timing and amount of the payments that
comprise each payment schedule are known as of the issue date and if one of the
schedules is significantly more likely than not to occur, the yield and maturity
of the note are determined by assuming that the payments will be made according
to that payment schedule. If there is no single payment schedule that is
significantly more likely than not to occur (other than because of a mandatory
sinking fund), the note will be subject to the general rules that govern
contingent payment obligations. These rules will be discussed in the applicable
pricing supplement.
For purposes of calculating the yield and maturity of a note subject to an
unconditional issuer or holder right to accelerate principal repayment
(respectively, a call option or put option), the call option or put option is
presumed exercised if the yield on the note would be less or more, respectively,
than it would be if the option were not exercised. The effect of this rule
generally may be to accelerate or defer the inclusion of original issue discount
in the income of a U.S. holder whose note is subject to a put option or a call
option, as compared to a note that does not have such an option. If any option
presumed to be exercised is not in fact exercised, the note is treated as
reissued on the date of presumed exercise for an amount equal to its adjusted
issue price on that date for purposes of redetermining the note's yield and
maturity and any related subsequent accruals of original issue discount.
ORIGINAL ISSUE DISCOUNT-VARIABLE RATE DEBT INSTRUMENTS. Certain notes that
provide for a variable rate of interest may be treated as variable rate debt
instruments. A note will be treated as a variable rate debt instrument if:
- the debt instrument does not provide for contingent principal payments,
- the issue price of the debt instrument does not exceed the total
noncontingent principal payments by more than the product of such
principal payments and the lesser of 15 percent or the product of
1.5 percent and the number of complete years in the debt instrument's term
(or its weighted average maturity in the case of an installment
obligation), and
- the debt instrument does not provide for any stated interest other than
stated interest paid or compounded at least annually at a qualifying
variable rate which is one or more qualified floating rates, a single
fixed rate and one or more qualified floating rates, a single objective
rate or a single fixed rate and a single objective rate that is a
qualified inverse floating rate.
A qualified floating rate or objective rate must be set at a current value
of that rate; a current value is the value of the variable rate on any day that
is no earlier than three months prior to the first day on which that value is in
effect and no later than one year following that day. A qualified floating rate
is a variable rate whose variations can reasonably be expected to measure
contemporaneous variations in the cost of newly borrowed funds in the currency
in which the debt instrument is denominated. A qualified
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floating rate may be multiplied by a fixed, positive multiple that is greater
than .65 but not more than 1.35, and may be increased or decreased by a fixed
rate. Certain combinations of rates constitute a single qualified floating rate,
including interest stated at a fixed rate for an initial period of one year or
less followed by a qualified floating rate if the value of the floating rate at
the issue date is intended to approximate the fixed rate, and two or more
qualified floating rates that can reasonably be expected to have approximately
the same values throughout the term of the debt instrument. A combination of
those rates is conclusively presumed to be a single qualified floating rate if
the values of all rates on the issue date are within .25 percentage points of
each other. A variable rate that is subject to an interest rate cap, floor,
governor or similar restriction on rate adjustment may be a qualified floating
rate only if such restriction is fixed throughout the term of the debt
instrument, or is not reasonably expected as of the issue date to cause the
yield on the debt instrument to differ significantly from its expected yield
absent the restriction.
An objective rate is defined as a rate (other than a qualified floating
rate) that is determined using a single fixed formula and that is based on
objective financial or economic information (other than a rate based on
information that is within the control of the issuer (or a related party) or
that is unique to the circumstances of the issuer (or a related party)). The
U.S. Internal Revenue Service may designate other variable rates that will be
treated as objective rates. However, a variable rate is not an objective rate if
it is reasonably expected that the average value of the rate during the first
half of the debt instrument's term will differ significantly from the average
value of such rate during the final half of its term. A combination of interest
stated at a fixed rate for an initial period of one year or less followed by an
objective rate is treated as a single objective rate if the value of the
objective rate at the issue date is intended to approximate the fixed rate; such
a combination of rates is conclusively presumed to be a single objective rate if
the objective rate on the issue date does not differ from the fixed rate by more
than .25 percentage points. An objective rate is a qualified inverse floating
rate if it is equal to a fixed rate reduced by a qualified floating rate, the
variations in which can reasonably be expected to inversely reflect
contemporaneous variations in the qualified floating rate (disregarding
permissible rate caps, floors, governors and similar restrictions as are
discussed above).
Under these rules, commercial paper rate notes, prime rate notes, LIBOR
notes, treasury rate notes, CD rate notes, CMT rate notes and federal funds rate
notes generally will be treated as bearing interest at a qualifying variable
rate.
If a note is a variable rate debt instrument, special rules apply to
determine the amount of qualified stated interest and the amount and accrual of
any original issue discount. If the note bears interest that is unconditionally
payable at least annually at a single qualified floating rate or objective rate,
all stated interest is treated as qualified stated interest. The accrual of any
original issue discount is determined by assuming the note bears interest at a
fixed interest rate equal to the issue date value of the qualified floating rate
or qualified inverse floating rate, or equal to the reasonably expected yield
for the note in the case of any other objective rate. The qualified stated
interest allocable to an accrual period is increased (or decreased) if the
interest actually paid during an accrual period exceeds (or is less than) the
interest assumed to be paid during the accrual period. If the note bears
interest at a qualifying variable rate other than a single qualified floating
rate or objective rate, the amount and accrual of original issue discount
generally are determined by:
- determining a fixed rate substitute for each variable rate as described in
the second preceding sentence,
- determining the amount of qualified stated interest and original issue
discount by assuming the note bears interest at those substitute fixed
rates and
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- making appropriate adjustments to the qualified stated interest and
original issue discount so determined for actual interest rates under the
note.
However, if the qualifying variable rate includes a fixed rate (other than
an initial fixed rate applicable for a period of one year or less), the note
first is treated for purposes of applying the first bullet point above of the
preceding sentence as if it provided for an assumed qualified floating rate (or
qualified inverse floating rate if the actual variable rate is such) in lieu of
the fixed rate; the assumed variable rate would be a rate that would cause the
note to have approximately the same fair market value.
Variable rate notes that do not bear interest at a qualifying variable rate
or that have contingent principal payments or an issue price that exceeds the
noncontingent principal payments by more than the allowable amount will be
treated as contingent payment debt instruments. The pricing supplement
applicable to any contingent payment debt instrument will describe the material
federal income tax consequences of the ownership of a contingent payment
instrument
SHORT-TERM NOTES. A note that matures one year or less from the date of its
issuance is called a short-term note. In general, an individual or other cash
method U.S. holder of a short-term note is not required to accrue original issue
discount for federal income tax purposes unless it elects to do so. U.S. holders
who report income for U.S. federal income tax purposes on the accrual method and
certain other holders, including banks, common trust funds, holders who holds
the note as part of certain identified hedging transactions, regulated
investment companies and dealers in securities, are required to include original
issue discount on those notes on a straight-line basis, unless an election is
made to accrue the original issue discount according to a constant interest
method based on daily compounding.
In the case of a U.S. holder who is not required and does not elect to
include original issue discount in income currently, any gain realized on the
sale, exchange or retirement of a note will be ordinary income to the extent of
the original issue discount accrued on a straight-line basis (or, if elected,
according to a constant interest method based on daily compounding) through the
date of sale, exchange or retirement. In addition, those non-electing holders
who are not subject to the current inclusion requirement described in this
paragraph will be required to defer deductions for any interest paid on
indebtedness incurred or continued to purchase or carry their notes in an amount
not exceeding the deferred interest income, until their deferred interest income
is realized.
For purposes of determining the amount of original issue discount subject to
these rules, all interest payments on a short-term note, including stated
interest, are included in the short-term note's stated redemption price at
maturity.
PREMIUM AND MARKET DISCOUNT. If a U.S. holder purchases a note, other than
a short-term note, for an amount that is less than the note's stated redemption
price at maturity, or, in the case of a note issued at an original issue
discount, less than its revised issue price (which is the sum of the issue price
of the note and the aggregate amount of the original issue discount previously
includable in the gross income of any holder (without regard to any acquisition
premium)) as of the date of purchase, the amount of the difference generally
will be treated as market discount for U.S. federal income tax purposes.
However, a note acquired at its original issue will not have market discount
unless the note is purchased at less than its issue price. Market discount
generally will be DE MINIMIS and therefore disregarded if it is less than the
product of .25 percent of the stated redemption price at maturity of the note
and the number of remaining complete years to maturity (or weighted average
maturity in the case of notes paying any amount other than qualified stated
interest prior to maturity).
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Under the market discount rules, a U.S. holder is required to treat any
principal payment on, or any gain on the sale, exchange, retirement or other
disposition of, a note as ordinary income to the extent of any accrued market
discount which has not previously been included in income. If a note is disposed
of in a nontaxable transaction (other than certain specified nonrecognition
transactions), accrued market discount will be includable as ordinary income to
the U.S. holder as if the holder had sold the note at its then fair market
value. In addition, the U.S. holder may be required to defer, until the maturity
of the note or its earlier disposition in a taxable transaction, the deduction
of all or a portion of the interest expense on any indebtedness incurred or
continued to purchase or carry the note.
Market discount is considered to accrue ratably during the period from the
date of acquisition to the maturity of a note, unless the U.S. holder elects to
accrue market discount on a constant yield basis. A U.S. holder of a note may
elect to include market discount in income currently as it accrues (on either a
ratable or constant yield basis), in which case the rule described above
regarding deferral of interest deductions will not apply. This election to
include market discount currently applies to all market discount obligations
acquired during or after the first taxable year to which the election applies,
and may not be revoked without the consent of the U.S. Internal Revenue Service.
A U.S. holder who purchases a note issued at an original issue discount for
an amount exceeding its adjusted issue price (as defined above) and less than or
equal to the sum of all amounts payable on the note after the purchase date
other than payments of qualified stated interest will be considered to have
purchased the note with acquisition premium. The amount of original issue
discount which the holder must include in gross income with respect to the note
will be reduced in the proportion that the excess bears to the original issue
discount remaining to be accrued as of the note's acquisition.
A U.S. holder who acquires a note for an amount that is greater than the sum
of all amounts payable on the note after the purchase date other than payments
of qualified stated interest will be considered to have purchased such note at a
premium, and will not be required to include any original issue discount in
income. A U.S. holder generally may elect to amortize a premium using a constant
yield method over the remaining term of the note. The amortized premium will be
treated as a reduction of the interest income from the note. Any such election
shall apply to all debt instruments (other than debt instruments the interest on
which is excludable from gross income) held at the beginning of the first
taxable year to which the election applies or thereafter acquired, and is
irrevocable without the consent of the IRS. Special rules may apply if a note is
subject to call prior to maturity at a price in excess of its stated redemption
price at maturity.
CONSTANT YIELD ELECTION. A U.S. holder of a note may elect to include in
income all interest, discount and premium with respect to the note based on a
constant yield method, as described above. The election is made for the taxable
year in which the U.S. holder acquired the note, and it may not be revoked
without the consent of the IRS. If the election is made with respect to a note
having market discount, the holder will be deemed to have elected currently to
include market discount on a constant interest basis with respect to all debt
instruments having market discount acquired during the year of election or
thereafter. If made with respect to a note having amortizable bond premium, the
holder will be deemed to have made an election to amortize premium generally
with respect to all debt instruments having amortizable bond premium held by the
taxpayer during the year of election or thereafter.
SALE AND RETIREMENT OF THE NOTES. Upon the sale, exchange or retirement of
a note, a U.S. holder will recognize taxable gain or loss equal to the
difference between the amount
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realized from the sale, exchange or retirement and the U.S. holder's adjusted
tax basis in the note. The gain or loss generally will be capital gain or loss,
except to the extent of any accrued market discount and accrued but unpaid
interest. The capital gain or loss will be long-term capital gain or loss if the
note has been held for more than one year. A U.S. holder's adjusted tax basis in
a note will equal the cost of the note, increased by any original issue discount
or market discount previously included in taxable income by the U.S. holder with
respect to such note, and reduced by any amortizable bond premium applied to
reduce interest on a note, any principal payments received by the U.S. holder
and in the case of notes issued at an original issue discount, any other
payments not constituting qualified stated interest.
Special rules regarding the treatment of gain realized with respect to
short-term notes issued at an original issue discount are described under
"Original Issue Discount" above.
NONFUNCTIONAL CURRENCY NOTES. The following is a summary of the principal
U.S. federal income tax consequences to a U.S. holder of the ownership of a
foreign currency note or a note determined by reference to a specified currency
other than the U.S. dollar, which are collectively referred to as nonfunctional
currency notes. Persons considering the purchase of nonfunctional currency notes
should consult their own tax advisors with regard to the application of the U.S.
federal income tax laws to their particular situations, as well as any
consequences arising under the laws of any other taxing jurisdictions.
In general, if a payment of interest with respect to a note is made in (or
determined by reference to the value of) nonfunctional currency, the amount
includable in the income of the U.S. holder will be, in the case of a cash basis
U.S. holder, the U.S. dollar value of the nonfunctional currency payment based
on the exchange rate in effect on the date of receipt or, in the case of an
accrual basis U.S. holder, based on the average exchange rate in effect during
the interest accrual period (or, with respect to an accrual period that spans
two taxable years, the partial period within the taxable year), in either case
regardless of whether the payment is in fact converted into U.S dollars. Upon
receipt of an interest payment (including a payment attributable to accrued but
unpaid interest upon the sale or retirement of the nonfunctional currency note)
in (or determined by reference to the value of) nonfunctional currency, an
accrual basis U.S. holder will recognize ordinary income or loss measured by the
difference between such average exchange rate and the exchange rate in effect on
the date of receipt. Accrual basis U.S. holders may determine the U.S. dollar
value of any interest income accrued in a nonfunctional currency under an
alternative method, described below as the spot accrual convention.
A U.S. holder will have a tax basis in any nonfunctional currency received
as payment of interest on, or on the sale, exchange or retirement of, the
nonfunctional currency note equal to the U.S. dollar value of the nonfunctional
currency, determined at the time of payment, or the disposition of the
nonfunctional currency note. Any gain or loss realized by a U.S. holder on a
sale or other disposition of nonfunctional currency (including its exchange for
U.S. dollars or its use to purchase nonfunctional currency notes) will be
ordinary income or loss.
A U.S. holder's tax basis in a nonfunctional currency note, and the amount
of any subsequent adjustments to the holder's tax basis, will be the U.S. dollar
value of the nonfunctional currency amount paid for the nonfunctional currency
note, or the nonfunctional currency amount of the adjustment, determined using
the spot rate on the date of the purchase or adjustment and increased by the
amount of any original issue discount included in the U.S. holder's income (and
accrued market discount, in the case of a U.S. holder who has elected to
currently include market discount, as described above) with
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respect to the nonfunctional currency note and reduced by the amount of any
payments on the nonfunctional currency note that are not qualified stated
interest payments and by the amount of any amortizable bond premium applied to
reduce interest on the nonfunctional currency note.
A U.S. holder who converts U.S. dollars to a nonfunctional currency and
immediately uses that currency to purchase a nonfunctional currency note
denominated in the same currency normally will not recognize gain or loss in
connection with the conversion and purchase. However, a U.S. holder who
purchases a nonfunctional currency note with previously owned nonfunctional
currency will recognize gain or loss in an amount equal to the difference, if
any, between the holder's tax basis in the nonfunctional currency and the U.S.
dollar value of the nonfunctional currency on the date of purchase.
For purposes of determining the amount of any gain or loss recognized by a
U.S. holder on the sale, exchange or retirement of a nonfunctional currency note
(as described above in the section "Sale and Retirement of the Notes"), the
amount realized upon the sale, exchange or retirement will be the U.S. dollar
value of the nonfunctional currency received (or that was payable, in the case
the payment was made in U.S. dollars), determined using the spot rate on the
date of the sale, exchange or retirement.
Gain or loss realized upon the sale, exchange or retirement of a
nonfunctional currency note that is attributable to fluctuations in currency
exchange rates will be treated as ordinary income or loss. Gain or loss
attributable to fluctuations in exchange rates will be calculated by multiplying
the original purchase price paid by the U.S. holder (expressed in the relevant
nonfunctional currency) by the change in the relevant exchange rate (expressed
in dollars per unit of relevant nonfunctional currency) between the date on
which the U.S. holder acquired the nonfunctional currency note and the date on
which the U.S. holder received payment in respect of the sale, exchange or
retirement of the nonfunctional currency note. That nonfunctional currency gain
or loss will be recognized only to the extent of the total gain or loss realized
by a U.S. holder on the sale, exchange or retirement of the nonfunctional
currency note.
Original issue discount on a note which is also a nonfunctional currency
note is to be determined for any accrual period in the relevant nonfunctional
currency and then translated into the U.S. holder's functional currency on the
basis of the average exchange rate in effect during the accrual period. If the
interest accrual period spans two taxable years, the original issue discount
accruing within each year's portion of the accrual period is to be translated
into U.S. dollars on the basis of the average exchange rate for the partial
period within the taxable year.
A U.S. holder may elect to translate original issue discount (and, in the
case of an accrual basis U.S. holder, accrued interest) into U.S. dollars at the
exchange rate in effect on the last day of an accrual period for the original
issue discount or interest, or in the case of an accrual period that spans two
taxable years, at the exchange rate in effect on the last day of the partial
period within the taxable year (the spot accrual convention). Additionally, if a
payment of original issue discount or interest is actually received within five
business days of the last day of the accrual period or taxable year, an electing
U.S. holder may instead translate the original issue discount or accrued
interest into U.S. dollars at the exchange rate in effect on the day of actual
receipt. Any election will apply to all debt instruments held by the U.S. holder
at the beginning of the first taxable year to which the election applies or
thereafter acquired by the U.S. holder, and will be irrevocable without the
consent of the U.S. Internal Revenue Service.
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Because exchange rates may fluctuate, a U.S. holder of a note with original
issue discount denominated in a nonfunctional currency may recognize a different
amount of original issue discount income in each accrual period than would the
U.S. holder of a similar note with original issue discount denominated in U.S.
dollars. Also, as described above, exchange gain or loss will be recognized when
the original issue discount is paid or the U.S. holder disposes of the note.
If the U.S. holder of a nonfunctional currency note has not elected to
include market discount in income currently as it accrues, the amount of accrued
market discount must be determined in the nonfunctional currency and translated
into U.S. dollars using the spot exchange rate in effect on the date principal
is paid or the nonfunctional currency note is sold, exchanged, retired or
otherwise disposed of. No part of the accrued market discount is treated as
exchange gain or loss. If the U.S. holder has elected to include market discount
in income currently as it accrues, the amount of market discount which accrues
during any accrual period will be required to be determined in units of
nonfunctional currency and translated into U.S. dollars on the basis of the
average exchange rate in effect during such accrual period. An electing U.S.
holder will recognize exchange gain or loss with respect to accrued market
discount under the same rules that apply to the accrual of interest payments on
a nonfunctional currency note by a U.S. holder on the accrual basis.
BACKUP WITHHOLDING AND INFORMATION REPORTING. Backup withholding tax and
certain information reporting requirements may apply to payments of principal,
premium and interest (including any original issue discount) made to, and the
proceeds of disposition of a note by, certain U.S. holders. Backup withholding
will apply only if:
- the U.S. holder fails to furnish its Taxpayer Identification Number to the
payor;
- the IRS notifies the payer that the U.S. holder has furnished an incorrect
Taxpayer Identification Number;
- the IRS notifies the payor that the U.S. holder has failed to report
properly payments of interest and dividends; or
- under certain circumstances, the U.S. holder fails to certify, under
penalty of perjury, that it has both furnished a correct Taxpayer
Identification Number and not been notified by the IRS that it is subject
to backup withholding for failure to report interest and dividend
payments.
Backup withholding will not apply with respect to payments made to certain
exempt recipients, such as corporations and financial institutions. U.S. holders
should consult their tax advisors regarding their qualification for exemption
from backup withholding and the procedure for obtaining such an exemption.
The amount of any backup withholding from a payment to a U.S. holder will be
allowed as a credit against the holder's federal income tax liability and may
entitle the holder to a refund, provided that the required information is
furnished to the IRS.
NON-U.S. HOLDERS
This section describes the tax consequences to a non-U.S. holder. You are a
non-U.S. holder:
- you are the beneficial owner of a note;
- you have no connection with the United States other than holding a note;
and
- for U.S. federal income tax purposes, you are:
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- a non-resident alien individual;
- a foreign corporation;
- a foreign partnership; or
- an estate or trust that is not subject to U.S. income tax on a net
income basis in respect of the note.
If you are not a non-U.S. beneficial owner, this section does not apply to you.
A non-U.S. holder generally will not be subject to U.S. federal withholding
tax with respect to payments of principal, premium (if any) and interest
(including original issue discount) on notes, provided that;
- the holder does not actually or constructively own 10 percent or more of
the total combined voting power of all classes of our stock entitled to
vote;
- the holder is not for U.S. federal income tax purposes a controlled
foreign corporation related to us through stock ownership;
- the beneficial owner of the note certifies to us or our agent under
penalties of perjury as to its status as a non-U.S. holder and complies
with applicable identification procedures; and
- the payment is not a payment of contingent interest (generally a payment
based on or determined by reference to income, profits, cash flow, sales,
dividends or other comparable attributes of the obligor or a party related
to the obligor). The applicable pricing supplement will indicate if a note
pays contingent interest.
Special rules apply to partnerships, estates and trusts, and in certain
circumstances certifications as to foreign status and other matters may be
required to be provided by partners and beneficiaries of those entities.
In addition, a non-U.S. holder of a note generally will not be subject to
U.S. federal income tax on any gain realized upon the sale, retirement or other
disposition of a note, unless such holder is an individual who is present in the
United States for 183 days or more during the taxable year of the sale,
retirement or other disposition and certain other conditions are met. If a
non-U.S. holder of a note is engaged in a trade or business in the United States
and income or gain from the note is effectively connected with the conduct of
the trade or business, the non-U.S. holder will be exempt from withholding tax
if appropriate certification has been provided, but will generally be subject to
regular U.S. income tax on the income and gain in the same manner as if it were
a U.S. holder. In addition, if the non-U.S. holder is a foreign corporation, it
may be subject to a branch profits tax equal to 30 percent of its effectively
connected earnings and profits for the taxable year, subject to adjustments.
A note held by an individual who is a non-U.S. holder at the time of death
will not be subject to U.S. federal estate tax upon the individual's death if at
the time of death:
- the holder does not actually or constructively own 10 percent or more of
the total combined voting power of all classes of our stock entitled to
vote;
- payments with respect to the note would not have been effectively
connected with a U.S. trade or business of the individual; and
- payments with respect to the note would not be considered to be a payment
of contingent interest as described above.
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Backup withholding and information reporting will not apply to payments of
principal, premium, if any, and interest made to a non-U.S. holder by us on a
note with respect to which the holder has provided the required certification
under penalties of perjury of its non-U.S. holder status or has otherwise
established an exemption, provided in each case that we or our paying agent, as
the case may be, do not have actual knowledge that the payee is a U.S. person.
Payments on the sale, exchange or other disposition of a note by a non-U.S.
holder effected outside the United States to or through a foreign office of a
broker will not be subject to backup withholding. However, if the broker is a
U.S. person, a controlled foreign corporation for U.S. tax purposes, a foreign
person 50 percent or more of whose gross income is derived from its conduct of a
U.S. trade or business for a specified three-year period, a foreign partnership
engaged in a U.S. trade or business or in which U.S. persons hold more than
50 percent of the income or capital interests, or certain U.S. branches of
foreign banks or insurance companies, information reporting will be required
unless the beneficial owner has provided certain required information or
documentation to the broker to establish its non-U.S. status or otherwise
establishes an exemption. Payments to or through the U.S. office of a broker
will be subject to backup withholding and information reporting unless the
holder certifies under penalties of perjury to its non-U.S. holder status or
otherwise establishes an exemption.
The U.S. Treasury Department has recently issued final Treasury regulations
which revise various procedural matters relating to withholding taxes. Non-U.S.
holders should consult their tax advisors regarding the application of U.S.
federal income tax laws, including information reporting and backup withholding,
to their particular situations.
SUPPLEMENTAL PLAN OF DISTRIBUTION
The notes are being offered from time to time by us through Banc of America
Securities LLC, Banc One Capital Markets, Inc., Bear, Stearns & Co. Inc., BNP
Paribas Securities Corp., Deutsche Banc Alex. Brown Inc., J.P. Morgan
Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Mizuho
International plc, Salomon Smith Barney Inc., Utendahl Capital Partners L.P.,
and Wells Fargo Brokerage Services, LLC as agents, who have severally agreed to
use their reasonable best efforts to solicit offers to purchase the notes. We
may also sell notes to any agent, as principal, and that agent may resell those
notes as further described below. We will have the sole right to accept offers
to purchase notes and may reject any proposed purchase of notes as a whole or in
part. The agents will have the right, in their discretion reasonably exercised,
to reject any proposed purchase of notes as a whole or in part. We will pay each
agent a commission (or grant a discount) ranging from .125% to .875%, depending
upon the maturity, of the principal amount of notes sold through that agent.
Commissions and discounts with respect to notes with maturities in excess of
30 years will be negotiated between us and that agent at the time of sale.
One of the agents, Wells Fargo Brokerage Services, LLC, is an affiliate of
ours. The participation of Wells Fargo Brokerage Services, LLC in the offer and
sale of the notes as described in this prospectus supplement will comply with
Rule 2720 of the Conduct Rules of the National Association of Securities
Dealers, Inc. regarding the offer and sale of securities of an affiliate. No
NASD member participating in offers and sales of securities will execute a
transaction in the notes in a discretionary account without the prior specific
written approval of the members' customer. Any obligation of Wells Fargo
Brokerage Services, LLC is the sole obligation of Wells Fargo Brokerage
Services, LLC and does not create an obligation on the part of us or any other
affiliate of ours.
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This prospectus supplement and the accompanying prospectus may be used by
Wells Fargo Brokerage Services, LLC in connection with offers and sales related
to secondary market transactions in the notes. Wells Fargo Brokerage Services,
LLC may act as principal or agent in those transactions. These sales will be
made at prices related to prevailing market prices at the time of sale.
Bank One Trust Company, National Association, as trustee, is an affiliate of
Banc One Capital Markets, Inc., one of the agents, and engages in general
financing and banking transactions with us and our affiliates.
Certain affiliates of certain of the agents may also provide commercial
banking, financial advisory and investment banking services to us and certain of
our affiliates from time to time.
No termination date for the offering of the notes has been established. We
reserve the right to withdraw, cancel or modify this offer without notice.
Unless otherwise indicated in the applicable pricing supplement, any note
sold to an agent as principal will be purchased by that agent at a price equal
to 100% of the principal amount thereof less a percentage equal to the
commission applicable to any agency sale of a note of identical maturity. Those
notes may be resold by the agent to investors and other purchasers from time to
time in one or more transactions, including negotiated transactions, or at
varying prices relating to prevailing market prices determined at the time of
sale or, if agreed, at a fixed public offering price. After the initial public
offering of notes to be resold to investors and other purchasers, the public
offering price (in the case of notes to be resold at a fixed public offering
price) and any concession or discount, may be changed. In addition, the agents
may resell notes they have purchased as principal to other dealers. Those
resales may be at a discount and, unless otherwise specified in the applicable
pricing supplement, the discount allowed to any dealer will not exceed the
discount to be received by that agent from us. Those dealers may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933.
No note will have an established trading market when issued. We do not
intend to list the notes on a national securities exchange. The agents have
informed us that they intend to establish a trading market for the notes.
However, the agents are not obligated to make such a market and may discontinue
any market making at any time without notice. No assurance can be given as to
the liquidity of the trading market for any notes.
During and after offerings of notes, the agents may purchase and sell the
offered notes in the open market. These transactions may include overallotment
and stabilizing transactions and purchases to cover short positions created in
connection with these offerings. Stabilizing transactions consist of certain
bids or purchases to prevent or retard a decline in the market price of the
notes. Short positions involve the sale by the agents of notes in an aggregate
principal amount exceeding that described in the applicable pricing supplement.
The agents also may impose penalty bids, whereby selling concessions allowed to
other broker-dealers in respect of the notes sold in those offerings for their
account may be reclaimed by the agents if the notes are repurchased by the
agents in stabilizing or covering transactions. These activities may stabilize,
maintain or otherwise affect the market prices of those notes, which may be
higher than the prices that might otherwise prevail in the open market. These
transactions may be effected in the over-the-counter market or otherwise, and
these activities, if commenced, may be discontinued at any time.
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The agents, as agents or principals, may be deemed to be "underwriters"
within the meaning of the Securities Act of 1933. We have agreed to indemnify
the agents against certain liabilities, including liabilities under the
Securities Act of 1933.
We reserve the right to sell notes directly to investors on our own behalf,
in which case no discount will be allowed or commission paid.
LEGAL OPINIONS
The validity of the notes will be passed upon for us by Steve R. Wagner, who
is our Senior Assistant General Counsel. The validity of the notes will be
passed upon for the agents, and certain federal income tax consequences of the
notes will be passed upon for us, by Orrick, Herrington & Sutcliffe LLP, New
York, New York.
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PROSPECTUS
- ---------
WELLS FARGO FINANCIAL, INC.
$3,000,000,000
DEBT SECURITIES
---------------
We may issue up to an aggregate $3.0 billion of debt securities at one or
more times. We will describe the specific terms of each series of debt
securities that we offer in a supplement to this prospectus. Supplements will be
made available at the time of each offering of debt securities.
You should read this prospectus and any supplement carefully before you
invest.
--------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL AND COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------------
The date of this prospectus is April 18, 2000
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WHERE YOU CAN FIND MORE INFORMATION ABOUT WELLS FARGO FINANCIAL
We file annual, quarterly and current reports and other information with the
Securities and Exchange Commission. You may read and copy any document we file
with the Securities and Exchange Commission at the Securities and Exchange
Commission's public reference rooms in Washington, D.C., Chicago, Illinois, and
New York, New York. Please call the Securities and Exchange Commission at
1-800-SEC-0330 for further information on the public reference rooms. Our
Securities and Exchange Commission filings are also available over the Internet
at the Securities and Exchange Commission's website at http://www.sec.gov.
Effective at the close of business on June 30, 2000, we changed our name from
Norwest Financial, Inc. to Wells Fargo Financial, Inc. Filings made by us with
the Securities and Exchange Commission prior to July 1, 2000 will be found
indexed and filed under Norwest Financial, Inc.
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The Securities and Exchange Commission allows us to incorporate by reference
the information we file with them, which means that we can disclose important
information to you by referring you directly to those documents. The information
incorporated by reference is an important part of this prospectus. Information
that we file later with the Securities and Exchange Commission will
automatically update and supercede information contained in this prospectus and
the accompanying prospectus supplement. We incorporate by reference the
documents listed below and any future filings made with the Commission under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until
we sell all of the securities we are offering:
- Annual Report on Form 10-K for the year ended December 31, 1999;
You may request a free copy of any of these filings by writing or
telephoning us at:
Wells Fargo Financial, Inc.
206 Eighth Street
Des Moines, Iowa 50309
Attn: Treasurer's Department
Telephone: (515) 243-2131
Because we list some of our debt securities on the New York Stock Exchange,
you may also inspect the filings described above, as well as other information,
at the offices of the New York Stock Exchange, 20 Broad Street, New York, New
York 10005.
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with additional or different information. If anyone
else provided you with different information, you should not rely on it. You
should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of those
documents.
WELLS FARGO FINANCIAL, INC.
Wells Fargo Financial is a leading diversified consumer finance company. Our
consumer finance operations make loans to individuals and purchase sales finance
contracts though 906 branch offices primarily in 46 states, Guam, Saipan, Puerto
Rico, Argentina and the ten Canadian provinces.
2
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We are a wholly-owned subsidiary of Wells Fargo & Company. Wells Fargo &
Company is a diversified financial services organization which, at December 31,
1999, had consolidated assets totaling approximately $218 billion.
Our principal executive offices are located at 206 Eighth Street, Des
Moines, Iowa 50309. Our telephone number is (515) 243-2131. When we refer to
"Wells Fargo Financial," "we" or "our" in this prospectus, we mean Wells Fargo
Financial, Inc. and its subsidiaries on a consolidated basis, unless the context
otherwise requires. We use "Wells Fargo Financial" to refer to us both before
and after the close of business on June 30, 2000, when we changed our name from
Norwest Financial, Inc. to Wells Fargo Financial, Inc., except in referring to
specific documents and financial statements dated, filed or issued prior to
July 1, 2000.
USE OF PROCEEDS
Unless we indicate otherwise in a prospectus supplement, we will use the net
proceeds from the sale of the debt securities for general corporate purposes.
These purposes may include bulk purchases of finance receivables, acquisitions
of branch offices, consumer finance operations and other related businesses or
the repayment of outstanding indebtedness. The net proceeds may be invested
temporarily or applied to repay short term debt until they are used for their
stated purposes.
RATIOS OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for Wells Fargo Financial is set
forth below for the periods indicated:
<Table>
<Caption>
YEARS ENDED DECEMBER 31,
- --------------------------------
1995 1996 1997 1998 1999
- ---- ---- ---- ---- ----
2.13 2.11 2.00 1.72 1.78
</Table>
For the purpose of calculating the ratio of earnings to fixed charges we
have divided earnings plus fixed charges and income taxes by fixed charges.
Fixed charges consist of interest and debt expenses plus the portion of rentals,
which we deem to be representative of the interest factor.
DESCRIPTION OF DEBT SECURITIES
The securities we are offering will be either senior or senior subordinated
debt. The senior debt securities and subordinated debt securities will be issued
under separate indentures. The senior debt securities will be issued under an
indenture, dated as of November 1, 1991, between Norwest Financial, Inc. (now
called Wells Fargo Financial, Inc.) and The First National Bank of Chicago (now
called Bank One Trust Company, National Asssociation), as trustee. The
subordinated debt securities will be issued under an Indenture, dated as of
May 1, 1986, as amended and supplemented by a First Supplemental Indenture dated
as of February 15, 1991, between Norwest Financial, Inc. (now called Wells Fargo
Financial, Inc.) and Harris Trust and Savings Bank, as trustee. Unless otherwise
indicated, Bank One Trust Company, National Association and Harris Trust and
Savings Bank will be referred to herein as the "trustee".
The following summaries of the material provisions of the indentures are not
complete. You should read all of the provisions of the indentures, including the
definitions of certain terms. These summaries set forth certain general terms
and provisions of the securities to
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which any prospectus supplement may relate. The particular terms of the
securities offered by any prospectus supplement and the applicability of the
general provisions will be described in the appropriate prospectus supplement.
Unless otherwise indicated, parenthetical section references refer to each of
the indentures.
SPECIFIC TERMS OF EACH SERIES
Each time that we issue a new series of debt securities, the prospectus
supplement relating to that new series will specify the particular amount, price
or other terms of these debt securities. These terms may include:
- the title of the debt securities and whether they will be senior or
subordinated debt;
- any limit on the total principal amount of the series of debt securities;
- the date or dates on which the principal of and premium, if any, on the
debt securities will be payable;
- the interest rate or rates on the series of debt securities and the date
from which any such interest will accrue;
- the dates on which we will pay interest on the series of debt securities
and the regular record date for determining who is entitled to the
interest payable on any interest payment date;
- the place or places where principal of and premium, if any, and interest
on the debt securities will be payable;
- any redemption dates, prices, obligations and restrictions on the series
of debt securities;
- any sinking fund or other provisions that would obligate us to repurchase
or otherwise redeem the series of debt securities;
- the denominations in which the series of debt securities will be issued,
if other than denominations of $1,000 and multiples of $1,000;
- the portion of the principal amount of the debt securities, other than
their principal amount, that is payable on the declaration of acceleration
of the maturity;
- the applicable overdue rate if other than the interest rate stated in the
title of the series of debt securities;
- any modifications of or additions to the events of default;
- the currency in which the debt securities will be denominated or in which
payment of the principal of and premium and interest on any debt
securities will be made, if other than U.S. dollars;
- if the principal of and premium or interest on any series of debt
securities is to be payable at our election or at the election of a holder
of the debt securities in a currency other than that in which the debt
securities are denominated, the period or periods within which and the
terms and conditions on which these elections may be made;
- if the amount of principal of and premium or interest on any series of
debt securities may be determined by reference to an index based on either
a currency other than that in which the debt securities are payable or any
other method specifying the manner in which these amounts will be
determined;
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- whether and to what extent any other means of satisfaction and discharge,
which is sometimes referred to as "defeasance" will be applicable to the
debt securities other than as described below under "Satisfaction and
Discharge; Defeasance";
- if the debt securities are to be issued in the form of one or more global
security and, if so, the identity of the depositary or depositaries of
such global debt security or global debt securities; and
- any other specific terms of the debt securities that are not inconsistent
with each Indenture. (Section 3.01)
We may issue debt securities at a discount below their stated principal
amount, bearing no interest or interest at a rate that, at the time of issuance,
is below market rates. If we issue these kinds of debt securities, we will
provide you with additional information in a prospectus supplement.
FORM, DENOMINATION AND EXCHANGE
We may issue the debt securities in registered form, without coupons, in
increments of $1,000 or multiples thereof, unless the prospectus supplement
states otherwise.
Alternatively, we may issue the debt securities in the form of one or more
global certificates.
No service charge will be made for any transfer or exchange of the
securities, but we may require payment of an amount sufficient to cover any tax
or other governmental charge payable in connection with a transfer or exchange.
(Section 3.02)
NO EVENT OF RISK COVENANT
Neither indenture contains any covenant or other provision that restricts
Wells Fargo Financial from incurring, assuming or becoming liable for any type
of debt or other obligations, from creating liens on its property, from paying
dividends or making distributions on its capital stock or purchasing or
redeeming its capital stock. Neither indenture requires Wells Fargo Financial to
maintain any financial ratios or specified levels of net worth. In addition,
neither indenture gives holders of the debt securities protection upon the
occurrence of a change in control or in the event of a highly leveraged
transaction involving Wells Fargo Financial.
LIMITATION ON MERGER, CONSOLIDATION AND CERTAIN SALE OF ASSETS
We may not merge into or consolidate with any other corporation, or convey
or transfer our properties and assets substantially as an entirety to any person
unless:
- the successor is a U.S. corporation;
- the successor assumes on the same terms and conditions all the obligations
under the debt securities and each indenture; and
- immediately after giving effect to the transaction, there is no default
under each indenture.
(Section 10.01) Upon any merger, consolidation, conveyance or transfer, the
successor will succeed to, and will be substituted in lieu of Wells Fargo
Financial. (Section 10.02).
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COMPUTATION OF INTEREST
We will calculate the interest that is due on the debt securities based on a
360-day year of twelve 30 day months, unless the prospectus supplement states
otherwise. (Section 3.11)
PAYMENTS ON REGISTERED DEBT SECURITIES
We will pay principal, interest and any premium on registered debt
securities in the designated currency at the office of a designated paying
agent. At our option, payment of interest on fully registered securities may
also be made by check mailed to the person in whose names the securities are
registered on the days specified in the indentures or any prospectus supplement.
(Section 3.12)
PAYING AGENT
Bank One Trust Company, National Association will be designated as Wells
Fargo Financial's paying agent for the senior debt securities unless the
prospectus supplement states otherwise. Harris Trust and Savings Bank will be
designated as Wells Fargo Financial's paying agent for the subordinated debt
securities unless the prospectus supplement states otherwise. (Section 8.14)
If we authorize any other person to make payments on debt securities for us,
we will identify them in the applicable prospectus supplement.
GLOBAL SECURITIES
We may issue debt securities of a series in whole or in part in the form of
one or more global certificates that will be deposited with a depository that we
will identify in a prospectus supplement. Unless and until it is exchanged in
whole or in part for individual certificates evidencing securities in definitive
form represented thereby, a global security may not be transferred except as a
whole by the depository to a nominee of that depository or by a nominee of that
depository to a depository or another nominee of that depository.
(Section 3.01)
The specific terms of the depositary arrangement for each series of debt
securities will be described in the applicable prospectus supplement.
RANKING
The senior debt securities will be the unsecured obligations of Wells Fargo
Financial and will rank equally among themselves and with all of Wells Fargo
Financial's other unsecured and unsubordinated debt.
The prospectus supplement will describe the specific terms and conditions
upon which the subordinated debt securities will be subordinated to other
indebtedness of Wells Fargo Financial. Such terms may include:
- indebtedness ranking senior to the subordinated debt securities;
- restrictions on payments to the holders of such subordinated debt
securities while a default relating to such senior indebtedness is
continuing;
- restrictions on payments to the holders of such subordinated debt
securities following an event of default; and
- provisions requiring holders of senior debt securities to receive certain
payments prior to holders of subordinated debt securities. (Section 15.01)
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SATISFACTION AND DISCHARGE
At our request, each indenture will terminate as to the debt securities of
any series (except for certain obligations to register the transfer or exchange
of the debt securities) when either:
- all the debt securities have been delivered to the trustee for
cancellation; or
- we have deposited with the trustee in trust, an amount sufficient to make
all remaining payments on these debt securities. (Section 6.01)
DEFEASANCE
We may satisfy our obligations with respect to payments of principal of the
debt securities, and premium, if any, and interest, if any, on the debt
securities of any series by irrevocably depositing in trust with the trustee
money or U.S. government obligations sufficient to make such payments when due.
If such deposit is sufficient, as verified by a written opinion of independent
public accountants, to make all payments of:
- interest, if any, on the debt securities of such series prior to and on
their redemption or maturity, as the case may be; and
- principal of the debt securities, and premium, if any, on the debt
securities of such series when due upon redemption or at the designated
maturity date, as the case may be
then all of our obligations with respect to the debt securities of such series
and the indentures which relate to the debt securities will be satisfied and
discharged.
To elect either option described above, we must deliver to the trustee an
opinion of counsel to the effect that the deposit and related payment described
above would not cause the holders of that series to recognize, income, gain or
loss for U.S. federal income tax purposes and that the holders of that series
will be subject to U.S. federal income tax in the same amounts, in the same
manner and at the same times as would have been the case if that option had not
been exercised. (Section 14.02)
EVENTS OF DEFAULT
An "event of default" regarding any series of debt securities is any one of
the following events, subject to various grace periods:
- failure to pay principal of, or any premium on, any debt security when
due;
- failure to deposit any sinking fund payments for any series of debt
security when due;
- failure to pay any interest when due and payable;
- failure to perform any covenants or warranties in either indenture, which
failure has continued for 60 days after written notice to Wells Fargo
Financial by the trustee or by the holders of 50% in principal amount of
the outstanding debt securities of that series;
- certain events in bankruptcy, insolvency or reorganization of Wells Fargo
Financial;
- default regarding any other series of debt securities, which results in
the acceleration of such other series of debt securities; and
- any other events of default regarding that series of debt securities that
is specified in the prospectus supplement. (Section 7.01)
7
<Page>
A default regarding a single series of debt securities will not necessarily
constitute a default regarding any other series. A default under other debt of
Wells Fargo Financial will not be a default under either indenture.
If an event of default for any series of debt securities occurs and is
continuing, either the trustee or the holders of 25% in principal amount of the
outstanding debt securities of that series may declare the principal amount of
all the debt securities of that series to be immediately due and payable by
notice in writing to Wells Fargo Financial. If the debt securities of that
series are original issue discount debt securities, the portion of the principal
amount as is specified in that series may declare the principal amount of the
debt securities of that series to be immediately declared payable by notice in
writing to Wells Fargo Financial. If the holders of debt securities give notice
of the declaration of acceleration to Wells Fargo Financial, then they must also
give notice to the trustee. (Section 7.02)
The holders of a majority in principal amount of the outstanding debt
securities may rescind a declaration of acceleration if:
- Wells Fargo Financial has paid or deposited with the trustee a sum
sufficient to pay principal, interest, including overdue interest and
interest thereon, any premium and the fee and expenses of the trustee
(Section 7.02); and
- any other event of default, besides the failure to pay principal due
because of the declaration of acceleration, has been cured or waived.
(Section 7.13)
We are required to file every year with the trustee an officers' certificate
stating whether any default exists and specifying any default that exists.
(Section 12.05)
NOTICE OF DEFAULTS
The trustee is required to give notice to holders of debt securities of a
default, which remains uncured or has not been waived, that is known to the
trustee within 90 days after the occurrence of the default. The trustee may
withhold this notice, however, if it determines in good faith that the
withholding of notice is in the interest of the holders of the debt securities.
However, the trustee may not withhold notice in the case of a default in the
payment of principal of and premium or interest on or a sinking fund installment
on any of the debt securities. In addition, the trustee is only required to give
notice of the failure by Wells Fargo Financial to perform any covenant until at
least 30 days after the failure has become a default. The term "default" for
this purpose means any event which is, or after notice or lapse of time or both
would become, an event of default. (Section 8.02)
RIGHTS OF THE TRUSTEE
The holders of a majority in principal amount of outstanding debt securities
of any series may direct the time, method and place of conducting any proceeding
for any remedy available to the trustee or exercising any trust or other power
conferred on the trustee. The trustee may decline to follow that direction,
however, if it either would involve the trustee in personal liability or would
be unduly prejudicial to holders of the debt securities of that series that do
not join in that direction. (Section 7.12) During a default, the trustee is
required to exercise the standard of care that a prudent man would exercise or
use under the circumstances in the conduct of his own affairs (Section 8.0)
Otherwise, the trustee is not obligated, however, to exercise any of its rights
or powers under each indenture at the request or direction of any of the holders
of debt securities unless those holders have offered to the trustee reasonable
security or indemnity. (Section 8.03)
8
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MODIFICATION AND WAIVER OF EACH INDENTURE
The holders of a majority in principal amount of the outstanding debt
securities of any series may waive any past default under the applicable
indenture. The following defaults may not, however, be waived:
- a default in the payment of the principal, or any premium, interest or
additional amounts payable on a series of debt securities, or in the
payment of any sinking fund installment with respect to that series, which
has not been cured until that time; or
- a default regarding a covenant or provision of either indenture which
cannot be modified or amended without the consent of the holder of each
outstanding debt security of the series affected. (Section 7.13)
MODIFICATION WITHOUT CONSENT OF THE HOLDERS
Without the consent of the holders of debt securities, we and the trustee
may modify each indenture for any of the following purposes:
- to name a successor entity to Wells Fargo Financial;
- to add to our covenants for the benefit of the holders of all or any
series of debt securities;
- to establish the form or terms of securities of any series of debt
securities and any related coupons;
- to cure any ambiguity or inconsistency in the applicable indenture;
- to modify, eliminate and add to the provisions of either indenture to
enable it to qualify under the Trust Indenture Act of 1939; or
- to provide for the acceptance or appointment of a successor trustee.
(Section 11.01)
MODIFICATION REQUIRING CONSENT OF THE HOLDERS
Each indenture provides that modifications and amendments may be made by us
and the trustee with the consent of the holders of at least a majority in
principal amount of the outstanding debt securities of each series affected by
the amendment or modification of each indenture. However, no modification or
amendment may, without the consent of each holder affected:
- change the stated maturity of the principal of, or any installment of
interest on, any debt security;
- reduce the principal amount, the rate of interest, or any additional
amounts in respect of any debt security or reduce the amount of any
premium payable upon the redemption of any debt security;
- reduce the principal amount of original issued discount debt securities
that would be due and payable upon acceleration of their maturity;
- change the place of payment, the currency in which, any debt security or
any premium or interest thereon is payable;
- reduce the amount of, or postpone the date fixed for, any payment under
the sinking fund for any debt security;
- impair the right to institute suit for the enforcement of any payment on
or after the stated maturity date of the security or, in the case of
redemption, on or after the redemption date;
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- reduce the percentage of securities required to consent to any
modification, amendment or waiver under either indenture;
- modify, except under limited circumstances, any provisions of the
applicable indenture relating to modification and amendment of the
indenture or waiver of compliance with conditions and defaults thereunder;
or
- in the case of the subordinated indenture, alter the provisions regarding
the subordination of the subordinated debt securities in any way that
would be adverse to the holders of such debt securities. (Section 11.02)
MUTILATED, DESTROYED, STOLEN OR LOST SECURITIES
We will replace any mutilated debt security at the expense of the holder and
on surrender of that mutilated debt security to the trustee. We will also
replace debt securities that are destroyed, lost or stolen at the expense of the
holder and on delivery to the security registrar of evidence of that
destruction, loss or theft which is satisfactory to us and the trustee. Before
we issue a replacement debt security, we and the trustee may require an
indemnity from the party seeking the replacement security. (Section 3.06)
NOTICES
Except as otherwise provided in each Indenture, notices to holders of debt
securities will be given by mail to the addresses of those holders as they
appear in the security register. (Section 1.06)
GOVERNING LAW
The laws of the State of New York govern each Indenture and will govern the
debt securities, including any matters of interpretation under them.
(Section 1.13)
INFORMATION CONCERNING THE TRUSTEE
We may from time to time engage in general financing and banking
transactions with Bank One Trust Company, National Association or with its
affiliates or with Harris Trust and Savings Bank or with its affiliates.
PLAN OF DISTRIBUTION
We may sell the debt securities in one or more of the following ways:
- through underwriters or dealers;
- directly to one or more purchasers;
- through agents; or
- in a combination of any of the above transactions.
The prospectus supplement for each series of debt securities will describe
that offering, including:
- the name or names of any underwriters;
- the purchase price and the proceeds we will receive from such sale;
- any underwriting discounts and other items constituting underwriters'
compensation;
- any discounts or concessions allowed or reallowed or paid to dealers; and
- any securities exchanges on which the debt securities of such series may
be listed.
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If underwriters are used in the sale, the debt securities will be acquired
by the underwriters for their own account and may be resold by them 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
obligations of the underwriters to purchase securities will be subject to
certain conditions precedent and the underwriters will be obligated to purchase
all the securities of a series 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.
Debt securities may be sold directly by us or through agents designated by
us from time to time. We will name any agent involved in the offer or sale of
the debt securities and will list commissions payable by us to these agents in
the prospectus supplement. These agents will be acting on a best efforts basis
to solicit purchases for the period of its appointment, unless we state
otherwise in the prospectus supplement.
We may sell debt securities directly to purchasers. In this case, we will
not engage underwriters or agents in the offer and sale of debt securities.
INDEMNIFICATION
Underwriters, dealers or agents who participate in the distribution of debt
securities may be entitled to indemnification by us against certain liabilities,
including liabilities under the Securities Act of 1933, or to contribution with
respect to payments which these underwriters, dealers or agents may be required
to make.
NO ASSURANCE OF LIQUIDITY
Each series of debt securities will be a new issue of securities with no
established trading market. Any underwriters that purchase debt securities from
us may make a market in these debt securities. The underwriters will not be
obligated, however, to make such a market and may discontinue market-making at
any time without notice to holders of the debt securities. We cannot assure you
that there will be liquidity in the trading market for any debt securities of
any series.
LEGAL OPINIONS
The legality of the debt securities will be passed upon for us by Steve R.
Wagner, Esq., who is our Senior Assistant General Counsel, and for the
underwriters, dealers or agents by Orrick, Herrington & Sutcliffe LLP, New York,
New York.
EXPERTS
The consolidated financial statements of Wells Fargo Financial, Inc. and
subsidiary companies as of and for the year ended December 31, 1999, have been
incorporated by reference herein and in the registration statement in reliance
upon the report of KPMG LLP, independent auditors, incorporated by reference
herein, and upon authority of that firm as experts in accounting and auditing.
The consolidated financial statements of Norwest Financial, Inc. and
subsidiary companies as of December 31, 1998 and for each of the two years in
the period ended December 31, 1998, have been incorporated by reference herein
and in the registration statement in reliance upon the report of Deloitte &
Touche LLP, independent auditors, incorporated by reference herein, and upon
authority of that firm as experts in accounting and auditing.
11
<Page>
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$1,300,000,000
[LOGO]
WELLS FARGO FINANCIAL, INC.
MEDIUM-TERM NOTES, SERIES D
DUE FROM 9 MONTHS TO
30 YEARS FROM DATE OF ISSUE
---------------------
PROSPECTUS SUPPLEMENT
---------------------
BANC OF AMERICA SECURITIES LLC
BANC ONE CAPITAL MARKETS, INC.
BEAR, STEARNS & CO. INC.
BNP PARIBAS
DEUTSCHE BANC ALEX. BROWN
JPMORGAN
MERRILL LYNCH & CO.
MIZUHO INTERNATIONAL PLC
SALOMON SMITH BARNEY
UTENDAHL CAPITAL PARTNERS, L.P.
WELLS FARGO INSTITUTIONAL BROKERAGE
JANUARY 18, 2002
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