Rule 424(b)(2)
File Nos. 333-83542
and 333-65597
PROSPECTUS SUPPLEMENT
(To prospectus dated March 14, 2002)
$100,000,000
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
MEDIUM-TERM NOTES, SERIES D
We may use this prospectus supplement to offer our unsecured Medium-Term
Notes, Series D, from time to time.
The following terms may apply to the notes. We will provide the final terms
for each note in a pricing supplement.
o They may have maturities of one year to 30 years.
o They may be subject to redemption at our option or repayment at the
option of the holder.
o They will be denominated in U.S. dollars.
o They may bear interest at a fixed rate or certain notes issued at a
discount may not bear interest.
o Interest will be paid on fixed rate notes on January 1 and July 1 of
each year (unless otherwise specified in a pricing supplement) and at
maturity.
o They may be issued in certificated or book-entry form.
o They will be issued in minimum denominations of $1,000 and multiples
of $1,000.
o They will be issued in an aggregate principal amount of up to
$100,000,000.
o They will be offered from time to time on a reasonable best efforts
basis on our behalf by the Agents named below. In addition, any Agent
may purchase notes from us and may resell them to investors, and we
may sell notes directly to investors acting on our own behalf.
This prospectus supplement may be used to offer and sell the notes only if
accompanied by the prospectus.
We will receive between $99,875,000 and $99,250,000 of the proceeds from
the sale of the notes, after paying the Agents' commissions of between $125,000
and $750,000 and before deducting $272,000 in estimated offering expenses. The
exact proceeds to us will be set at the time of issuance. We do not expect that
any of the notes will be listed on any securities exchange, and a market for the
notes may not develop.
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THE NOTES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAVE ANY OF THESE
ORGANIZATIONS DETERMINED THAT THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-----------------
Salomon Smith Barney
JPMorgan
Banc One Capital Markets, Inc.
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March 20, 2002
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT PAGE PROSPECTUS PAGE
-------------------- ---- ---------- ----
Use of Proceeds ................................ S-2 About this Prospectus ............................ 2
Description of the Notes ....................... S-2 Where You Can Find More Information .............. 2
Plan of Distribution ........................... S-5 Central Hudson Gas & Electric Corporation ........ 3
Recent Developments .............................. 4
Forward-Looking Statements ....................... 5
Use of Proceeds .................................. 5
Ratios of Earnings to Fixed Charges .............. 6
Description of the Debt Securities ............... 6
Legal Matters .................................... 11
Experts .......................................... 12
Plan of Distribution ............................. 12
You should rely only on the information contained or incorporated by
reference in this prospectus supplement, the accompanying prospectus and in the
applicable pricing supplement. We have not authorized anyone to provide you with
information different from that contained in these documents. The information
contained in this prospectus supplement, the accompanying prospectus and the
applicable pricing supplement is accurate only as of the date of this prospectus
supplement, the date of the accompanying prospectus and the date of the
applicable pricing supplement, regardless of the time of delivery of this
prospectus supplement or any sale of the notes. We are offering to sell the
notes and seeking offers to buy the notes only in jurisdictions where offers and
sales are permitted.
USE OF PROCEEDS
We expect to use the net proceeds from the sales of the notes for the
purposes set forth under the heading "Use of Proceeds" in the accompanying
prospectus.
DESCRIPTION OF THE NOTES
The following description of the particular terms of the notes supplements,
and to the extent inconsistent therewith replaces, the description of the debt
securities and the indenture under "Description of the Debt Securities" in the
accompanying prospectus, which description you should read. We have filed the
indenture with the Securities and Exchange Commission, as referred to in the
list of exhibits to the registration statement. You should read the indenture
for provisions that may be important to you. The following description of the
notes will apply to all notes, unless otherwise specified in an accompanying
pricing supplement.
GENERAL
We will issue the notes as a single series of unsecured debt securities
under the indenture dated as of April 1, 1992, between us and U.S. Bank Trust
National Association (formerly known as First Trust of New York, National
Association) (as successor trustee to Morgan Guaranty Trust Company of New
York), as trustee. The notes will be limited in aggregate principal amount to
$100,000,000.
We will issue the notes in fully registered form only, without coupons.
Unless we specify otherwise in the applicable pricing supplement, the notes will
be issued as "book-entry" notes, represented by a permanent global note or notes
registered in the name of The Depository Trust Company ("DTC"), or its nominee.
We reserve the right, however, to issue note certificates registered in the name
of the holders of the notes. Unless we specify otherwise in the applicable
pricing supplement, the authorized denominations of the notes will be $1,000 and
integral multiples thereof.
S-2
The pricing supplement relating to a note will describe the following
terms:
o the price at which the note will be issued;
o the date on which the note will be originally issued;
o the date on which the note will mature;
o if an interest-bearing note, the fixed annual rate at which the note
will bear interest and the interest payment dates for the note which,
unless otherwise specified, will be January 1 and July 1 of each year;
o whether the note
- may be redeemed by us at our option prior to its maturity date
and/or
- is required to be redeemed by us prior to its maturity date
pursuant to any sinking fund or other mandatory redemption
provision applicable to the note;
and, if so, the related terms and conditions, including applicable
redemption dates and prices;
o any provisions for the repayment or purchase by us of the note at
the option of the holder;
o any applicable discounts or commissions; and
o any other terms of the note not inconsistent with the provisions
of the indenture.
In the discussion that follows, whenever we talk about
o paying principal or interest on the notes at maturity, we mean at
the maturity date, redemption date or other date upon which
payment of principal of the notes become due;
o a holder of a note, we mean the person in whose name the note is
registered (which, in the case of global notes representing
"book-entry" notes, will be DTC's nominee);
o a business day with respect to any note, we mean any day, other
than a Saturday or Sunday, which is not a day on which banking
institutions or trust companies in The City and State of New
York, or other city in which any office or agency is maintained
for the payment of principal of, or premium, if any, or interest
on the note, are generally authorized or required by law,
regulation or executive order to remain closed; and
o the regular record date for any interest payment date for a note
(unless otherwise specified in the applicable pricing
supplement), we mean the December 15 or June 15 (whether or not a
business day) immediately preceding the interest payment date.
PAYMENT OF PRINCIPAL AND INTEREST
Unless otherwise set forth in the applicable pricing supplement, each note
will bear interest from the date of its original issue or from the most recent
interest payment date to which interest has been paid or duly provided for,
whichever is later, at the fixed rate per annum stated on its face until the
principal amount of the note is paid or duly provided for. However, each note
authenticated after the regular record date for any interest payment date but
before such interest payment date will bear interest from such interest payment
date, unless the date of its original issue is after such regular record date
but before such interest payment date, in which case the note will bear interest
from the date of its original issue. Interest on each note will be payable
semiannually in arrears on each interest payment date and at maturity. Each
payment of interest in respect of an interest payment date or at maturity will
include interest accrued through the day before such date. Interest on notes
will be computed on the basis of a 360-day year of twelve 30-day months.
Payments of interest on the notes (other than interest payable at maturity)
will be made to the holders of the notes as of the regular record date for each
interest payment date, commencing with the first interest payment date following
the date of original issue of the note. However, if the date of original issue
of a note is after a regular record date and before the corresponding interest
payment date, interest for the period from and including its original issue date
to but excluding the second interest payment date following the original issue
date will be paid on such second interest payment date to the holder of the note
on the regular record date immediately preceding such second interest payment
date. Unless otherwise specified in the applicable pricing supplement, payment
of interest on a note (other than interest payable at maturity) may, at our
option, be made by check mailed to the holder of the note or (subject
S-3
to receipt of proper instructions) by wire transfer to an account maintained by
the holder with a bank in the United States. See "Supplemental Description of
the Notes-- Book-Entry Notes."
Unless otherwise specified in the applicable pricing supplement, the
principal of the notes and any premium and interest thereon payable at maturity
will be paid upon surrender of the note at the office of U. S. Bank Trust
National Association in New York, New York, or of any successor paying agent in
New York, New York. All payments of principal of, and premium, if any, and
interest on, any of the notes will be made in United States dollars.
Unless we specify otherwise in the applicable pricing supplement, if any
date for payment of principal or interest on a note is not a business day,
payment of amounts due on the note on that date may be made on the next
succeeding business day. If that payment is made or duly provided for on that
business day, no interest shall accrue on those amounts for the period from and
after the payment date to that business day.
BOOK-ENTRY NOTES
We will issue the notes as "book-entry" notes, unless we specify otherwise
in the applicable pricing supplement. Each issuance of book-entry notes will be
represented by a global note that will be deposited with, or on behalf of, DTC,
and registered in the name of a nominee of DTC. This means that, if we issue the
notes as book-entry notes, we will not issue note certificates to any holder
unless use of the book-entry system for the notes is discontinued.
Beneficial ownership interests in global notes will be shown on, and
transfers of beneficial ownership interests in global notes will be made only
through, records maintained by DTC and its participants (for example, your
broker) whose clients have purchased the notes. The participant will then keep a
record of its clients who purchased the notes.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered under the provisions of Section 17A of the Securities Exchange Act of
1934. DTC holds securities that its direct participants deposit with DTC. DTC
also records the settlement among direct participants of securities
transactions, such as transfers and pledges, in deposited securities through
computerized records for direct participant's accounts. This eliminates the need
to exchange note certificates. Direct participants in DTC 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 the New York Stock Exchange, Inc., The American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc.
Other organizations such as securities brokers and dealers, banks and trust
companies that work through a direct participant can also use DTC's book-entry
system.
The rules that apply to DTC and those using its systems are on file with
the SEC.
Purchases of beneficial ownership interests in global notes within the DTC
system must be made through direct participants, which will receive a credit for
such notes on DTC's records. The beneficial ownership interest of each purchaser
will be recorded on the participants' records. Owners of beneficial interests in
the global notes will not receive written confirmation from DTC of their
purchases, but beneficial owners should receive written confirmations of the
transaction, as well as periodic statements of their holdings, from the
participants through which they purchased notes.
DTC's records reflect only the identity of the direct participants to whose
accounts the notes are credited. These participants may or may not be the owners
of beneficial interests in the global notes. DTC has no knowledge of the actual
owners of the beneficial interests in such notes.
We and the trustee will treat DTC's nominee as the sole owner or holder of
the global notes for all purposes (for example, payments of principal and
interest, rights to consent or vote, and receipt of any notices). Therefore,
each owner of beneficial interests in the global notes must rely on the
procedures of DTC and its participants to exercise any rights under the notes.
S-4
We will have principal and interest payments made to DTC's nominee by wire
transfer. Accordingly, we, the trustee and any paying agent will have no direct
responsibility or liability to pay amounts due on the global notes to owners of
beneficial interests in the global notes.
It is DTC's current practice, upon receipt of any payment of principal or
interest, to credit direct participants' accounts on the payment date according
to their respective holdings of beneficial interests in the global notes as
shown on DTC's records. The standing instructions and customary practices
between the participants and owners of beneficial interests in the global notes
will govern payments by participants to owners of beneficial interests, as is
the case with notes held for the account of customers registered in "street
name." However, payments will be the responsibility of the participants and not
of DTC, the trustee or us.
In addition, it is DTC's current practice to assign any consenting or
voting rights to direct participants whose accounts are credited with notes on a
record date.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants and by
participants to beneficial owners will be governed by arrangements among them.
Redemption notices shall be sent to Cede & Co. If less than all of the
notes are being redeemed, DTC's practice is to determine by lot the amount of
each direct participant to be redeemed.
DTC may discontinue providing its services as securities depositary for the
notes at any time by giving reasonable notice to us, or we may decide to
discontinue use of the system of book-entry transfers through DTC (or a
successor securities depositary). In either of those cases, and in the event
that no successor securities depositary is appointed by us, note certificates
will be printed and delivered, in authorized denominations and having the same
terms as the global notes they replace.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that we believe to be reliable, but neither we
nor the trustee take any responsibility for the accuracy of such information.
PLAN OF DISTRIBUTION
Under the provisions of a Distribution Agreement, dated March 20, 2002, the
notes are being offered on a continuing basis by us through Salomon Smith Barney
Inc., J.P. Morgan Securities Inc. and Banc One Capital Markets, Inc., as agents
(the "Agents"), each of which has agreed to use its reasonable best efforts to
solicit offers to purchase the notes. We also may sell notes to an Agent, as
principal, at a price to be agreed upon at the time of sale. Such notes may be
resold by such Agent to investors or other purchasers at varying prices related
to prevailing market prices at the time of such resale or at a fixed public
offering price set forth in the applicable pricing supplement, as determined by
such Agent. We reserve the right to sell notes directly to investors on our own
behalf in those jurisdictions where we are authorized to do so. We will have the
sole right to accept offers to purchase notes and may reject any proposed
purchase of notes in whole or in part. Each Agent will have the right, in its
discretion reasonably exercised, without notice to us, to reject any proposed
purchase of notes through it in whole or in part. Payment of the purchase price
of notes will be required to be made in immediately available funds in The City
of New York. We will pay each Agent a commission in the form of a discount
ranging from .125% to .750% of the principal amount of notes sold through such
Agent, depending upon the maturity date of such notes. No commission will be
payable on any sale made directly by us. In the event of purchases of notes by
the Agents as principal for resale to investors at a fixed price or prices, such
purchases will, unless otherwise provided in the applicable pricing supplement,
be at the public offering price less a discount ranging from .125% to .750%,
depending upon the maturity date of such notes and negotiations between us and
the relevant Agent.
Each Agent, whether acting as agent or principal, may be deemed to be an
"underwriter" within the meaning of the Securities Act of 1933, as amended. We
have agreed to indemnify each Agent against certain liabilities, including
liabilities under the Securities Act, or to contribute to payments that an Agent
may be required to make in respect of any liabilities, and to reimburse each
Agent for, or pay, certain of their expenses, including the fees and
disbursements of legal counsel to the Agents.
S-5
In connection with certain offerings of the notes, the Agents may engage in
overallotment, stabilizing transactions and short covering transactions.
Overallotment involves sales in excess of the offering size, which creates a
short position for the Agents. Stabilizing transactions involve bids to purchase
the notes in the open market for the purpose of pegging, fixing or maintaining
the price of the notes. Short covering transactions involve purchases of the
notes in the open market after the distribution has been completed in order to
cover short positions. Stabilizing transactions and short covering transactions
may cause the price of the notes to be higher than it would otherwise be in the
absence of these transactions. These activities, if commenced, may be
discontinued at any time. Neither we nor any of the Agents makes any
representation or prediction as to the direction or magnitude of any effect that
the transactions described above may have on the price of the notes. In
addition, neither we nor any of the Agents makes any representation that the
Agents will engage in any of the transactions described in this paragraph or
that such transactions, once commenced, will not be discontinued without notice.
The notes will not be listed on any securities exchange and will not have
an established trading market when issued. Each Agent may make a market in the
notes, but such Agent is not obligated to do so and may discontinue
market-making at any time without notice. There can be no assurance that the
notes offered by this prospectus supplement will be sold or that there will be a
secondary market for the notes.
Each Agent and/or certain of its affiliates engages from time to time in
various general financing, investment banking and commercial banking
transactions with us and certain of our affiliates.
S-6
PROSPECTUS
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
DEBT SECURITIES
By this prospectus, we may offer from time to time up to $100,000,000 of our
unsecured debt securities. The debt securities of each series or issuance will
be offered on terms to be determined at the time of sale.
WE WILL PROVIDE THE SPECIFIC TERMS OF THE DEBT SECURITIES IN ONE OR MORE
SUPPLEMENTS TO THIS PROSPECTUS. YOU SHOULD READ THIS PROSPECTUS AND THE
APPLICABLE SUPPLEMENTS CAREFULLY BEFORE YOU INVEST.
We may offer the debt securities in any of the following ways:
o directly;
o through agents;
o through dealers; or
o through one or more underwriters or a syndicate of underwriters in an
underwritten offering.
-----------------
THE DEBT SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAVE ANY OF THESE
ORGANIZATIONS DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------
THE DATE OF THIS PROSPECTUS IS MARCH 14, 2002.
------------------
TABLE OF CONTENTS
PAGE
About this Prospectus ..................................................... 2
Where You Can Find More Information ....................................... 2
Central Hudson Gas & Electric Corporation ................................. 3
Recent Developments ....................................................... 4
Forward-Looking Statements ................................................ 5
Use of Proceeds ........................................................... 5
Ratios of Earnings to Fixed Charges ....................................... 6
Description of the Debt Securities ........................................ 6
Legal Matters ............................................................. 11
Experts ................................................................... 12
Plan of Distribution ...................................................... 12
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement (No. 333-83542) that we
filed with the Securities and Exchange Commission ("SEC") utilizing a "shelf"
registration process. Under this shelf process, we may offer, from time to time,
the debt securities described in this prospectus in one or more offerings with a
total aggregate principal amount not to exceed $100,000,000. This prospectus
provides you with a general description of the debt securities we may offer.
Each time we offer debt securities, we will provide you with a prospectus
supplement and, if applicable, a pricing supplement. The prospectus supplement
and any applicable pricing supplement will describe the specific amounts, prices
and terms of the debt securities being offered. The prospectus supplement and
any applicable pricing supplement may also add, update or change information in
this prospectus. Please carefully read this prospectus, the applicable
prospectus supplement and any applicable pricing supplement, together with the
information contained in the documents referred to under the heading "Where You
Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements, and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the operation
of the public reference rooms. Our SEC filings are also available to the public
over the Internet at the SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" into this prospectus the
information we file with the SEC, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus, and
information that we file later with the SEC will automatically update and
supersede this information. We incorporate by reference our Annual Report on
Form 10-K for the year ended December 31, 2001, which we have filed with the
SEC, as amended by our Form 10-K/A filed on February 28, 2002.
Our future filings with the SEC under Sections 13(a), 13(c), 14, or 15(d) of
the Securities Exchange Act of 1934 are also incorporated by reference until our
offering of the debt securities is completed.
-2-
You may obtain a copy of these filings, at no cost, by writing to or
telephoning us at the following address:
Treasurer
Central Hudson Gas & Electric Corporation
284 South Avenue
Poughkeepsie, New York 12601-4879
(845) 486-5597
YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS AND THE APPLICABLE PROSPECTUS SUPPLEMENT, AND IN ANY
PRICING SUPPLEMENT. WE HAVE AUTHORIZED NO ONE TO PROVIDE YOU WITH DIFFERENT
INFORMATION. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS, ANY
APPLICABLE PROSPECTUS SUPPLEMENT OR ANY PRICING SUPPLEMENT IS ACCURATE AS OF ANY
DATE OTHER THAN THE DATE ON THE COVER OF THE DOCUMENT. WE ARE NOT MAKING AN
OFFER OF THE DEBT SECURITIES IN ANY STATE IN WHICH THE OFFER OR SALE IS NOT
PERMITTED.
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
Central Hudson Gas & Electric Corporation is a public utility that serves
the Mid-Hudson River Valley region of New York State. We or our predecessors
have been in business since 1900. We purchase, transmit, generate and sell
electricity and purchase, transport and sell natural gas. Pursuant to a share
exchange effective December 15, 1999, we became a wholly-owned subsidiary of CH
Energy Group, Inc. Our preferred stock and debt obligations have not changed as
a result of the share exchange.
CH Energy Group, Inc., is also the holding company for various other
energy-related businesses in the Northeast and Mid-Atlantic regions, engaged
primarily in the distribution of fuel oil, gasoline, diesel, kerosene and
propane; the sale of natural gas; the installation and maintenance of electrical
systems and heating, ventilation and air conditioning equipment; project
construction; and providing services for electric generators installed on
customers' property.
Our principal executive office is located at 284 South Avenue, Poughkeepsie,
New York 12601-4879 and our telephone number is (845) 452-2000.
Total revenues and operating income before income taxes (expressed as
percentages) derived from our electric and gas operations accounted for
approximately the following percentages of our total revenues and operating
income before income taxes for each of the last three years:
PERCENT OF OPERATING
PERCENT OF TOTAL REVENUES INCOME BEFORE INCOME TAXES
-------------------------- --------------------------
ELECTRIC GAS ELECTRIC GAS
-------- ------- --------- -------
2001 ........ 79.5% 20.5% 73.3% 26.7%
2000 ........ 83.2% 16.8% 86.2% 13.8%
1999 ........ 82.0% 18.0% 86.6% 13.4%
For the year ended December 31, 2001, we served an average of 280,769
electric and 65,774 natural gas customers monthly. Our total electric revenues
during that period were derived from the following sources (approximate):
o 43.1% from residential customers;
o 31.0% from commercial customers;
o 16.0% from industrial customers; and
o 9.9% from other utilities and miscellaneous sources.
-3-
Our total natural gas revenues during that period were derived from the
following sources (approximate):
o 49.1% from residential customers;
o 37.5% from commercial customers;
o 3.8% from industrial customers;
o 2.9% from interruptible customers; and
o 6.7% from miscellaneous sources (including revenues from
transportation of customer-owned natural gas).
Our largest customer is International Business Machines Corporation, which
accounted for approximately 8.0% of our total electric revenues and
approximately 1.0% of our total gas revenues for the year ended December 31,
2001.
RECENT DEVELOPMENTS
SALE OF PLANTS
On January 30, 2001, we sold our 500-megawatt Danskammer Point Steam
Electric Generating Plant and our 35% interest in the 1,200-megawatt Roseton
Steam Electric Generating Plant to affiliates of Dynegy Power Corp. for
approximately $713 million.
On November 7, 2001, we sold our 9.0% interest in the 1,148-megawatt Unit 2
of the Nine Mile Point Nuclear Station to an affiliate of Constellation Nuclear
LLC for a total consideration of $66.2 million, of which $28.4 million was paid
in cash and $37.8 million of principal and interest will be paid under a five
year promissory note, all subject to certain post-closing adjustments.
To partially support our full service customers, we entered into an
agreement with Dynegy to purchase capacity and energy from January 30, 2001
through October 31, 2003 (with our right to extend that period to October 31,
2004). We also entered into an agreement with Constellation to purchase capacity
and energy from Nine Mile Unit 2 during the 10-year period beginning November 7,
2001. In each case, the energy will be purchased at specified prices, which
increase over the life of the respective contract.
PSC RATE ORDER
Effective October 25, 2001, the New York State Public Service Commission
issued its Order Establishing Rates in a major rate and restructuring proceeding
filed by us.
The Order has a term of three years, beginning July 1, 2001, with our option
to extend the Order for up to two years. Electric delivery rates were reduced by
1.2% and then frozen for the remainder of the term of the Order. Natural gas
delivery rates were frozen for the term of the Order. Our customers will receive
refunds of $25 million annually for each of the first three years the Order is
effective. We will be allowed an annual base return on common equity of 10.3% on
the equity portion of our rate base (approximately $250 million) determined
separately for our electric and gas operations. Earnings above the 10.3% base
return on equity will be retained by us up to 11.3% with a 50/50 sharing between
our customers and us for amounts between 11.3% and 14.0%. Earnings above 14.0%
will be reserved for customer benefits. The common equity ratio used to
determine return on equity will be capped at 47% in the first year of the Order
and will decline 1% per year in each of the next two years.
Excess proceeds from power plant sales and deferred regulatory accounts
approximating $164 million (net of tax) are available for our customers'
benefit. The Order provides for the following customer benefit uses, unused
amounts to remain available for future disposition:
o Customer refunds $45 million (after tax)
o Rate base reduction $42.5 million (after tax)
o Reliability program $13 million (after tax)
o Offset of manufactured gas $12.6 million (after tax)
plant site remediation costs
The Order also establishes customer service standards, enhanced low income
and customer education programs.
- 4 -
DEFEASANCE OF MORTGAGE INDENTURE
On November 6, 2001, we defeased our first mortgage bond indenture by
depositing approximately $39 million with the trustee under that indenture.
Effective that date, we are released of all obligations under that indenture. We
can no longer issue secured debt under that indenture.
FORWARD-LOOKING STATEMENTS
This prospectus and the information incorporated by reference may contain
statements which, to the extent they are not recitations of historical fact,
constitute "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
These statements will contain words such as "believes," "expects," "intends,"
"plans," and other similar words. All forward-looking statements are intended to
be subject to the safe harbor protection provided by such sections. A number of
important factors affecting Central Hudson's business and financial results
could cause actual results to differ materially from those stated in the
forward-looking statements. Those factors include, but are not limited to,
weather, energy supply and demand, fuel prices, interest rates, potential future
acquisitions, developments in the legislative, regulatory and competitive
environments and market risks, electric and gas industry restructuring and cost
recovery, future market prices for energy, capacity and ancillary services, the
ability to obtain adequate and timely rate relief, changes in fuel supply or
costs and the success of strategies to satisfy power requirements now that
Central Hudson's electric generation has been sold, the outcome of pending
litigation, and certain environmental matters, particularly industrial waste
site remediation requirements, and certain presently unknown or unforeseen
factors.
USE OF PROCEEDS
We are offering hereby our unsecured debt securities, in the maximum amount
described on the cover page of this prospectus, on terms to be determined when
an agreement or agreements to sell any or all of the debt securities are made
from time to time.
We expect to use the net proceeds from sales of the debt securities for:
o the payment of maturing issues of long-term debt;
o repayment of short-term debt incurred or expected to be incurred for
working capital requirements in connection with our construction
program; and/or
o financing expenditures for our construction program, funding of
customer benefits/refunds and for other corporate purposes.
More specific information concerning the use of the proceeds from any
particular sale of debt securities will be set forth in the applicable
prospectus supplement. Pending application for such purposes, proceeds from the
sale of the debt securities may be temporarily invested in short-term
instruments.
We anticipate the need for additional funds for our construction program and
for other corporate purposes and expect to incur short-term borrowings and may
issue and sell additional securities as needed, in amounts and of types
presently undetermined.
Reference is made to the information contained in the documents referred to
under the heading "Where You Can Find More Information" regarding our
construction program and other significant capital requirements and our general
financing plan and capabilities.
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RATIOS OF EARNINGS TO FIXED CHARGES
Our ratios of earnings to fixed charges for each of the last five fiscal
years are as follows:
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------
1997 1998 1999 2000 2001
---- ---- ---- ---- ----
Ratio of Earnings to Fixed Charges .... 3.94 3.83 3.58 3.75 2.23
For purposes of the determination of this ratio, the following should be
noted:
(1) Earnings consist of pretax income from continuing operations adjusted to
add the amount of fixed charges computed for this ratio and also include
our share in the income of our subsidiary, which is wholly owned. Since we
are a public utility, earnings include allowance for funds used during
construction.
(2) Fixed charges consist of interest charges on first mortgage bonds, other
long-term debt, other interest charges including interest on short-term
debt, amortization of premium and expense on debt and the portion of rents
representative of the interest factor. These charges have not been reduced
by any allowance for funds used during construction.
DESCRIPTION OF THE DEBT SECURITIES
GENERAL: The debt securities will be issued under an indenture, dated as of
April 1, 1992, between us and U.S. Bank Trust National Association (formerly
known as First Trust of New York, National Association) (as successor trustee to
Morgan Guaranty Trust Company of New York), as trustee. The debt securities may
be issued in one or more series. Each series may provide for one or more
issuances of debt securities. The following contains a description of the
material terms of the debt securities. For a complete description of the debt
securities, you should read the indenture.
The indenture does not limit the aggregate principal amount of debt
securities which may be issued thereunder. The indenture also does not limit the
amount of other debt, secured or unsecured, which we may issue. The debt
securities will be our unsubordinated and unsecured obligations ranking equally
with all our existing and future unsubordinated and unsecured obligations.
Reference is made to the applicable prospectus supplement for a description
of the following terms of specific series of debt securities:
o the title of debt securities of such series;
o the limit, if any, upon the aggregate principal amount of debt
securities of such series;
o the rate or rates, or the method of determination thereof, at which
debt securities of such series will bear interest, if any; the date or
dates from which such interest will accrue; the dates on which such
interest will be payable; and the regular record dates for the
interest payable on such interest payment dates;
o our obligation, if any, to redeem or purchase debt securities of such
series pursuant to any sinking fund or analogous provisions or at the
option of the holder thereof and the periods within which or the dates
on which, the prices at which and the terms and conditions upon which
debt securities of such series will be redeemed or purchased, in whole
or in part, pursuant to such obligation;
o the periods within which or the dates on which, the prices at which
and the terms and conditions upon which such debt securities may be
redeemed or repurchased, if any, in whole or in part, at our option;
o if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which debt securities of such series
will be issuable;
o whether debt securities of such series are to be issued in whole or in
part in the form of one or more global securities and, if so, the
identity of the depositary for such global securities; and
o any other terms of such debt securities not inconsistent with the
provisions of the indenture.
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PAYMENT OF DEBT SECURITIES; TRANSFERS, EXCHANGES: Except as may be provided
in the applicable prospectus supplement, interest, if any, on each debt security
payable on each interest payment date will be paid to the person in whose name
such debt security is registered as of the close of business on the regular
record date relating to such interest payment date; provided, however, that
interest payable at maturity (whether at stated maturity, upon redemption or
otherwise) will be paid to the person to whom the principal of such debt
security is paid. However, if there has been a default in the payment of
interest on any debt security, such defaulted interest may be payable to the
registered holder of such debt security as of the close of business on a date
selected by the trustee not more than 15 days and not less than 10 days prior to
the date we propose for payment of such defaulted interest.
Principal of and premium, if any, and interest, if any, on the debt
securities at maturity will be payable upon presentation of the debt securities
at the principal corporate trust office of U.S. Bank Trust National Association,
or of any successor paying agent, in New York, New York. We may change the place
of payment on the debt securities, may appoint one or more paying agents
(including ourselves) and may remove any paying agent, all in our discretion.
The applicable prospectus supplement, or a supplement thereto, will identify any
new place of payment and any paying agent appointed and will disclose the
removal of any paying agent effected prior to the date of such prospectus
supplement or supplement thereto.
The transfer of debt securities may be registered, and debt securities may
be exchanged for other debt securities of authorized denominations and of like
tenor and aggregate principal amount, at the principal corporate trust office of
U.S. Bank Trust National Association, or any successor transfer agent and
registrar, in New York, New York. We may change the place for registration of
transfer of the debt securities, may appoint one or more additional security
registrars or transfer agents (including ourselves) and may remove any security
registrar or transfer agent, all in our discretion. The applicable prospectus
supplement, or a supplement thereto, will identify any new place for
registration of transfer and any additional security registrar or transfer agent
appointed and will disclose the removal of any security registrar or transfer
agent effected prior to the date of such prospectus supplement or supplement
thereto. No service charge will be made for any transfer or exchange of the debt
securities, but we may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith. We will not be
required (a) to issue, register the transfer of, or exchange debt securities
during a period of 15 days prior to giving any notice of redemption or (b) to
issue, register the transfer of, or exchange any debt security selected for
redemption in whole or in part, except the unredeemed portion of any debt
security being redeemed in part.
REDEMPTION: Any terms of the optional or mandatory redemption of any series
of debt securities will be set forth in the applicable prospectus supplement.
Except as shall otherwise be provided with respect to any series of debt
securities, or any tranche thereof, redeemable at the option of the holder, the
debt securities of such series, or any tranche thereof, will be redeemable only
upon notice, by mail, not less than 30 nor more than 60 days prior to the date
fixed for redemption and, if less than all of the debt securities of any series,
or any tranche thereof, are to be redeemed, the particular debt securities will
be selected by such method as the trustee deems fair and appropriate.
Any notice of optional redemption may state that such redemption shall be
conditional upon the receipt by the trustee, on or prior to the date fixed for
such redemption, of money sufficient to pay the principal of and premium, if
any, and interest, if any, on such debt securities and that if such money has
not been so received, such notice will be of no force or effect and we will not
be required to redeem such debt securities.
EVENTS OF DEFAULT: The following constitute events of default under the
indenture with respect to each series of debt securities outstanding thereunder:
o failure to pay any interest on any debt security of such series within
60 days after the same becomes due and payable;
o failure to pay any principal of or premium, if any, on any debt
security of such series within three business days after the same
becomes due and payable;
o failure to perform or breach of any of our covenants or warranties in
the indenture (other than a covenant or warranty solely for the
benefit of one or more other series of debt securities) for 60 days
after written notice to us by the trustee, or to us and the trustee by
the holders of at least 33% in principal amount of the debt securities
of such series outstanding under the indenture as provided in the
indenture;
o a default under any evidence of indebtedness by us (including a
default with respect to any series of debt securities) or a default
under any instrument under which there may be issued any such
indebtedness, in
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each case aggregating in excess of $5 million, which default shall
constitute a failure to pay the principal of such indebtedness when
due and payable (after the expiration of any applicable grace period)
or shall have resulted in the acceleration of when such indebtedness
becomes due and payable if (1) either the trustee, or at least 10% in
principal amount of any outstanding series of debt securities, shall
have given us notice of such default and (2) within 10 days of said
notice, such indebtedness is not discharged or such acceleration is
not rescinded or annulled;
o certain events of bankruptcy, insolvency or reorganization; and
o any other event of default specified with respect to debt securities
of such series.
REMEDIES: If an event of default with respect to any series of debt
securities occurs and is continuing, then either the trustee or the holders of
not less than 33% in principal amount of the outstanding debt securities of such
series may declare the principal amount (or if the debt securities of such
series are discount notes or similar debt securities, such portion of the
principal amount as may be specified in the applicable prospectus supplement) of
all of the debt securities of such series to be due and payable immediately;
provided, however, that if such an event of default occurs and is continuing
with respect to more than one series of debt securities, the trustee or the
holders of not less than 33% in aggregate principal amount of the outstanding
debt securities of all such series, considered as one class, may make such
declaration of acceleration and not the holders of the debt securities of any
one of such series.
At any time after the declaration of acceleration with respect to the debt
securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained, the event or events of default
giving rise to such declaration of acceleration will, without further act, be
deemed to have been waived, and such declaration and its consequences will,
without further act, be deemed to have been rescinded and annulled, if-
o we have paid or deposited with the trustee a sum sufficient to pay
-- all overdue interest on all debt securities of such series,
-- the principal of and premium, if any, on any debt securities of
such series which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate or
rates prescribed therefor in such debt securities,
-- interest upon overdue interest at the rate or rates prescribed
therefor in such debt securities, to the extent that payment of
such interest is lawful, and
-- all amounts due to the trustee under the indenture; and
o any other event or events of default with respect to the debt
securities of such series, other than the nonpayment of the principal
of the debt securities of such series which has become due solely by
such declaration of acceleration, have been cured or waived as
provided in the indenture.
If any such event of default with respect to the debt securities of any
series occurs and is continuing, the holders of a majority in principal amount
of the outstanding debt securities of such series will have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the trustee, or exercising any trust or power conferred on the trustee, with
respect to the debt securities of such series, subject to the following:
o If such an event of default occurs and is continuing with respect to
more than one series of debt securities, the holders of a majority in
aggregate principal amount of the outstanding debt securities of all
such series, considered as one class, will have the right to make such
direction, and not the holders of the debt securities of any one of
such series;
o Such direction will not be in conflict with any rule of law or with
the indenture and could not involve the trustee in personal liability
in circumstances where reasonable indemnity would not be adequate;
o The trustee may take any other action it deems proper which is not
inconsistent with such direction; and
o The trustee shall not be obligated to take any action unduly
prejudicial to holders not joining in such direction.
The right of a holder of any debt security of such series to institute a
proceeding with respect to the indenture is subject to certain conditions
precedent, but each holder has an absolute right to receive payment of principal
and premium, if any, and interest, if any, when due and to institute suit for
the enforcement of any such payment. The
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indenture generally provides that the trustee, within 90 days after the
occurrence of any default thereunder with respect to the debt securities of a
series, is required to give the holders of the debt securities of such series
notice of any default known to it, unless cured or waived. Except in the case of
a default in the payment of principal of or premium, if any, or interest, if
any, on any debt securities of such series, however, the trustee may withhold
such notice if the trustee determines that it is in the interest of such holders
to do so. Furthermore, in the case of such an event of default caused by our
failure to perform or our breach of any covenant or warranty in the indenture,
no such notice shall be given to such holders until at least 75 days after the
occurrence thereof.
We will be required to furnish annually to the trustee a statement as to our
performance of certain of our obligations under the indenture and as to any
default in such performance.
COVENANTS: MAINTENANCE OF PROPERTY; PRESERVATION OF RIGHTS; CONSOLIDATION,
OR MERGER, ETC.; NEGATIVE PLEDGE: We will cause (or, with respect to property
owned in common with others, make a reasonable effort to cause) all our
properties used or useful in the conduct of our business to be maintained and
kept in good condition, repair and working order, ordinary wear and tear
excepted, and will cause (or with respect to property owned in common with
others, make a reasonable effort to cause) to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as, in our
judgment, may be necessary so that the business carried on in connection
therewith may be properly conducted. The foregoing, however, shall not prevent
us from discontinuing, or causing the discontinuance of, the operation and
maintenance of any of our properties if such discontinuance is, in our judgment,
desirable in the conduct of our business.
Subject to the provisions described in the next paragraph, we will do or
cause to be done all things necessary to preserve and keep in full force and
effect our corporate existence and our rights (charter and statutory) and
franchises. We shall not, however, be required to preserve any such right or
franchise if, in our judgment, (1) preservation thereof is no longer desirable
in the conduct of our business and (2) the loss thereof does not adversely
affect the interests of the holders in any material respect.
We will not consolidate with or merge into any other corporation or
corporations or convey, transfer or lease our properties and assets
substantially as an entirety to any person or persons unless:
o the corporation or corporations formed by such consolidation or into
which we are merged or the person or persons which acquires by
conveyance or transfer, or which leases, our properties and assets
substantially as an entirety, expressly assumes, by supplemental
indenture, the due and punctual payment of the principal of and
premium, if any, and interest, if any, on all the outstanding debt
securities and the performance of all of our covenants under the
indenture;
o immediately after giving effect to any such transaction no event of
default, and no event which after notice or lapse of time would become
an event of default, will have occurred and be continuing; and
o we will have delivered to the trustee an officers' certificate and an
opinion of counsel as provided in the indenture.
We will not incur or permit to exist a mortgage, lien, pledge, charge or
encumbrance of any kind upon our property to secure indebtedness without equally
and ratably securing the outstanding debt securities of all series. This
restriction shall not apply in certain circumstances, however, including the
pledging by us of assets in connection with the incurrences of indebtedness in
aggregate principal amount not exceeding 3% of our net tangible utility assets
at any time outstanding. The indenture also excepts certain encumbrances from
this restriction including, among other things:
o liens for taxes not delinquent and liens for taxes which are
delinquent but are being contested in good faith by us;
o easements, rights of way, restrictions or reservations in our property
for, among other things, roads, utility transmission and distribution
facilities and other utility rights of way and immaterial defects in
title;
o purchase money mortgages on property acquired after the date of the
indenture;
o liens existing on assets prior to the acquisition thereof; and
o liens arising out of the refinancing, extension renewal or refunding
of indebtedness secured by certain of the liens or encumbrances
referred to above, including by any of the two immediately preceding
clauses.
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Generally, personal property used in our ordinary business, including cash,
accounts receivable, stock in trade, products generated or purchased by us,
office equipment, motor vehicles, fuel and gas, are also excepted from this
restriction.
MODIFICATION OF INDENTURE: Without the consent of any holders of debt
securities, we and the trustee may enter into one or more supplemental
indentures for any of the following purposes:
o to evidence the succession of another person to us and the assumption
by any such successor of our covenants in the indenture and the debt
securities; or
o to add to our covenants for the benefit of the holders of all or any
series of outstanding debt securities, or tranche thereof, or to
surrender any right or power conferred upon us by the indenture; or
o to add any additional events of default with respect to all or any
series of outstanding debt securities; or
o to change or eliminate any provision of the indenture or to add any
new provision to the indenture; provided that if such change,
elimination or addition will adversely affect the interests of the
holders of debt securities of any series or tranche in any material
respect, such change, elimination or addition will become effective
with respect to such series or tranche only when there is no debt
security of such series or tranche remaining outstanding under the
indenture; or
o to provide collateral security for the debt securities; or
o to establish the form or terms of debt securities of any series or
tranche as permitted by the indenture; or
o to evidence and provide for the acceptance of appointment of a
successor trustee under the indenture with respect to the debt
securities of one or more series and to add to or change any of the
provisions of the indenture as shall be necessary to provide for or to
facilitate the administration of the trusts under the indenture by
more than one trustee; or
o to provide for the procedures required to permit the utilization of a
noncertificated system of registration for any series of debt
securities; or
o to change any place where:
-- the principal of and premium, if any, and interest, if any, on
debt securities of any series, or any tranche thereof, shall be
payable;
-- any debt securities of any series, or any tranche thereof, may be
surrendered for registration of transfer;
-- debt securities of any series, or any tranche thereof, may be
surrendered for exchange; and
-- notices and demands to or upon us in respect of the debt
securities of any series, or any tranche thereof, and the
indenture may be served; or
o to cure any ambiguity or inconsistency, or to make any other
provisions with respect to matters or questions arising under the
indenture, provided such other provisions shall not adversely affect
the interests of the holders of debt securities of any series in any
material respect.
The holders of a majority in aggregate principal amount of the debt
securities of all series then outstanding under the indenture may, before the
time compliance by us with certain restrictive provisions of the indenture is
required, waive our compliance with one or more of such provisions. The holders
of not less than a majority in principal amount of the debt securities of any
series then outstanding under the indenture may waive any past default under the
indenture with respect to such series, except a default in the payment of
principal, premium, or interest and certain covenants and provisions of the
indenture that cannot be modified or be amended without the consent of the
holder of each outstanding debt security of such series affected.
Without limiting the generality of the foregoing, if the Trust Indenture Act
is amended after the date of the indenture to require changes to the indenture
or the incorporation therein of additional provisions or permit changes to, or
the elimination of, provisions which, at the date of the indenture or at any
time thereafter, are required by the Trust Indenture Act to be contained in the
indenture, we and the trustee may, without the consent of any holders, enter
into one or more supplemental indentures to effect or reflect any such change,
incorporation or elimination.
In general and except as described above, the consent of the holders of not
less than a majority in principal amount of the debt securities of all series
then outstanding under the indenture, considered as one class, is required to
add, change or eliminate any provision of the indenture pursuant to one or more
supplemental indentures. If less
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than all of the series of debt securities outstanding under the indenture are
directly affected by a supplemental indenture, however, then only the consent of
the holders of a majority in aggregate principal amount of the outstanding debt
securities of all series so directly affected, considered as one class, is
required. Furthermore, if the proposed supplemental indenture shall directly
affect the rights of the holders of debt securities of one or more, but less
than all, of the tranches of any series issued in tranches, then only the
consent of the holders of a majority in aggregate principal amount of the debt
securities outstanding of all tranches so directly affected, considered as one
class, shall be required. No such supplemental indenture will, without the
consent of the holder of each debt security outstanding under the indenture of
each such series or tranche directly affected thereby:
o change the stated maturity of, or any installment of principal of or
the rate of interest on (or the amount of any installment of interest
on), any debt security, or reduce the principal thereof or redemption
premium thereon, if any, or change the amount payable upon
acceleration of a discount note or method of calculating the rate of
interest thereon, or otherwise modify certain terms of payment of the
principal thereof or interest or premium thereon;
o reduce the percentage in principal amount of the debt securities
outstanding under such series or tranche required to consent to any
supplemental indenture or waiver of compliance with any provision of
the indenture or any default under the indenture and its consequences,
or to reduce the requirements for quorum and voting; or
o modify certain of the provisions in the indenture relating to
supplemental indentures, waivers of certain covenants and waivers of
past defaults.
A supplemental indenture which changes or eliminates any covenant or other
provision of the indenture which has expressly been included solely for the
benefit of one or more particular series of debt securities or of one or more
tranches thereof, or which modifies the rights of the holders of debt securities
of such series or tranche with respect to such covenant or other provision,
shall be deemed not to affect the rights under the indenture of the holders of
any other debt securities.
DEFEASANCE: The debt securities of any series, or any portion of the
principal amount thereof, will be deemed to have been paid for purposes of the
indenture (except as to any surviving rights of registration of transfer or
exchange expressly provided for in the indenture), and our entire indebtedness
in respect thereof will be deemed to have been satisfied and discharged, if
there shall have been irrevocably deposited with the trustee, in trust:
o money in the amount which will be sufficient; or
o direct obligations of, or obligations unconditionally guaranteed by,
the United States of America and entitled to the benefit of the full
faith and credit thereof and certificates, depositary receipts or
other instruments which evidence a direct ownership interest in such
obligations or in any specific interest or principal payments due in
respect thereof, in each case which do not contain provisions
permitting the redemption or other prepayment thereof at the option of
the issuer thereof, the principal of and the interest on which when
due, without any regard to reinvestment thereof, will provide monies
which, together with the money, if any, deposited with or held by the
trustee, will be sufficient; or
o a combination of the preceding items which will be sufficient, to pay
when due the principal of and premium, if any, and interest, if any,
due and to become due on such debt securities or portions thereof on
and prior to the maturity thereof.
As a condition to defeasing any series of debt securities as described
above, we are obligated to obtain a legal opinion to the effect that the
defeasance will be tax free to the holders of the debt securities to be
defeased.
TITLE: We, the trustee, and any agent of ours or the trustee may treat the
registered holder of a debt security as the absolute owner thereof (whether or
not such debt security may be overdue) for the purpose of making payment and for
all other purposes.
LEGAL MATTERS
The legality of the debt securities offered hereby and all legal matters in
connection therewith will be passed upon for us by Gould & Wilkie LLP, our
general counsel, One Chase Manhattan Plaza, New York, New York and for any
underwriter, dealer or agent by Pillsbury Winthrop LLP, One Battery Park Plaza,
New York, New York.
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EXPERTS
Our consolidated financial statements incorporated in this prospectus by
reference to our Annual Report on Form 10-K for the year ended December 31,
2001, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
PLAN OF DISTRIBUTION
We may sell the debt securities:
o through underwriters or dealers;
o directly to one or more purchasers; or
o through agents.
Each prospectus supplement will set forth the terms of the offering of the
debt securities offered thereby, including the name or names of any
underwriters, dealers or agents, the initial public offering price or purchase
price of such debt securities, the proceeds we receive from such sale, any
underwriting discounts and other items constituting underwriters' compensation,
any discounts or concessions allowed or reallowed or paid to dealers, any
securities exchange on which debt securities may be listed and the use of
delayed delivery contracts, if any. Any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time. Only firms named in a prospectus supplement are deemed to be
underwriters, dealers or agents in connection with the debt securities offered
thereby.
If underwriters are used in the sale of the debt securities, such debt
securities will be acquired by the underwriters for their own account and may be
resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. Such debt securities may be offered to the public either
through underwriting syndicates represented by one or more managing underwriters
or directly by one or more underwriters. Any underwriters with respect to any of
the debt securities will be named in the prospectus supplement applicable to
such debt securities and, if an underwriting syndicate is used, the managing
underwriter or underwriters will be named on the cover page of such prospectus
supplement. Unless otherwise set forth in the prospectus supplement, the
obligations of the underwriters to purchase any of the debt securities will be
subject to certain conditions precedent, and the underwriters will be obligated
to purchase all of such debt securities if any are purchased.
Subject to certain conditions, we may agree to indemnify the several
underwriters or agents and their controlling persons against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
arising out of or based upon, among other things, any untrue statement or
alleged untrue statement of a material fact contained in the registration
statement, this prospectus, a prospectus supplement or the documents
incorporated by reference herein or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. See the applicable prospectus supplement.
Any underwriter may engage in over-allotment, stabilizing transactions,
short covering transactions and penalty bids in accordance with Regulation M
under the Securities Exchange Act of 1934. Over-allotment involves sales in
excess of the offering size, which creates a short position. Stabilizing
transactions permit bids to purchase the underlying debt security so long as the
stabilizing bids do not exceed a specified maximum. Short covering transactions
involve purchases of the debt securities in the open market after the
distribution is completed to cover short positions. Penalty bids permit the
underwriters to reclaim a selling concession from a dealer when the debt
securities originally sold by the dealer are purchased in a covering transaction
to cover short positions. Those activities may cause the price of the debt
securities to be higher than it would otherwise be. The underwriters may engage
in any such activities on any exchange or other market in which the debt
securities may be traded. If commenced, the underwriters may discontinue those
activities at any time. The prospectus supplement or pricing supplement, as
applicable, will set forth the anticipated delivery date of the debt securities
being sold at that time.
Underwriters, dealers and agents or their affiliates may engage from time to
time in various general financing, investment banking and commercial banking
transactions with us and certain of our affiliates.
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