FILED PURSUANT TO RULE 424(b)(2)
                                                REGISTRATION NO. 333-02831
 
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MAY 8, 1996)
                                 $500,000,000
                                TRIBUNE COMPANY
                          MEDIUM-TERM NOTES, SERIES D
                  DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
                                ---------------
  Tribune Company (the "Company") may offer from time to time its Medium-Term
Notes (the "Notes") with an aggregate initial offering price not to exceed
$500,000,000, or the equivalent thereof in one or more foreign or composite
currencies. Such aggregate principal amount is subject to reduction as a
result of the sale by the Company of certain other debt securities under the
Prospectus to which this Prospectus Supplement relates. Each Note will mature
on any day nine months or more from the date of issue, as specified in a
pricing supplement hereto (each, a "Pricing Supplement"), and may be subject
to redemption by the Company or repayment at the option of the holder thereof,
in each case, in whole or in part, prior to its Stated Maturity Date, as set
forth therein and specified in the applicable Pricing Supplement.
  The interest rate, if any, or the formula for the determination of any such
interest rate, applicable to each Note and other variable terms of the Notes
as described herein will be established by the Company at the date of issue of
such Note and will be set forth therein and specified in a Pricing Supplement.
Interest rates, interest rate formulae and such other variable terms are
subject to change by the Company, but no change will affect any Note already
issued or as to which an offer to purchase has been accepted by the Company.
Each Note will be issued in fully registered book-entry form (a "Book-Entry
Note") or in definitive form (a "Definitive Note"), as set forth in the
applicable Pricing Supplement, in denominations of $1,000 and integral
multiples thereof, unless otherwise specified in the applicable Pricing
Supplement. Each Book-Entry Note will be represented by one or more fully
registered global securities deposited with or on behalf of The Depository
Trust Company (or such other Depository as is identified in the applicable
Pricing Supplement) (the "Depositary") and registered in the name of the
Depositary or the Depositary's nominee. Interests in Book-Entry Notes will be
shown on, and transfers thereof will be effected only through, records
maintained by the Depositary (with respect to its participants) and the
Depositary's participants (with respect to beneficial owners).
  Unless otherwise specified in the applicable Pricing Supplement, the Notes
will bear interest at fixed rates (the "Fixed Rate Notes") or at floating
rates (the "Floating Rate Notes"). The applicable Pricing Supplement will
specify whether a Floating Rate Note is a Regular Floating Rate Note, Floating
Rate/Fixed Rate Note or Inverse Floating Rate Note and whether its rate of
interest is determined by reference to one or more of the CD Rate, the CMT
Rate, the Commercial Paper Rate, the Eleventh District Cost of Funds Rate, the
Federal Funds Rate, LIBOR, the Prime Rate or the Treasury Rate (each, an
"Interest Rate Basis"), or any other interest rate basis or formula, as
adjusted by any Spread and/or Spread Multiplier and will specify such other
terms applicable to such Note. Notes may also be issued as Foreign Currency
Notes, Indexed Notes or Amortizing Notes. See "Description of Notes." Interest
on Fixed Rate Notes will accrue from their date of issue and, unless otherwise
specified in the applicable Pricing Supplement, will be payable semiannually
in arrears on May 15 and November 15 of each year and at Maturity. Unless
otherwise specified in the applicable Pricing Supplement, the rate of interest
on each Floating Rate Note will be reset daily, weekly, monthly, quarterly,
semiannually or annually, as set forth therein and specified in the applicable
Pricing Supplement, and interest on each Floating Rate Note will accrue from
its date of issue and will be payable in arrears monthly, quarterly,
semiannually or annually, as specified in the applicable Pricing Supplement,
and at Maturity. Notes may also be issued with original issue discount, and
such Notes may or may not currently pay interest.
                                ---------------
  THESE SECURITIES HAVE  NOT BEEN APPROVED OR DISAPPROVED  BY THE SECURITIES
     AND EXCHANGE COMMISSION  OR ANY STATE SECURITIES  COMMISSION NOR HAS
       THE SECURITIES  AND EXCHANGE COMMISSION OR ANY  STATE SECURITIES
          COMMISSION PASSED  UPON THE  ACCURACY OR ADEQUACY  OF THIS
            PROSPECTUS  SUPPLEMENT, THE PROSPECTUS OR  ANY PRICING
               SUPPLEMENT  HERETO.  ANY  REPRESENTATION TO  THE
                 CONTRARY IS A CRIMINAL OFFENSE.
 
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                                         PRICE TO    AGENTS' DISCOUNTS          PROCEEDS TO
                                        PUBLIC(1)    AND COMMISSIONS(2)        COMPANY(2)(3)
- ---------------------------------------------------------------------------------------------------
                                                                
Per Note..............................     100%        .125% --.750%         99.875% --99.250%
- ---------------------------------------------------------------------------------------------------
Total(4).............................. $500,000,000 $625,000--$3,750,000 $499,375,000--$496,250,000

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(1) Unless otherwise specified in the applicable Pricing Supplement, the price
    to public will be 100% of the principal amount.
(2) The Company will pay a commission to Merrill Lynch & Co., Merrill Lynch,
    Pierce, Fenner & Smith Incorporated, Goldman, Sachs & Co. or Salomon
    Brothers Inc, each as agent (collectively, the "Agents"), in the form of a
    discount, ranging from .125% to .750% of the principal amount of a Note,
    depending upon its Stated Maturity, sold through such Agent. Commissions
    with respect to Notes with Stated Maturity Dates in excess of 30 years
    that are sold through such Agent will be negotiated between the Company
    and such Agent at the time of such sale. The Company may also sell notes
    to an Agent, as principal, for resale to investors and other purchasers at
    varying prices relating to prevailing market prices at the time of resale
    as determined by such Agent, or, if so specified in the applicable Pricing
    Supplement, for resale at a fixed public offering price. Unless otherwise
    specified in the applicable Pricing Supplement, any Note sold to an Agent
    as principal will be purchased by such Agent at a price equal to 100% of
    the principal amount thereof less a percentage of the principal amount
    equal to the commission applicable to an agency sale (as described above)
    of a Note of identical maturity. The Company has agreed to indemnify each
    Agent against, and to provide contribution with respect to, certain
    liabilities, including liabilities under the Securities Act of 1933, as
    amended. See "Plan of Distribution of Notes."
(3) Before deducting expenses payable by the Company estimated at $510,000,
    including reimbursement of certain of the Agents' expenses.
(4) Or the equivalent thereof in one or more foreign or composite currencies.
                                ---------------
  The Notes are being offered on a continuing basis by the Company through the
Agents, each of which has agreed to use its reasonable best efforts to solicit
offers to purchase the Notes. The Company may also sell Notes to any Agent, as
principal, for resale to investors and other purchasers at varying prices
relating to prevailing market prices at the time of resale as determined by
such Agent, or, if so specified in the applicable Pricing Supplement, for
resale at a fixed public offering price. Unless otherwise specified in the
applicable Pricing Supplement, the Notes will not be listed on any securities
exchange and 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. The Company reserves the right to cancel or modify the offer
made hereby without notice. The Company or the Agent may reject any offer to
purchase Notes in whole or in part. See "Plan of Distribution of Notes."
                                ---------------
MERRILL LYNCH & CO.
                             GOLDMAN, SACHS & CO.
                                                           SALOMON BROTHERS INC
 
                                ---------------
 
            The date of this Prospectus Supplement is May 8, 1996.

 
  IN CONNECTION WITH THE OFFERING OF NOTES, THE AGENTS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
 
                               ----------------
 
                                USE OF PROCEEDS
 
  The Company expects to add the proceeds from the sale of the Notes to its
general funds to be used for general corporate purposes, including capital
expenditures, working capital, repayment of long-term and short-term debt,
securities repurchase programs and the financing of possible future
acquisitions. Funds not required immediately may be invested in short-term
marketable securities.
 
                              DESCRIPTION OF NOTES
 
  The following description of the particular terms of the Notes offered hereby
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms of the Debt Securities (as defined in the accompanying
Prospectus) set forth under the heading "Description of Debt Securities" in the
Prospectus, to which description reference is made. The following description
will apply to each Note unless otherwise specified in the applicable Pricing
Supplement.
 
GENERAL
 
  The Notes will be issued under an Indenture dated as of March 1, 1992 (as
supplemented from time to time in accordance with its terms, the "Indenture"),
between the Company and First Trust of Illinois, National Association, as
successor trustee (the "Trustee"), which is more fully described in the
Prospectus. All Debt Securities, including the Notes, issued and to be issued
under the Indenture will be unsecured general obligations of the Company and
will rank pari passu with all other unsecured and unsubordinated indebtedness
of the Company from time to time outstanding. The Indenture does not limit the
aggregate principal amount of Debt Securities which may be issued thereunder
and Debt Securities may be issued thereunder from time to time in one or more
series up to the aggregate principal amount from time to time authorized by the
Company for each series. The Company may, from time to time, without the
consent of the holders of the Notes, provide for the issuance of Debt
Securities under the Indenture in addition to the Notes offered hereby.
 
  The Notes are currently limited to an aggregate initial offering price of
$500,000,000, or the equivalent thereof in one or more foreign or composite
currencies. The Notes will be offered on a continuing basis and will mature on
any day nine months or more from the date of issue, as specified in the
applicable Pricing Supplement (the "Stated Maturity Date"). Unless otherwise
specified in the applicable Pricing Supplement, interest-bearing Notes will
either be Fixed Rate Notes or Floating Rate Notes as specified in the
applicable Pricing Supplement. Notes may be issued at significant discounts
from their principal amount payable at the Stated Maturity Date (or on any
prior date on which the principal or an installment of principal of a Note
becomes due and payable, whether by the declaration of acceleration, call for
redemption at the option of the Company, repayment at the option of the holder
or otherwise) (each such date, a "Maturity"), and some Notes may not bear
interest.
 
  Each Note will be denominated in a currency or currency unit (the "Specified
Currency") as specified on the face thereof and in the applicable Pricing
Supplement. Unless otherwise indicated in a Note or in the applicable Pricing
Supplement, the Notes will be denominated in United States dollars and payments
of principal of, and premium, if any, and interest on, the Notes will be made
in United States dollars. Unless otherwise specified in the applicable Pricing
Supplement, purchasers are required to pay for Foreign Currency
 
                                      S-2

 
Notes in the Specified Currency. At the present time, there are limited
facilities in the United States for the conversion of United States dollars
into foreign currencies or currency units and vice versa, and commercial banks
do not generally offer non-U.S. dollar checking or savings account facilities
in the United States. If requested on or prior to the third Business Day (as
defined below) preceding the date of delivery of the Notes, or by such other
day as determined by the Agent who presented such offer to purchase Notes to
the Company, such Agent may be prepared to arrange for the conversion of United
States dollars into the Specified Currency to enable the purchasers to pay for
the Notes. If agreed to by such Agent, each such conversion will be made by
such Agent on such terms and subject to such conditions, limitations and
charges as such Agent may from time to time establish in accordance with its
regular foreign exchange practices. All costs of exchange will be borne by the
purchasers of Foreign Currency Notes. See "Special Provisions and Risks
Relating to Foreign Currency Notes" below.
 
  Interest rates, interest rate formulae and other variable terms of the Notes
are subject to change by the Company from time to time, but no such change will
affect any Note already issued or as to which an offer to purchase has been
accepted by the Company.
 
  Each Note, other than a Foreign Currency Note, will be issued in fully
registered form as a Book-Entry Note or a Definitive Note, in denominations of
$1,000 and integral multiples thereof, unless otherwise specified in the
applicable Pricing Supplement. The authorized denominations of Foreign Currency
Notes will be indicated in the applicable Pricing Supplement. Interest rates
offered by the Company with respect to the Notes may differ depending upon the
aggregate principal amount of Notes subject to purchase in any single
transaction, and, the Company expects generally to distinguish, with respect to
such offered rates, between purchases which are for less than, and purchases
which are for an amount equal to or greater than, $100,000.
 
  Beneficial interests in Book-Entry Notes may be transferred or exchanged only
through the Depositary. See "Book-Entry Notes." Registration of transfer of
Definitive Notes will be made at the office or agency of the Trustee in the
Borough of Manhattan, The City of New York. No service charge will be made by
the Company or the Trustee for any such registration of transfer or exchange of
Notes, but the Company may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection therewith (other
than exchanges pursuant to the Indenture not involving any transfer).
 
  Payments of principal of, and premium and interest, if any, on Book-Entry
Notes will be made by the Company through the Trustee to the Depositary. See
"Book-Entry Notes." In the case of Definitive Notes, payment of principal or
premium, if any, at the Maturity of each Definitive Note will be made in
immediately available funds upon presentation of the Definitive Note at the
office or agency of the Trustee in the Borough of Manhattan, The City of New
York, the office maintained for such purpose by any duly authorized Paying
Agent, or at such other place as the Company may designate (or, in the case of
any repayment on an Optional Repayment Date, upon presentation of the
Definitive Note in accordance with the provisions thereof as described below).
Payment of interest due at Maturity will be made to the person to whom payment
of the principal shall be made. Payment of interest due on Definitive Notes
(other than at Maturity) will be made at the office or agency of the Trustee or
the office maintained for such purpose by the Paying Agent or, at the option of
the Company, may be made by check mailed to the address of the person entitled
thereto as such address shall appear in the registry books of the Company.
Notwithstanding the foregoing, a holder of $10,000,000 or more in aggregate
principal amount of Definitive Notes having the same Interest Payment Dates
will, at the option of the Company, be entitled to receive interest payments by
wire transfer of immediately available funds if appropriate wire transfer
instructions have been received in writing by the Trustee not less than 15 days
prior to the applicable Interest Payment Date. Such wire instructions, upon
receipt by the Trustee, shall remain in effect until revoked by such holder.
 
  For special payment terms applicable to Foreign Currency Notes, see "Special
Provisions and Risks Relating to Foreign Currency Notes" below.
 
                                      S-3

 
REDEMPTION AT THE OPTION OF THE COMPANY
 
  Unless otherwise indicated in the applicable Pricing Supplement, Notes will
not be subject to any sinking fund. The Notes will be redeemable at the option
of the Company prior to the Stated Maturity Date only if an Initial Redemption
Date is specified therein and in the applicable Pricing Supplement. If so
indicated in the applicable Pricing Supplement, Notes will be subject to
redemption at the option of the Company on any date on and after the applicable
Initial Redemption Date specified in such Pricing Supplement. On and after the
Initial Redemption Date, if any, the related Note may be redeemed at any time
in whole or from time to time in part in increments of $1,000 at the option of
the Company at the applicable Redemption Price, together with interest thereon
payable to the date of redemption, on notice given not more than 60 nor less
than 30 days prior to the date of redemption and in accordance with the
provisions of the Indenture. "Redemption Price," with respect to a Note, will
initially mean a percentage, the Initial Redemption Percentage, of the
principal amount of such Note to be redeemed specified in the applicable
Pricing Supplement and shall decline at each anniversary of the Initial
Redemption Date by a percentage, the Annual Redemption Percentage Reduction, if
any, specified in the applicable Pricing Supplement, of the principal amount to
be redeemed until the Redemption Price is 100% of such principal amount.
 
REPAYMENT AT THE OPTION OF THE HOLDER
 
  If so indicated in the applicable Pricing Supplement, Notes will be repayable
by the Company in whole or in part at the option of the holders thereof on
their respective Optional Repayment Dates specified in such Pricing Supplement.
If no Optional Repayment Date is indicated with respect to a Note, such Note
will not be repayable at the option of the holder prior to the Stated Maturity
Date. Any repayment in part will be in increments of $1,000 provided that any
remaining principal amount of such Note will be an authorized denomination of
such Note. Unless otherwise provided in the applicable Pricing Supplement, the
repayment price for any Note so repaid will be 100% of the principal amount to
be repaid, together with accrued interest thereon payable to the date of
repayment. For any Note to be so repaid, the Note must be received, together
with the form thereon entitled "Option to Elect Repayment" duly completed, by
the Trustee at its Corporate Trust Office (or such other address of which the
Company shall from time to time notify the holders) not more than 60 nor less
than 30 days prior to the Optional Repayment Date. Exercise of such repayment
option by the holder will be irrevocable.
 
  If the Book-Entry Notes are represented by global securities held by or on
behalf of the Depositary, and registered in the name of the Depositary or the
Depositary's nominee, the Depositary or its nominee will be the holder of such
Book-Entry Note and therefore will be the only entity that can exercise a right
to repayment. 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 such Book-Entry Note must instruct the participant through
which it holds an interest in such Book-Entry Note to notify the Depositary of
its desire to exercise a right of repayment. Different firms may have different
deadlines for accepting instructions from their customers. Accordingly,
beneficial owners of Book-Entry Notes should consult the participants through
which they own their interest in the Book-Entry Notes for the respective
deadlines for such participants. All notices shall be executed by a duly
authorized officer of such participant (with signature guaranteed) and shall be
irrevocable. In addition, such beneficial owners of Book-Entry Notes shall
effect delivery of such Book-Entry Notes at the time such notices of election
are given to the Depositary by causing the participant to transfer such
beneficial owner's interest in the Book-Entry Notes, on the Depositary's
records, to the Trustee. Conveyance of notices and other communications by the
Depositary to participants, by participants to indirect participants and by
participants and indirect participants to beneficial owners of the Book-Entry
Notes will be governed by agreements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
 
  If applicable, the Company will comply with the requirements of Rule 14e-1
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
any other securities laws or regulations in connection with any such repayment.
 
                                      S-4

 
  The Company may at any time purchase Notes at any price or prices in the open
market or otherwise. Notes so purchased by the Company may be held or resold
or, at the discretion of the Company, may be surrendered to the Trustee for
cancellation.
 
INTEREST
 
 General
 
  Unless otherwise specified in the applicable Pricing Supplement, each Note
will bear interest from the date of issue at the rate per annum or, in the case
of a Floating Rate Note, pursuant to the interest rate formula stated therein
and in the applicable Pricing Supplement, until the principal thereof is paid
or made available for payment. Interest will be payable in arrears on each
Interest Payment Date specified in the applicable Pricing Supplement on which
an installment of interest is due and payable and at Maturity. Unless otherwise
specified in the applicable Pricing Supplement, the first payment of interest
on any Note originally issued between a record date and the related Interest
Payment Date will be made on the Interest Payment Date immediately following
the next succeeding record date to the registered holder on such next
succeeding record date. Unless otherwise specified in the applicable Pricing
Supplement, a "Record Date" shall be the fifteenth calendar day (whether or not
a Business Day) immediately preceding the related Interest Payment Date.
 
 Fixed Rate Notes
 
  Unless otherwise specified in the applicable Pricing Supplement, each Fixed
Rate Note will bear interest from, and including, the Original Issue Date, at
the rate per annum stated on the face thereof until the principal amount
thereof is paid or made available for payment. Interest payments on Fixed Rate
Notes will equal the amount of interest accrued from and including the next
preceding Interest Payment Date in respect of which interest has been paid (or
from and including the Original Issue Date, if no interest has been paid with
respect to such Fixed Rate Notes), to but excluding the related Interest
Payment Date or Maturity, as the case may be. Unless otherwise specified in the
applicable Pricing Supplement, interest on Fixed Rate Notes will be computed on
the basis of a 360-day year of twelve 30-day months.
 
  Unless otherwise specified in the applicable Pricing Supplement, interest on
Fixed Rate Notes will be payable semiannually on May 15 and November 15 of each
year and at Maturity. If any Interest Payment Date or the Maturity of a Fixed
Rate Note falls on a day that is not a Business Day, the related payment of
principal, premium, if any, or interest will be made on the next succeeding
Business Day as if made on the date such payment was due, and no interest will
accrue on the amount so payable for the period from and after such Interest
Payment Date or Maturity, as the case may be.
 
 Floating Rate Notes
 
  Unless otherwise specified in the applicable Pricing Supplement, Floating
Rate Notes will be issued as described below. Each applicable Pricing
Supplement will specify certain terms with respect to which such Floating Rate
Note is being delivered, including: whether such Floating Rate Note is a
"Regular Floating Rate Note," a "Floating Rate/Fixed Rate Note" or an "Inverse
Floating Rate Note," the Interest Rate Basis or Bases, Initial Interest Rate,
Interest Reset Dates, Record Dates, Interest Payment Dates, Index Maturity,
maximum interest rate and minimum interest rate, if any, and the Spread and/or
Spread Multiplier, if any, and if one or more of the specified Interest Rate
Bases is LIBOR, the Index Currency and the Designated LIBOR Page, as described
below.
 
  The interest rate borne by the Floating Rate Notes will be determined as
follows:
 
    (i) Unless such Floating Rate Note is designated as a "Floating
  Rate/Fixed Rate Note," an Inverse Floating Rate Note or as having an
  Addendum attached, such Floating Rate Note will be designated a "Regular
  Floating Rate Note" and, except as described below or in the applicable
  Pricing Supplement, will bear interest at the rate determined by reference
  to the applicable Interest Rate Basis (i) plus or
 
                                      S-5

 
  minus the applicable Spread, if any, and/or (ii) multiplied by the
  applicable Spread Multiplier, if any. Commencing on the first Interest
  Reset Date, the rate at which interest on such Regular Floating Rate Note
  shall be payable shall be reset as of each Interest Reset Date; provided,
  however, that the interest rate in effect for the period from the Original
  Issue Date to the first Interest Reset Date will be the Initial Interest
  Rate.
 
    (ii) If such Floating Rate Note is designated as a "Floating Rate/Fixed
  Rate Note," then, except as described below or in the applicable Pricing
  Supplement, such Floating Rate Note will bear interest at the rate
  determined by reference to the applicable Interest Rate Basis (i) plus or
  minus the applicable Spread, if any, and/or (ii) multiplied by the
  applicable Spread Multiplier, if any. Commencing on the first Interest
  Reset Date, the rate at which interest on such Floating Rate/Fixed Rate
  Note shall be payable shall be reset as of each Interest Reset Date;
  provided, however, that (i) the interest rate in effect for the period from
  the Original Issue Date to the first Interest Reset Date will be the
  Initial Interest Rate; and (ii) the interest rate in effect commencing on,
  and including, the Fixed Rate Commencement Date to Maturity shall be the
  Fixed Interest Rate, if such rate is specified in the applicable Pricing
  Supplement, or if no such Fixed Interest Rate is so specified, the interest
  rate in effect thereon on the day immediately preceding the Fixed Rate
  Commencement Date.
 
    (iii) If such Floating Rate Note is designated as an "Inverse Floating
  Rate Note," then, except as described below or in the applicable Pricing
  Supplement, such Floating Rate Note will bear interest equal to the Fixed
  Interest Rate specified in the related Pricing Supplement minus the rate
  determined by reference to the Interest Rate Basis (i) plus or minus the
  applicable Spread, if any, and/or (ii) multiplied by the applicable Spread
  Multiplier, if any; provided, however, that, unless otherwise specified in
  the applicable Pricing Supplement, the interest rate thereon will not be
  less than zero. Commencing on the first Interest Reset Date, the rate at
  which interest on such Inverse Floating Rate Note is payable shall be reset
  as of each Interest Reset Date; provided, however, that the interest rate
  in effect for the period from the Original Issue Date to the first Interest
  Reset Date will be the Initial Interest Rate.
 
  Notwithstanding the foregoing, if such Floating Rate Note is designated as
having an Addendum attached as specified on the face thereof, such Floating
Rate Note shall bear interest in accordance with the terms described in such
Addendum and the applicable Pricing Supplement.
 
  Unless otherwise provided in the applicable Pricing Supplement, the interest
rate with respect to each Interest Rate Basis will be determined in accordance
with the applicable provisions below. Except as set forth above or in the
applicable Pricing Supplement, the interest rate in effect on each day shall be
(a) if such day is an Interest Reset Date, the interest rate determined as of
the Interest Determination Date immediately preceding such Interest Reset Date
or (b) if such day is not an Interest Reset Date, the interest rate determined
as of the Interest Determination Date immediately preceding the next preceding
Interest Reset Date.
 
  Interest on Floating Rate Notes will be determined by reference to an
"Interest Rate Basis," which may be one or more of (i) the "CD Rate," (ii) the
"CMT Rate," (iii) the "Commercial Paper Rate," (iv) the "Eleventh District Cost
of Funds Rate," (v) the "Federal Funds Rate," (vi) "LIBOR," (vii) the "Prime
Rate," (viii) the "Treasury Rate," or (ix) such other Interest Rate Basis or
interest rate formula as may be set forth in the applicable Pricing Supplement;
provided, however, that with respect to a Floating Rate/Fixed Rate Note, the
interest rate commencing on the Fixed Rate Commencement Date and continuing
until Maturity shall be the Fixed Interest Rate, if such rate is specified in
the applicable Pricing Supplement, or if no such Fixed Interest Rate is so
specified, the interest rate in effect thereon on the day immediately preceding
the Fixed Rate Commencement Date.
 
  The "Spread" is the number of basis points to be added to or subtracted from
the related Interest Rate Basis or Bases applicable to such Floating Rate Note.
The "Spread Multiplier" is the percentage of the related Interest Rate Basis or
Bases applicable to such Floating Rate Note by which such Interest Rate Basis
or Bases will be multiplied to determine the applicable interest rate on such
Floating Rate Note. The "Index
 
                                      S-6

 
Maturity" is the period to maturity of the instrument or obligation with
respect to which the Interest Rate Basis or Bases will be calculated. The
Spread, Spread Multiplier, Index Maturity and other variable terms of the
Floating Rate Notes are subject to change by the Company from time to time, but
no such change will affect any Floating Rate Note previously issued or as to
which an offer has been accepted by the Company.
 
  Each applicable Pricing Supplement will specify whether the rate of interest
on the related Floating Rate Note will be reset daily, weekly, monthly,
quarterly, semiannually, annually or such other specified period (each, an
"Interest Reset Period") and the dates on which such Interest Rate will be
reset (each, an "Interest Reset Date"). Unless otherwise specified in the
applicable Pricing Supplement, the Interest Reset Date will be, in the case of
Floating Rate Notes which reset: (i) daily, each Business Day; (ii) weekly, the
Wednesday of each week (with the exception of weekly reset Treasury Rate Notes
which will reset the Tuesday of each week, except as specified below); (iii)
monthly, the third Wednesday of each month (with the exception of monthly reset
Eleventh District Cost of Funds Rate Notes, which will reset on the first
calendar day of the month); (iv) quarterly, the third Wednesday of March, June,
September and December of each year; (v) semiannually, the third Wednesday of
the two months specified in the applicable Pricing Supplement; and (vi)
annually, the third Wednesday of the month specified in the applicable Pricing
Supplement; provided however, that, with respect to Floating Rate/Fixed Rate
Notes, the fixed rate of interest in effect for the period from the Fixed Rate
Commencement Date until Maturity shall be the Fixed Interest Rate or the
interest rate in effect on the day immediately preceding the Fixed Rate
Commencement Date, as specified 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, such Interest Reset Date will be postponed to the next
succeeding day that is a Business Day, except that in the case of a Floating
Rate Note as to which LIBOR is an applicable Interest Rate Basis, if such
Business Day falls in the next succeeding calendar month, such Interest Reset
Date will be the immediately preceding Business Day. As used herein, "Business
Day" means, unless otherwise specified in the applicable Pricing Supplement,
any day that in The City of New York, is not a day on which banking
institutions are authorized or required by law, regulation or executive order
to close and, with respect to Notes as to which LIBOR is an applicable Interest
Rate Basis, is also a London Business Day. As used herein, "London Business
Day" means any day (a) if the Index Currency is other than the European
Currency Unit ("ECU"), on which dealings in deposits in such Index Currency are
transacted in the London interbank market or (b) if the Index Currency is the
ECU, that is not designated as an ECU Non-Settlement Day by the ECU Banking
Association in Paris or otherwise generally regarded in the ECU interbank
market as a day on which payments on ECUs shall not be made.
 
  A Floating Rate Note may also have either or both of the following: (i) a
maximum numerical limitation, or ceiling, on the rate at which interest may
accrue during any interest period, and (ii) a minimum numerical limitation, or
floor, on the rate at which interest may accrue during any interest period. In
addition to any maximum interest rate that may be applicable to any Floating
Rate Note pursuant to the above provisions, the interest rate on 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 United States law of general application.
 
  Each Floating Rate Note will bear interest from the date of issue at the
rates specified therein until the principal thereof is paid or otherwise made
available for payment. Except as provided below or in the applicable Pricing
Supplement, the Interest Payment Dates will be, in the case of Floating Rate
Notes which reset: (i) daily, weekly or monthly, the third Wednesday of each
month or on the third Wednesday of March, June, September and December of each
year, as specified in the applicable Pricing Supplement; (ii) quarterly, the
third Wednesday of March, June, September and December of each year, (iii)
semiannually, the third Wednesday of the two months of each year specified in
the applicable Pricing Supplement; and (iv) annually, the third Wednesday of
the month of each year specified in the applicable Pricing Supplement and, in
each case, interest will be payable at Maturity. If any Interest Payment Date
for any Floating Rate Note (other than an Interest Payment Date at Maturity)
would otherwise be a day that is not a Business Day, such Interest Payment Date
will be postponed to the next succeeding day that is a Business Day except that
in the case of a Floating Rate Note as to which LIBOR is an applicable Interest
Rate Basis, if such Business Day
 
                                      S-7

 
falls in the next succeeding calendar month, such Interest Payment Date will be
the immediately preceding Business Day. If the Maturity of a Floating Rate Note
falls on a day that is not a Business Day, the payment of principal, premium,
if any, and interest will be made on the next succeeding Business Day, and no
interest on such payment shall accrue for the period from and after such
Maturity.
 
  All percentages resulting from any calculation on Floating Rate Notes will be
rounded to the nearest one hundred-thousandth of a percentage point, with five
one millionths of a percentage point rounded upwards (e.g., 9.876545% (or
 .09876545) would be rounded to 9.87655% (or .0987655)), and all dollar amounts
used in or resulting from such calculation on Floating Rate Notes will be
rounded to the nearest cent or, in the case of Notes denominated other than in
United States dollars, the nearest unit (with one-half cent or unit being
rounded upward).
 
  Interest payments on Floating Rate Notes will equal the amount of interest
accrued from, and including the next preceding Interest Payment Date in respect
of which interest has been paid (or from, and including the Original Issue
Date, if no interest has been paid with respect to such Floating Rate Notes)
to, but excluding the related Interest Payment Date or Maturity, as the case
may be.
 
  With respect to each Floating Rate Note, accrued interest is calculated by
multiplying its face amount by an accrued interest factor. Such accrued
interest factor is computed by adding the interest factor calculated for each
day in the period for which accrued interest is being calculated. Unless
otherwise specified in the applicable Pricing Supplement, the interest factor
for each such day will be computed by dividing the interest rate applicable to
such day by 360, in the case of Notes for which the Interest Rate Basis is the
CD Rate, the Commercial Paper Rate, the Eleventh District Cost of Funds Rate,
the Federal Funds Rate, LIBOR or the Prime Rate, or by the actual number of
days in the year in the case of Notes for which the Interest Rate Basis is the
Treasury Rate or the CMT Rate. Unless otherwise specified in the applicable
Pricing Supplement, the interest factor for Notes for which the interest rate
is calculated with reference to two or more Interest Rate Bases will be
calculated in each period in the same manner as if only one of the applicable
Interest Rate Bases applied as specified in the applicable Pricing Supplement
and the Notes.
 
  The interest rate applicable to each Interest Rate Reset Period commencing on
the Interest Reset Date with respect to such Interest Rate Reset Period will be
the rate determined as of the applicable Interest Determination Date. The
Interest Determination Date with respect to the CD Rate, the CMT Rate, the
Commercial Paper Rate, the Federal Funds Rate and the Prime Rate will be the
second Business Day preceding each Interest Reset Date; the Interest
Determination Date with respect to the Eleventh District Cost of Funds Rate
will be the last working day of the month immediately preceding each Interest
Reset Date on which the Federal Home Loan Bank of San Francisco (the "FHLB of
San Francisco") publishes the Index; the Interest Determination Date with
respect to LIBOR will be the second London Business Day immediately preceding
each Interest Reset Date unless the Index Currency is British pounds sterling,
in which case the Interest Determination Date will be the applicable Interest
Reset Date. With respect to the Treasury Rate, the Interest Determination Date
will be the day in the week in which the related Interest Reset Date falls on
which day Treasury Bills (as defined below) are normally auctioned (Treasury
Bills are normally sold at auction 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 such auction may be held on the preceding Friday);
provided, however, that if an auction is held on the Friday of the week
preceding the related Interest Reset Date, the related Interest Determination
Date will be such preceding Friday; and provided, further, that if an auction
falls on any Interest Reset Date, then the related Interest Reset Date will
instead be the first Business Day following such auction. The Interest
Determination Date pertaining to a Floating Rate Note the interest rate of
which is determined with reference to two or more Interest Rate Bases will be
the most recent Business Day which is at least two Business Days prior to such
Interest Reset Date for such Floating Rate Note on which each Interest Rate
Basis is determinable. Each Interest Rate Basis will be determined on such
date, and the applicable interest rate will take effect on the related Interest
Reset Date.
 
  Unless otherwise provided in the applicable Pricing Supplement, First Trust
of Illinois, National Association, will be the "Calculation Agent." Upon
request of the Holder of any Floating Rate Note, the
 
                                      S-8

 
Calculation Agent will provide the interest rate then in effect and, if
determined, the interest rate that will become effective as a result of a
determination made for the next Interest Reset Date with respect to such
Floating Rate Note. Unless otherwise specified in the applicable Pricing
Supplement, the "Calculation Date," if applicable, pertaining to any Interest
Determination Date will be the earlier of (i) the tenth calendar day after such
Interest Determination Date, or, if such day is not a Business Day, the next
succeeding Business Day or (ii) the Business Day preceding the applicable
Interest Payment Date or Maturity, as the case may be.
 
  CD Rate. CD Rate Notes will bear interest at the rates (calculated with
reference to the CD Rate and the Spread and/or Spread Multiplier, if any)
specified in such CD Rate Notes and in any applicable Pricing Supplement.
 
  Unless otherwise specified in the applicable Pricing Supplement, "CD Rate"
means, with respect to any Interest Determination Date relating to a CD Rate
Note or any Floating Rate Note for which the interest rate is determined with
reference to the CD Rate (a "CD Rate Interest Determination Date"), the rate on
such date for negotiable United States dollar certificates of deposit having
the Index Maturity specified 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 ("H.15(519)")
under the heading "CDs (Secondary Market)," or, if not published by 3:00 P.M.,
New York City time, on the related Calculation Date, the rate on such CD Rate
Interest Determination Date for negotiable United States dollar certificates of
deposit of the Index Maturity specified in the applicable Pricing Supplement as
published by the Federal Reserve Bank of New York in its daily statistical
release "Composite 3:30 P.M. Quotations for U.S. Government Securities" or any
successor publication ("Composite Quotations") under the heading "Certificates
of Deposit." If such rate is not yet published in either H.15(519) or Composite
Quotations by 3:00 P.M., New York City time, on the related Calculation Date,
then the CD Rate on such CD Rate Interest Determination Date will be calculated
by the Calculation Agent and will be the arithmetic mean of the secondary
market offered rates as of 10:00 A.M., New York City time, on such CD Rate
Interest Determination Date, of three leading nonbank dealers in negotiable
United States dollar certificates of deposit in The City of New York selected
by the Calculation Agent for negotiable certificates of deposit of major United
States money market banks for negotiable United States dollar certificates of
deposit with a remaining maturity closest to the Index Maturity designated in
the applicable Pricing Supplement in an amount that is representative for a
single transaction in that market at that time; provided, however, that if the
dealers so selected by the Calculation Agent are not quoting as set forth
above, the CD Rate with respect to such CD Rate Interest Determination Date
will be the CD Rate in effect on such CD Rate Interest Determination Date.
 
  CMT Rate. CMT Rate Notes will bear interest at the rates (calculated with
reference to the CMT Rate and the Spread and/or Spread Multiplier, if any)
specified in such CMT Rate Notes and in any applicable Pricing Supplement.
 
  Unless otherwise specified in the applicable Pricing Supplement, "CMT Rate"
means, with respect to any Interest Determination Date relating to a Floating
Rate Note for which the interest rate is determined with reference to the CMT
Rate (a "CMT Rate Interest Determination Date"), the rate displayed on the
Designated CMT Telerate Page under the caption ". . . Treasury Constant
Maturities . . . Federal Reserve Board Release H.15 . . . Mondays Approximately
3:45 P.M.," under the column for the Designated CMT Maturity Index for (i) if
the Designated CMT Telerate Page is 7055, the rate on such CMT Rate Interest
Determination Date and (ii) if the Designated CMT Telerate Page is 7052, the
week, or the month, as applicable, ended immediately preceding the week in
which the related CMT Rate Interest Determination Date occurs. If such rate is
no longer displayed on the relevant page or is not displayed by 3:00 P.M., New
York City time, on the related Calculation Date, then the CMT Rate for such CMT
Rate Interest Determination Date will be such treasury constant maturity rate
for the Designated CMT Maturity Index as published in the relevant H.15(519).
If such rate is no longer published or is not published by 3:00 P.M., New York
City time, on the related Calculation Date, then the CMT Rate on such CMT Rate
Interest Determination Date will be such treasury constant maturity rate for
the Designated CMT Maturity Index
 
                                      S-9

 
(or other United States Treasury rate for the Designated CMT Maturity Index)
for the CMT Rate Interest Determination Date with respect to such Interest
Reset Date as may then be published by either the Board of Governors of the
Federal Reserve System or the United States 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). If
such information is not provided by 3:00 P.M., New York City time, on the
related Calculation Date, then the CMT Rate on the CMT Rate Interest
Determination Date will be calculated by the Calculation Agent and will be a
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 such
CMT Rate Interest Determination Date reported, according to their written
records, by three leading primary United States government securities dealers
(each, a "Reference Dealer") in The City of New York (which may include the
Agents or their affiliates) selected by the Calculation Agent (from five such
Reference Dealers selected by the Calculation Agent and eliminating 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 Designated
CMT Maturity Index and a remaining term to maturity of not less than such
Designated CMT Maturity Index minus one year. If the Calculation Agent is
unable to obtain three such Treasury Note quotations, the CMT Rate on such CMT
Rate Interest Determination Date will be calculated by the Calculation Agent
and will be 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
such CMT Rate Interest Determination Date of three Reference Dealers in The
City of New York (from five such Reference Dealers selected by the Calculation
Agent and eliminating 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 Treasury Notes with an original maturity of the number of
years that is the next highest to the Designated CMT Maturity Index and a
remaining term to maturity closest to the Designated CMT Maturity Index and in
an amount of at least $100 million. If three or four (and not five) of such
Reference Dealers are quoting as described above, then the CMT Rate will be
based on the arithmetic mean of the offer prices obtained and neither the
highest nor the lowest of such quotes will be eliminated; provided however,
that if fewer than three Reference Dealers so selected by the Calculation Agent
are quoting as mentioned herein, the CMT Rate determined as of such CMT Rate
Interest Determination Date will be the CMT Rate in effect on such CMT Rate
Interest Determination Date. If two Treasury Notes with an original maturity as
described in the second preceding sentence have remaining terms to maturity
equally close to the Designated CMT Maturity Index, the Calculation Agent will
obtain from five Reference Dealers quotations for the Treasury Note with the
shorter remaining term to maturity.
 
  "Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page specified in the applicable Pricing Supplement (or any
other page as may replace such page on that service for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519)) for the
purpose of displaying Treasury Constant Maturities as reported in H.15(519). If
no such page is specified in the applicable Pricing Supplement, the Designated
CMT Telerate Page shall be 7052 for the most recent week.
 
  "Designated CMT Maturity Index" means the original period to maturity of the
U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years) specified
in the applicable Pricing Supplement with respect to which the CMT Rate will be
calculated. If no such maturity is specified in the applicable Pricing
Supplement, the Designated CMT Maturity Index shall be 2 years.
 
  Commercial Paper Rate. Commercial Paper Rate Notes will bear interest at the
rates (calculated with reference to the Commercial Paper Rate and the Spread
and/or Spread Multiplier, if any) specified in such Commercial Paper Rate Notes
and in any applicable Pricing Supplement.
 
  Unless otherwise specified in the applicable Pricing Supplement, "Commercial
Paper Rate" means, with respect to any Interest Determination Date relating to
a Commercial Paper Rate Note or any Floating Rate Note for which the interest
rate is determined with reference to the Commercial Paper Rate (a "Commercial
Paper Rate Interest Determination Date"), the Money Market Yield (as defined
below) on such date of the
 
                                      S-10

 
rate for commercial paper having the Index Maturity specified in the applicable
Pricing Supplement as published in H.15(519) under the heading "Commercial
Paper." In the event that such rate is not published by 3:00 P.M., New York
City time, on the related Calculation Date, then the Commercial Paper Rate will
be the Money Market Yield on such Commercial Paper Rate Interest Determination
Date of the rate for commercial paper having the Index Maturity specified in
the applicable Pricing Supplement as published in Composite Quotations under
the heading "Commercial Paper" (with an Index Maturity of one month or three
months being deemed to be equivalent to an Index Maturity of 30 days or 90
days, respectively). If by 3:00 P.M., New York City time, on the related
Calculation Date such rate is not yet published in either H.15(519) or
Composite Quotations, then the Commercial Paper Rate on such Commercial Paper
Rate Interest Determination Date will be calculated by the Calculation Agent
and will be the Money Market Yield of the arithmetic mean of the offered rates
at approximately 11:00 A.M., New York City time, on such Commercial Paper Rate
Interest Determination Date of three leading dealers of commercial paper in The
City of New York selected by the Calculation Agent for commercial paper having
the Index Maturity designated in the applicable Pricing Supplement placed for
an industrial issuer whose bond rating is "AA", or the equivalent, from a
nationally recognized securities rating agency; provided, however, that if the
dealers so selected by the Calculation Agent are not quoting as mentioned in
this sentence, the Commercial Paper Rate determined on such Commercial Paper
Rate Interest Determination Date will be the Commercial Paper Rate in effect on
such Commercial Paper Rate Interest Determination Date.
 
  "Money Market Yield" means a yield (expressed as a percentage) calculated in
accordance with the following formula:

                                            D X 360
                    Money Market Yield = ------------- X 100
                                         360 - (D X M)
 
where "D" refers to the applicable per annum rate for 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.
 
  Eleventh District Cost of Funds Rate. Eleventh District Cost of Funds Rate
Notes will bear interest at the rates (calculated with reference to the
Eleventh District Cost of Funds Rate and the Spread and/or Spread Multiplier,
if any) specified in such Eleventh District Cost of Funds Rate Notes and in any
applicable Pricing Supplement.
 
  Unless otherwise specified in the applicable Pricing Supplement, "Eleventh
District Cost of Funds Rate" means, with respect to any Interest Determination
Date relating to an Eleventh District Cost of Funds Rate Note or any Floating
Rate Note for which the interest rate is determined with reference to the
Eleventh District Cost of Funds Rate (an "Eleventh District Cost of Funds Rate
Interest Determination Date"), the rate equal to the monthly weighted average
cost of funds for the calendar month preceding such Eleventh District Cost of
Funds Rate Interest Determination Date as set forth under the caption "11th
District" on Telerate Page 7058 as of 11:00 A.M., San Francisco time, on such
Eleventh District Cost of Funds Rate Interest Determination Date. If such rate
does not appear on Telerate Page 7058 on any related Eleventh District Cost of
Funds Rate Interest Determination Date, the Eleventh District Cost of Funds
Rate for such Eleventh District Cost of Funds Rate Interest Determination Date
shall be the monthly weighted average cost of funds paid by member institutions
of the Eleventh Federal Home Loan Bank District that was most recently
announced (the "Index") by the FHLB of San Francisco as such cost of funds for
the calendar month preceding the date of such announcement. If the FHLB of San
Francisco fails to announce such rate for the calendar month next preceding
such Eleventh District Cost of Funds Rate Interest Determination Date, then the
Eleventh District Cost of Funds Rate for such Eleventh District Cost of Funds
Rate Interest Determination Date will be the Eleventh District Cost of Funds
Rate in effect on such Eleventh District Cost of Funds Rate Interest
Determination Date.
 
  Federal Funds Rate. Federal Funds Rate Notes will bear interest at the rates
(calculated with reference to the Federal Funds Rate and the Spread and/or
Spread Multiplier, if any) specified in such Federal Funds Rate Notes and in
any applicable Pricing Supplement.
 
                                      S-11

 
  Unless otherwise specified in the applicable Pricing Supplement, "Federal
Funds Rate" means, with respect to any Interest Determination Date relating to
a Federal Funds Rate Note or any Floating Rate Note for which the interest rate
is determined with reference to the Federal Funds Rate (a "Federal Funds Rate
Interest Determination Date"), the rate on such date for Federal Funds as
published in H.15(519) under the heading "Federal Funds (Effective)" or, if not
published by 3:00 P.M., New York City time, on the related Calculation Date,
the rate on such Federal Funds Rate Interest Determination Date as published in
Composite Quotations under the heading "Federal Funds/Effective Rate." If by
3:00 P.M., New York City time, on the related Calculation Date such rate is not
published in either H.15(519) or Composite Quotations, then the Federal Funds
Rate on such Federal Funds Rate Interest Determination Date will be calculated
by the Calculation Agent and will be the arithmetic mean of the rates for the
last transaction in overnight United States dollar federal funds arranged by
three leading brokers of federal funds transactions in The City of New York
selected by the Calculation Agent prior to 9:00 A.M., New York City time on
such Federal Funds Rate Interest Determination Date; provided, however that if
the brokers so selected by the Calculation Agent are not quoting as mentioned
in this sentence, the Federal Funds Rate with respect to such Federal Funds
Rate Interest Determination Date will be the Federal Funds Rate in effect on
such Federal Funds Rate Interest Determination Date.
 
  LIBOR. LIBOR Notes will bear interest at the rates (calculated with reference
to LIBOR and the Spread and/or Spread Multiplier, if any) specified in such
LIBOR Notes and in any applicable Pricing Supplement.
 
  Unless otherwise specified in the applicable Pricing Supplement, "LIBOR"
means the rate determined by the Calculation Agent in accordance with the
following provisions:
 
    (i) With respect to an Interest Determination Date relating to a LIBOR
  Note or any Floating Rate Note for which the interest rate is determined
  with reference to LIBOR (a "LIBOR Interest Determination Date"), LIBOR will
  be either: (a) if "LIBOR Reuters" is specified in the applicable Pricing
  Supplement, the arithmetic mean of the offered rates (unless the specified
  Designated LIBOR Page by its terms provides only for a single rate, in
  which case such single rate shall be used) for deposits in the Index
  Currency having the Index Maturity designated in the applicable Pricing
  Supplement, commencing on the second London Business Day immediately
  following that LIBOR Interest Determination Date, that appear on the
  Designated LIBOR Page specified in the applicable Pricing Supplement as of
  11:00 A.M. London time, on that LIBOR Interest Determination Date, if at
  least two such offered rates appear (unless, as aforesaid, only a single
  rate is required) on such Designated LIBOR Page, or (b) if "LIBOR Telerate"
  is specified in the applicable Pricing Supplement, the rate for deposits in
  the Index Currency having the Index Maturity designated in the applicable
  Pricing Supplement commencing on the second London Business Day immediately
  following that LIBOR Interest Determination Date that appears on the
  Designated LIBOR Page specified in the applicable Pricing Supplement as of
  11:00 A.M. London time, on that LIBOR Interest Determination Date. If fewer
  than two offered rates appear, or no rate appears, as applicable, LIBOR in
  respect of the related LIBOR Interest Determination Date will be determined
  as if the parties had specified the rate described in clause (ii) below.
 
    (ii) With respect to a LIBOR Interest Determination Date on which fewer
  than two offered rates appear, or no rate appears, as the case may be, on
  the applicable Designated LIBOR Page as specified in clause (i) above, the
  Calculation Agent will request the principal London offices of each of four
  major reference banks in the London interbank market, as selected by the
  Calculation Agent, to provide the Calculation Agent with its offered
  quotation for deposits in the Index Currency for the period of the Index
  Maturity designated in the applicable Pricing Supplement, commencing on the
  second London Business Day immediately following such LIBOR Interest
  Determination Date, to prime banks in the London interbank market at
  approximately 11:00 A.M., London time, on such LIBOR Interest Determination
  Date and in a principal amount that is representative for a single
  transaction in such Index Currency in such market at such time. If at least
  two such quotations are provided, LIBOR determined on such LIBOR Interest
  Determination Date will be the arithmetic mean of such quotations. If fewer
  than two quotations are provided, LIBOR determined on such LIBOR Interest
  Determination
 
                                      S-12

 
  Date will be the arithmetic mean of the rates quoted at approximately 11:00
  A.M., in the applicable Principal Financial Center, on such LIBOR Interest
  Determination Date by three major banks in such Principal Financial Center
  selected by the Calculation Agent for loans in the Index Currency to
  leading European banks, having the Index Maturity designated in the
  applicable Pricing Supplement and in a principal amount that is
  representative for a single transaction in such Index Currency in such
  market at such time; provided, however, that if the banks so selected by
  the Calculation Agent are not quoting as mentioned in this sentence, LIBOR
  determined on such LIBOR Interest Determination Date will be LIBOR in
  effect on such LIBOR Interest Determination Date.
 
  "Index Currency" means the currency (including composite currencies)
specified in the applicable Pricing Supplement as the currency for which LIBOR
shall be calculated. If no such currency is specified in the applicable Pricing
Supplement, the Index Currency shall be U.S. dollars.
 
  "Designated LIBOR Page" means either (a) if "LIBOR Reuters" is designated in
the applicable Pricing Supplement, the display on the Reuters Monitor Money
Rates Service for the purpose of displaying the London interbank rates of major
banks for the applicable Index Currency, or (b) if "LIBOR Telerate" is
designated in the applicable Pricing Supplement, the display on the Dow Jones
Telerate Service for the purpose of displaying the London interbank rates of
major banks for the applicable Index Currency. If neither LIBOR Reuters nor
LIBOR Telerate is specified in the applicable Pricing Supplement, LIBOR for the
applicable Index Currency will be determined as if LIBOR Telerate (and, if the
U.S. dollar is the Index Currency, Page 3750) had been specified.
 
  "Principal Financial Center" will generally be the capital city of the
country of the specified Index Currency, except that with respect to U.S.
dollars and ECUs, the Principal Financial Center shall be The City of New York
and Luxembourg, respectively.
 
  Prime Rate. Prime Rate Notes will bear interest at the rates (calculated with
reference to the Prime Rate and the Spread and/or Spread Multiplier, if any)
specified in such Prime Rate Notes and any applicable Pricing Supplement.
 
  Unless otherwise specified in the applicable Pricing Supplement, "Prime Rate"
means, with respect to any Interest Determination Date relating to a Prime Rate
Note or any Floating Rate Note for which the interest rate is determined with
reference to the Prime Rate (a "Prime Rate Interest Determination Date"), the
rate on such date as such rate is published in H.15(519) under the heading
"Bank Prime Loan." If such rate is not published prior to 3:00 P.M., New York
City time, on the related Calculation Date, then the Prime Rate shall be the
arithmetic mean of the rates of interest publicly announced by each bank that
appears on the Reuters Screen USPRIME1 as such bank's prime rate or base
lending rate as in effect for that Prime Rate Interest Determination Date. If
fewer than four such rates but more than one such rate appear on the Reuters
Screen USPRIME1 for such Prime Rate Interest Determination Date, the Prime Rate
shall be the arithmetic mean of the prime rates quoted on the basis of the
actual number of days in the year divided by a 360-day year as of the close of
business on such Prime Rate Interest Determination Date by four major money
center banks in The City of New York selected by the Calculation Agent. If
fewer than two such rates appear on the Reuters Screen USPRIME1, the Prime Rate
will be determined by the Calculation Agent on the basis of the rates furnished
in The City of New York by three substitute banks or trust companies organized
and doing business under the laws of the United States, or any state thereof,
having total equity capital of at least $500 million and being subject to
supervision or examination by Federal or state authority, selected by the
Calculation Agent to provide such rate or rates; provided, however, that if the
banks or trust companies selected as aforesaid are not quoting as mentioned in
this sentence, the Prime Rate for such Prime Rate Interest Determination Date
will be the Prime Rate in effect on such Prime Rate Interest Determination
Date.
 
  "Reuters Screen USPRIME1" means the display designated as page "USPRIME1" on
the Reuters Monitor Money Rates Service (or such other page as may replace the
USPRIME1 page on that service for the purpose of displaying prime rates or base
lending rates of major United States banks).
 
                                      S-13

 
  Treasury Rate. Treasury Rate Notes will bear interest at the rates
(calculated with reference to the Treasury Rate and the Spread and/or Spread
Multiplier, if any) specified in such Treasury Rate Notes and in any applicable
Pricing Supplement.
 
  Unless otherwise specified in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Interest Determination Date relating to a
Treasury Rate Note or any Floating Rate Note for which the interest rate is
determined by reference to the Treasury Rate (a "Treasury Rate Interest
Determination Date"), the rate applicable to the most recent auction of direct
obligations of the United States ("Treasury Bills") having the Index Maturity
specified in the applicable Pricing Supplement, as such rate is published in
H.15(519) under the heading "Treasury Bills-auction average (investment)" or,
if not published by 3:00 P.M., New York City time, on the related Calculation
Date, the auction average rate (expressed as a bond equivalent on the basis of
a year of 365 or 366 days, as applicable, and applied on a daily basis) as
otherwise announced by the United States Department of the Treasury. In the
event that the results of the auction of Treasury Bills having the Index
Maturity designated in the applicable Pricing Supplement are not reported as
provided by 3:00 P.M., New York City time, on such Calculation Date, or if no
such auction is held in a particular week, then the Treasury Rate will be
calculated by the Calculation Agent and will be a yield to maturity (expressed
as a bond equivalent on the basis of a year of 365 or 366 days, as applicable,
and applied on a daily basis) of the arithmetic mean of the secondary market
bid rates, as of approximately 3:30 P.M., New York City time, on such Treasury
Rate Interest Determination Date, of three leading primary United States
government securities dealers (which may include the Agents) selected by the
Calculation Agent, for the issue of Treasury Bills with a remaining maturity
closest to the Index Maturity designated in the applicable Pricing Supplement;
provided, however, that if the dealers so selected by the Calculation Agent are
not quoting as mentioned in this sentence, the Treasury Rate with respect to
such Treasury Rate Interest Determination Date will be the Treasury Rate in
effect on such Treasury Rate Interest Determination Date.
 
OTHER PROVISIONS; ADDENDA
 
  Any provisions with respect to Notes, including the determination of an
Interest Rate Basis, the specification of an Interest Rate Basis, calculation
of the interest rate applicable to a Floating Rate Note, its Interest Payment
Dates or any other matter relating thereto may be modified by the terms as
specified under "Other Provisions" on the face thereof or in an Addendum
relating thereto, if so specified on the face thereof and in the applicable
Pricing Supplement.
 
AMORTIZING NOTES
 
  The Company may from time to time offer Notes which pay a level amount in
respect of both interest and principal amortized over the life of the Note
("Amortizing Notes"). Unless otherwise specified in the applicable Pricing
Supplement, interest on each Amortizing Note will be computed on the basis of a
360-day year of twelve 30-day months. Payments with respect to Amortizing Notes
will be applied first to interest due and payable thereon and then to the
reduction of the unpaid principal amount thereof. Further information
concerning additional terms and conditions of any issue of Amortizing Notes
will be provided in the applicable Pricing Supplement. A table setting forth
repayment information in respect of each Amortizing Note will be included in
the applicable Pricing Supplement and set forth in such Notes.
 
ORIGINAL ISSUE DISCOUNT NOTES
 
  Notes may be issued at a price less than their "stated redemption price at
maturity," resulting in such Notes being treated as if they were issued with
original issue discount for federal income tax purposes. Such original issue
discount Notes may currently pay no interest or interest at a rate which at the
time of issuance is below market rates. See "United States Federal Income Tax
Consequences." Certain additional considerations relating to any original issue
discount Notes may be described in the Pricing Supplement relating thereto.
 
                                      S-14

 
INDEXED NOTES
 
  Notes also may be issued with the principal amount payable at Maturity and/or
interest to be paid thereon to be determined with reference to the price or
prices of specified commodities or stocks, the exchange rate of one or more
specified currencies (including a composite currency such as the ECU) relative
to an indexed currency, or such other price or exchange rate as may be
specified in such Note ("Indexed Notes"), as set forth in the applicable
Pricing Supplement. Holders of such Notes may receive a principal amount at
Maturity that is greater than or less than the face amount of the Notes
depending upon the relative value at Maturity of the specified indexed item.
Information as to the method for determining the principal amount payable at
Maturity, certain historical information with respect to the specified indexed
item and tax considerations associated with investment in Indexed Notes will be
set forth in the applicable Pricing Supplement.
 
  An investment in Notes indexed, as to principal or interest or both, to one
or more values of currencies (including exchange rates between currencies),
commodities or interest rate indices entails significant risks that are not
associated with similar investments in a conventional fixed-rate debt security.
If the interest rate of such a Note is so indexed, it may result in an interest
rate that is less than that payable on a conventional fixed-rate debt security
issued at the same time, including the possibility that no interest will be
paid, and, if the principal amount of such a Note is so indexed, the principal
amount payable at Maturity may be less than the original purchase price of such
Note if allowed pursuant to the terms of such Note, including the possibility
that no principal will be paid. The secondary market for such Notes will be
affected by a number of factors, independent of the creditworthiness of the
Company and the value of the applicable currency, including the volatility of
the applicable currency, commodity or interest rate index, the time remaining
to the maturity of such Notes, the amount outstanding of such Notes and market
interest rates. The value of the applicable currency, commodity or interest
rate index depends on a number of interrelated factors, including economic,
financial and political events, over which the Company has no control.
Additionally, if the formula used to determine the principal amount or interest
payable with respect to such Notes contains a multiple or leverage factor, the
effect of any change in the applicable currency, commodity or interest rate
index may be increased. The historical experience of the relevant currencies,
commodities or interest rate indices should not be taken as an indication of
future performance of such currencies, commodities or interest rate indices
during the term of any Note. Accordingly, prospective investors should consult
their own financial and legal advisors as to the risks entailed by an
investment in such Notes and the suitability of such Notes in light of their
particular circumstances.
 
BOOK-ENTRY NOTES
 
  The Company has established a depositary arrangement with The Depository
Trust Company (the "Depositary") with respect to the Book-Entry Notes, the
terms of which are summarized below. Any additional or differing terms of the
depositary arrangement with respect to the Book-Entry Notes will be described
in the applicable Pricing Supplement.
 
  Upon issuance, all Book-Entry Notes up to $200,000,000 aggregate principal
amount bearing interest (if any) at the same rate or pursuant to the same
formula and having the same date of issue, currency of denomination and
payment, Interest Payment Dates (if any), Stated Maturity Date, redemption
provisions (if any), repayment provisions (if any) and other terms will be
represented by a single Global Security. Each Global Security representing
Book-Entry Notes will be deposited with, or on behalf of, the Depositary and
will be registered in the name of the Depositary or a nominee of the
Depositary. No Global Security may be transferred except as a whole by a
nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or such nominee to a successor of the
Depositary or a nominee of such successor.
 
  So long as the Depositary or its nominee is the registered owner of a Global
Security, the Depositary or its nominee, as the case may be, will be the sole
Holder of the Book-Entry Notes represented thereby for all
 
                                      S-15

 
purposes under the Indenture. Except as otherwise provided in this section, the
Beneficial Owners of the Global Security or Securities representing Book-Entry
Notes will not be entitled to receive physical delivery of certificated Notes
and will not be considered the Holders thereof for any purpose under the
Indenture, and no Global Security representing Book-Entry Notes shall be
exchangeable or transferable. Accordingly, each Beneficial Owner must rely on
the procedures of the Depositary and, if such Beneficial Owner is not a
Participant, on the procedures of the Participant through which such Beneficial
Owner owns its interest in order to exercise any rights of a Holder under such
Global Security or the Indenture. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
certificated form. Such limits and such laws may impair the ability to transfer
beneficial interests in a Global Security representing Book-Entry Notes.
 
  Unless otherwise specified in the applicable Pricing Supplement, each Global
Security representing Book-Entry Notes will be exchangeable for certificated
Notes of like tenor and terms and of differing authorized denominations
aggregating a like principal amount, only if (i) the Depositary notifies the
Company that it is unwilling or unable to continue as Depositary for the Global
Securities, (ii) the Depositary ceases to be a clearing agency registered under
the Exchange Act, (iii) the Company in its sole discretion determines that the
Global Securities shall be exchangeable for certificated Notes or (iv) there
shall have occurred and be continuing an Event of Default under the Indenture
with respect to the Notes. Upon any such exchange, the certificated Notes shall
be registered in the names of the Beneficial Owners of the Global Security or
Securities representing Book-Entry Notes, which names shall be provided by the
Depositary's relevant Participants (as identified by the Depositary) to the
Trustee.
 
  The following is based on information furnished by the Depositary:
 
    The Depositary will act as securities depository for the Book-Entry
  Notes. The Book-Entry Notes will be issued as fully registered securities
  registered in the name of Cede & Co. (the Depositary's partnership
  nominee). One fully registered Global Security will be issued for each
  issue of Book-Entry Notes, each in the aggregate principal amount of such
  issue, and will be deposited with the Depositary. If, however, the
  aggregate principal amount of any issue exceeds $200,000,000, one Global
  Security will be issued with respect to each $200,000,000 of principal
  amount and an additional Global Security will be issued with respect to any
  remaining principal amount of such issue.
 
    The Depositary is a limited-purpose trust company organized under the New
  York Banking Law, a "banking organization" within the meaning of the New
  York Banking Law, a member of the Federal Reserve System, a "clearing
  corporation" within the meaning of the New York Uniform Commercial Code,
  and a "clearing agency" registered pursuant to the provisions of Section
  17A of the Exchange Act. The Depositary holds securities that its
  participants ("Participants") deposit with the Depositary. The Depositary
  also facilitates the settlement among Participants of securities
  transactions, such as transfers and pledges, in deposited securities
  through electronic computerized book-entry changes in Participants'
  accounts, thereby eliminating the need for physical movement of securities
  certificates. Direct Participants of the Depositary ("Direct Participants")
  include securities brokers and dealers (including the Agents), banks, trust
  companies, clearing corporations and certain other organizations. The
  Depositary 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 Depositary's
  system is also available to others such as securities brokers and dealers,
  banks and trust companies that clear through or maintain a custodial
  relationship with a Direct Participant, either directly or indirectly
  ("Indirect Participants"). The rules applicable to the Depositary and its
  Participants are on file with the Securities and Exchange Commission.
 
    Purchases of Book-Entry Notes under the Depositary's system must be made
  by or through Direct Participants, which will receive a credit for such
  Book-Entry Notes on the Depositary's records. The ownership interest of
  each actual purchaser of each Book-Entry Note represented by a Global
  Security ("Beneficial Owner") is in turn to be recorded on the Direct and
  Indirect Participants' records. Beneficial Owners will not receive written
  confirmation from the Depositary of their purchase, but Beneficial
 
                                      S-16

 
  Owners are expected to receive written confirmations providing details of
  the transaction, as well as periodic statements of their holdings, from the
  Direct or Indirect Participants through which such Beneficial Owner entered
  into the transaction. Transfers of ownership interests in a Global Security
  representing Book-Entry Notes are to be accomplished by entries made on the
  books of Participants acting on behalf of Beneficial Owners. Beneficial
  Owners of a Global Security representing Book-Entry Notes will not receive
  certificated Notes representing their ownership interests therein, except
  in the event that use of the book-entry system for such Book-Entry Notes is
  discontinued.
 
    To facilitate subsequent transfers, all Global Securities representing
  Book-Entry Notes which are deposited with, or on behalf of, the Depositary
  are registered in the name of the Depositary's nominee, Cede & Co. The
  deposit of Global Securities with, or on behalf of, the Depositary and
  their registration in the name of Cede & Co. effect no change in beneficial
  ownership. The Depositary has no knowledge of the actual Beneficial Owners
  of the Global Securities representing the Book-Entry Notes; the
  Depositary's records reflect only the identity of the Direct Participants
  to whose accounts such Book-Entry Notes are credited, which may or may not
  be the Beneficial Owners. The Participants will remain responsible for
  keeping account of their holdings on behalf of their customers.
 
    Conveyance of notices and other communications by the Depositary to
  Direct Participants, by Direct Participants to Indirect Participants, and
  by Direct 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.
 
    Neither the Depositary nor Cede & Co. will consent or vote with respect
  to the Global Securities representing the Book-Entry Notes. Under its usual
  procedure, the Depositary mails an Omnibus Proxy to the Company as soon as
  possible after the applicable record date. The Omnibus Proxy assigns Cede &
  Co.'s consenting or voting rights to those Direct Participants to whose
  accounts the Book-Entry Notes are credited on the applicable record date
  (identified in a listing attached to the Omnibus Proxy).
 
    Principal, premium, if any, and/or interest, if any, payments on the
  Global Securities representing the Book-Entry Notes will be made to the
  Depositary. The Depositary's practice is to credit Direct Participants'
  accounts on the applicable payment date in accordance with their respective
  holdings shown on the Depositary's records unless the Depositary has reason
  to believe that it will not receive payment on such date. Payments by
  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 such Participant and not of the Depositary,
  the Trustee or the Company, subject to any statutory or regulatory
  requirements as may be in effect from time to time. Payment of principal,
  premium, if any, and/or interest, if any, to the Depositary is the
  responsibility of the Company or the Trustee, disbursement of such payments
  to Direct Participants shall be the responsibility of the Depositary, and
  disbursement of such payments to the Beneficial Owners shall be the
  responsibility of Direct and Indirect Participants.
 
    If applicable, redemption notices shall be sent to Cede & Co. If less
  than all of the Book-Entry Notes within an issue are being redeemed, the
  Depositary's practice is to determine by lot the amount of the interest of
  each Direct Participant in such issue to be redeemed.
 
    A Beneficial Owner shall give notice of any option to elect to have its
  Book-Entry Notes repaid by the Company, through its Participant, to the
  Trustee, and shall effect delivery of such Book-Entry Notes by causing the
  Direct Participant to transfer the Participant's interest in the Global
  Security or Securities representing such Book-Entry Notes, on the
  Depositary's records, to the Trustee. The requirement for physical delivery
  of Book-Entry Notes in connection with a demand for repayment will be
  deemed satisfied when the ownership rights in the Global Security or
  Securities representing such Book-Entry Notes are transferred by Direct
  Participants on the Depositary's records.
 
    The Depositary may discontinue providing its services as securities
  depository with respect to the Book-Entry Notes at any time by giving
  reasonable notice to the Company or the Trustee. Under such circumstances,
  in the event that a successor securities depository is not obtained,
  certificated Notes are required to be printed and delivered.
 
                                      S-17

 
    The Company may decide to discontinue use of the system of book-entry
  transfers through the Depositary (or a successor securities depository). In
  that event, certificated Notes will be printed and delivered.
 
  The information in this section concerning the Depositary and the
Depositary's system has been obtained from sources that the Company believes to
be reliable, but the Company takes no responsibility for the accuracy thereof.
 
  A further description of the Depositary's procedures with respect to Global
Securities representing Book-Entry Notes is set forth in the accompanying
Prospectus under "Description of Securities--Global Securities." The Depositary
has confirmed to the Company that it intends to follow such procedures.
 
        SPECIAL PROVISIONS AND RISKS RELATING TO FOREIGN CURRENCY NOTES
 
GENERAL
 
  Unless otherwise specified in the applicable Pricing Supplement, Notes
denominated in other than United States dollars or ECUs will not be sold in, or
to residents of, the country issuing the Specified Currency in which particular
Notes are denominated. The information set forth in this Prospectus Supplement
is directed to prospective purchasers who are United States residents, and the
Company disclaims any responsibility to advise prospective purchasers who are
residents of countries other than the United States with respect to any matters
that may affect the purchase, holding or receipt of payments of principal of
and any interest on the Notes. Such persons should consult their own financial
and legal advisors with regard to such matters.
 
  THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT HERETO AND THE PROSPECTUS
DO NOT DESCRIBE ALL RISKS OF AN INVESTMENT IN FOREIGN CURRENCY NOTES THAT
RESULT FROM SUCH NOTES BEING DENOMINATED OR PAYABLE IN A FOREIGN CURRENCY OR
CURRENCY UNIT, EITHER AS SUCH RISKS EXIST AT THE DATE OF THIS PROSPECTUS
SUPPLEMENT, ANY PRICING SUPPLEMENT HERETO OR THE PROSPECTUS OR AS SUCH RISKS
MAY CHANGE FROM TIME TO TIME. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN
FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN
FOREIGN CURRENCY NOTES. FOREIGN CURRENCY NOTES ARE NOT AN APPROPRIATE
INVESTMENT FOR INVESTORS WHO ARE UNSOPHISTICATED WITH RESPECT TO FOREIGN
CURRENCY TRANSACTIONS.
 
  The information set forth below is by necessity incomplete and prospective
purchasers of Foreign Currency Notes should consult their own financial and
legal advisors with respect to any matters that may affect the purchase or
holding of a Foreign Currency Note or the receipt of payments of principal of
and any premium and interest on a Foreign Currency Note in a Specified
Currency.
 
EXCHANGE RATES AND EXCHANGE CONTROLS
 
  An investment in Foreign Currency Notes entails significant risks that are
not associated with a similar investment in a security denominated in United
States dollars. Such risks include, without limitation, the possibility of
significant changes in rate of exchange between the United States dollar and
the Specified Currency and the possibility of the imposition or modification of
foreign exchange controls by either the United States or foreign governments.
Such risks generally depend on events over which the Company has no control,
such as economic and political events and the supply and demand for the
relevant currencies. In recent years, rates of exchange between the United
States dollar and certain foreign currencies have been highly volatile and such
volatility may be expected in the future. Fluctuations in any particular
exchange rate that have occurred in the past are not necessarily indicative,
however, of fluctuations in the rate that may occur during the term of any
Foreign Currency Notes. Depreciation of the Specified Currency applicable
 
                                      S-18

 
to a Foreign Currency Note against the United States dollar would result in a
decrease in the United States dollar-equivalent yield of such Note, in the
United States dollar-equivalent value of the principal payable at Maturity of
such Note, and, generally, in the United States dollar-equivalent market value
of such Note.
 
  Governments have imposed from time to time exchange controls and may in the
future impose or revise exchange controls at or prior to a Foreign Currency
Note's Maturity which could affect exchange rates as well as the availability
of the Specified Currency at a Foreign Currency Note's Maturity. Even if there
are no exchange controls, it is possible that the Specified Currency for any
particular Foreign Currency Note would not be available at such Note's Maturity
due to other circumstances beyond the control of the Company. In that event,
the Company will repay in United States dollars on the basis of the most
recently available exchange rate.
 
JUDGMENTS
 
  The Notes will be governed by and construed in accordance with the laws of
the State of Illinois. If an action based on Foreign Currency Notes were
commenced in a court of the United States, it is likely that such court would
grant judgment relating to such Notes only in United States dollars. It is not
clear, however, whether, in granting such judgment, the rate of conversion into
United States dollars would be determined with reference to the date of
default, the date judgment is rendered or some other date. Under current
Illinois law, a state court in the State of Illinois rendering a judgment on a
Foreign Currency Note would, unless otherwise provided in such Foreign Currency
Note, require such judgment to be payable in the Specified Currency in which
such Foreign Currency Note is denominated or, at the option of the Company, in
United States dollars based upon the spot rate of exchange on the banking date
next preceding the date on which the judgment is satisfied. Holders of Foreign
Currency Notes would bear the risk of exchange rate fluctuations between the
time the amount of the judgment is calculated and the time the Paying Agent
converts United States dollars to the Specified Currency for payment of the
judgment.
 
PAYMENT OF PRINCIPAL AND ANY PREMIUM AND INTEREST
 
  The Company is obligated to make payments of principal of and any premium and
interest on Foreign Currency Notes in the Specified Currency (or, if such
Specified Currency is not at the time of such payment legal tender for the
payment of public and private debts, in such other coin or currency of the
country which issued such Specified Currency as at the time of such payment is
legal tender for the payment of such debts). Any such amounts paid by the
Company will, unless otherwise specified in the applicable Pricing Supplement,
be converted by the Exchange Rate Agent named in the applicable Pricing
Supplement to United States dollars for payment to holders. However, unless
otherwise indicated in the applicable Pricing Supplement, the holder of a
Foreign Currency Note may elect to receive such payments in the Specified
Currency as hereinafter described.
 
  Any United States dollar amount to be received by a holder of a Foreign
Currency Note will be based on the highest bid quotation in the City of New
York received by the Exchange Rate Agent at approximately 11:00 a.m., New York
City time, on the second Business Day preceding the applicable payment date
from three recognized foreign exchange dealers (one of which may be the
Exchange Rate Agent) selected by the Exchange Rate Agent and approved by the
Company for the purchase by the quoting dealer of the Specified Currency for
United States dollars for settlement on such payment date in the aggregate
amount of the Specified Currency payable to all holders of Foreign Currency
Notes scheduled to receive United States dollar payments and at which the
applicable dealer commits to execute a contract. If such bid quotations are not
available, payments will be made in the Specified Currency. All currency
exchange costs will be borne by the holder of the Foreign Currency Note by
deductions from such payments.
 
  Unless otherwise specified in the applicable Pricing Supplement, a holder of
a Foreign Currency Note may elect to receive payment of the principal of and
any premium and interest on such Note in the Specified
 
                                      S-19

 
Currency by submitting a written request for such payment to the Paying Agent
at its office in the City of New York maintained for such purpose on or prior
to the Record Date or at least sixteen days prior to Maturity, as the case may
be. Such written request may be mailed or hand-delivered or sent by cable,
telex or other form of facsimile transmission. A holder of a Foreign Currency
Note may elect to receive payment in the Specified Currency for all principal
and any premium and interest payments and need not file a separate election for
each payment. Such election will remain in effect until revoked by written
notice to the Paying Agent, but written notice of any such revocation must be
received by the Paying Agent on or prior to the relevant Record Date or at
least the sixteenth calendar day prior to Maturity, as the case may be. Holders
of Foreign Currency Notes whose Notes are to be held in the name of a broker or
nominee should contact such broker or nominee to determine whether and how an
election to receive payments in the Specified Currency may be made.
 
  Principal of, and any premium and interest on, a Foreign Currency Note paid
in United States dollars will be paid in the manner specified in the Prospectus
and this Prospectus Supplement for interest on Notes denominated in United
States dollars. Interest on a Foreign Currency Note paid in the Specified
Currency will be paid by check mailed at the address of the person entitled
thereto as it appears in the Security Register. All checks payable in a
Specified Currency will be drawn on a bank office located outside the United
States. Payments of principal of and any premium and interest on Foreign
Currency Notes paid in the Specified Currency at Maturity will be made by wire
transfer of immediately available funds to an account with a bank located in
the country of the Specified Currency, as shall have been designated at least
sixteen days prior to Maturity by the holder, provided that the Note is
presented at the office or agency of the Trustee or the office maintained for
such purpose by the Paying Agent in time for the Paying Agent to make such
payments in such funds in accordance with its normal procedures.
 
  Unless otherwise specified in the applicable Pricing Supplement, a beneficial
owner of Book-Entry Notes denominated in a Specified Currency electing to
receive payments of principal or any premium or interest in a currency other
than United States dollars must notify the participant through which its
interest is held on or prior to the applicable Record Date, in the case of a
payment of interest, and on or prior to the sixteenth day prior to Maturity, in
the case of principal or premium, of such beneficial owner's election to
receive all or a portion of such payment in a Specified Currency. Such
participant must notify the Depositary of such election on or prior to the
third Business Day after such Record Date. The Depositary will notify the
Paying Agent of such election on or prior to the fifth Business Day after such
Record Date. If complete instructions are received by the participant and
forwarded by the participant to the Depositary, and by the Depositary to the
Paying Agent, on or prior to such dates, the beneficial owner will receive
payments in the Specified Currency.
 
PAYMENT CURRENCY
 
  If a Specified Currency is not available for the payment of principal or any
premium or interest with respect to a Foreign Currency Note due to the
imposition of exchange controls or other circumstances beyond the control of
the Company, the Company will be entitled to satisfy its obligations to holders
of Foreign Currency Notes by making such payment in United States dollars on
the basis of the Market Exchange Rate on the second Business Day prior to such
payment, or if such Market Exchange Rate is not then available, on the basis of
the most recently available Market Exchange Rate or as otherwise indicated in
the applicable Pricing Supplement. The "Market Exchange Rate" for any Specified
Currency means the noon buying rate in the City of New York for cable transfer
for such Specified Currency as certified for customs purposes (or if not so
certified, as otherwise determined) by the Federal Reserve Bank of New York.
Any payment made under such circumstances in United States dollars where the
required payment is in other than United States dollars will not constitute an
Event of Default under the Indenture.
 
  If payment in respect of a Note is required to be made in any currency unit
(e.g., ECU), and such currency unit is unavailable due to the imposition of
exchange controls or other circumstances beyond the
 
                                      S-20

 
Company's control, then the Company will be entitled, but not required, to make
any payments in respect of such Note in United States dollars until such
currency unit is again available. The amount of each payment in United States
dollars shall be computed on the basis of the equivalent of the currency unit
in United States dollars, which shall be determined by the Company or its agent
on the following basis. The component currencies of the currency unit for this
purpose (the "Component Currencies" or, individually, a "Component Currency")
shall be the currency amounts that were components of the currency unit as of
the last day on which the currency unit was used. The equivalent of the
currency unit in United States dollars shall be calculated by aggregating the
United States dollar equivalents of the Component Currencies. The United States
dollar equivalent of each of the Component Currencies shall be determined by
the Company or such agent on the basis of the most recently available Market
Exchange Rate for each such Component Currency, or as otherwise indicated in
the applicable Pricing Supplement.
 
  If the official unit of any Component Currency is altered by way of
combination or subdivision, the number of units of the currency as a Component
Currency shall be divided or multiplied in the same proportion. If two or more
Component Currencies are consolidated into a single currency, the amounts of
those currencies as Component Currencies shall be replaced by an amount in such
single currency equal to the sum of the amounts of the consolidated Component
Currencies expressed in such single currency. If any Component Currency is
divided into two or more currencies, the amount of the original Component
Currency shall be replaced by the amounts of such two or more currencies, the
sum of which shall be equal to the amount of the original Component Currency.
 
  All determinations referred to above made by the Company or its agent
(including the Exchange Rate Agent) shall be at its sole discretion and shall,
in the absence of manifest error, be conclusive for all purposes and binding on
the holders of the Notes.
 
                 UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
 
  The following summary describes the principal United States federal income
tax consequences of the purchase, ownership and disposition of Notes to
beneficial owners ("holders"). This summary is based on the Internal Revenue
Code of 1986, as amended to the date hereof (the "Code"), legislative history,
administrative pronouncements, judicial decisions and final, temporary and
proposed Treasury Regulations, changes to any of which subsequent to the date
of this Prospectus Supplement may affect the tax consequences described herein.
Any such change may apply retroactively.
 
  This summary discusses only the principal United States federal income tax
consequences to those holders holding Notes as capital assets within the
meaning of Section 1221 of the Code. It does not address all of the tax
consequences that may be relevant to a holder in light of the holder's
particular circumstances or to holders subject to special rules (including
pension plans and other tax-exempt investors, banks, thrifts, insurance
companies, real estate investment trusts, regulated investment companies,
dealers in securities, currencies and persons so treated for federal income tax
purposes, persons whose functional currency (as defined in Section 985 of the
Code) is other than the United States dollar, and persons who hold Notes as
part of a straddle, hedging or conversion transaction). This summary is subject
to the requirement that a taxpayer obtain the consent of the Internal Revenue
Service ("IRS") before changing a method of accounting.
 
  Persons considering the purchase of Notes should consult their tax advisors
with regard to the application of United States federal income tax laws to
their particular situations as well as any tax consequences to them arising
under the laws of any state, local or foreign taxing jurisdiction. State, local
and foreign income tax laws may differ substantially from the corresponding
federal income tax laws, and this discussion does not purport to describe any
aspect of the tax laws of any state, local or foreign jurisdiction. Therefore,
potential investors should consult their own tax advisers with respect to the
various state, local and foreign tax consequences of an investment in Notes.
 
                                      S-21

 
  As used herein, the term "United States Holder" means a holder of a Note who
or which is, for United States federal income tax purposes, either (i) a
citizen or resident of the United States, (ii) a corporation or partnership
created or organized in or under the laws of the United States or of any
political subdivision thereof or (iii) an estate or trust the income of which
is subject to United States federal income taxation regardless of its source.
The term also includes certain holders who are former citizens of the United
States whose income and gain from the Notes are subject to United States
taxation.
 
TAXATION OF INTEREST
 
  The taxation of interest on a Note depends on whether it is "qualified stated
interest" (as defined below). Interest that is qualified stated interest is
includible in a United States Holder's income as ordinary interest income when
actually or constructively received, if such Holder uses the cash method of
accounting for federal income tax purposes, or when accrued, if such Holder
uses an accrual method of accounting for federal income tax purposes. Interest
that is not qualified stated interest and that is payable on a Note with a
maturity of more than one year from its issue date is included in a United
States Holder's income under the rules governing "original issue discount,"
described below, regardless of such Holder's method of accounting. Interest
that is payable on a Note with a maturity of one year or less from its issue
date (a "Short-Term Note") is included in a United States Holder's income under
the rules described below under "Short-Term Notes."
 
 Definition of Qualified Stated Interest
 
  Qualified stated interest is stated interest that is unconditionally payable,
or that will be constructively received, in cash or in property (other than
debt instruments of the issuer) at least annually at a single fixed rate.
 
  Qualified stated interest also includes stated interest that is payable on a
Note (such as a Floating Rate Note or Indexed Note) at a variable interest
rate, provided that the (i) Note qualifies as a "variable rate debt instrument"
("VRDI") and (ii) such stated interest is at a single "qualified floating rate"
or "objective rate" (each as defined below) and is unconditionally payable, or
will be constructively received, in cash or in property (other than debt
instruments of the issuer) at least annually.
 
  Definition of a Variable Rate Debt Instrument. A Note is a VRDI if all of the
three following conditions are met.
 
  First, the issue price of the Note must not exceed the total noncontingent
principal payments by more than an amount equal to the lesser of (i) .015
multiplied by the product of the total noncontingent principal payments and the
number of complete years to maturity from the issue date (or, in the case of a
Note that is an "installment obligation," its weighted average maturity) and
(ii) 15% of the total noncontingent principal payments. An installment
obligation is a debt instrument that provides for payment of any amount other
than qualified stated interest before maturity. The issue price and issue date
of a Note will be the first price and the first settlement date, respectively,
at which a substantial amount of the Notes in the issuance that includes such
Note is sold for money (excluding sales to bond houses, brokers or similar
persons or organizations acting in the capacity of underwriters, placement
agents or wholesalers).
 
  Second, the Note must provide for stated interest (compounded or paid at
least annually) at (a) one or more qualified floating rates, (b) a single fixed
rate and one or more qualified floating rates, (c) a single objective rate or
(d) a single fixed rate and a single objective rate that is a "qualified
inverse floating rate" (as defined below).
 
  Third, the Note must provide that a qualified floating rate or objective rate
in effect at any time during the term of the instrument is set at the current
value of that rate. A current value is the value of the 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 first day.
 
                                      S-22

 
  Definition of a Qualified Floating Rate. Subject to certain exceptions, a
variable rate of interest is a qualified floating rate if variations in the
value of the rate can reasonably be expected to measure contemporaneous
fluctuations in the cost of newly borrowed funds in the currency in which the
Note is denominated. A variable rate is considered a qualified floating rate if
the variable rate equals (i) the product of an otherwise qualified floating
rate and a fixed multiple (i.e., a Spread Multiplier) that is greater than zero
but not more than 1.35 or (ii) an otherwise qualified floating rate (or the
product described in clause (i)) plus or minus a fixed rate (i.e., a Spread).
If the variable rate equals the product of an otherwise qualified floating rate
and a single multiplier greater than 1.35, however, such rate generally is an
objective rate, described more fully below. A variable rate is not considered a
qualified floating rate if the variable rate is subject to a cap, floor,
governor (i.e., a restriction on the amount of increase or decrease in the
stated interest rate) or similar restriction that is reasonably expected as of
the issue date to cause the yield on the Note to be significantly more or less
than the expected yield determined without the restriction (other than a cap,
floor or governor that is fixed throughout the term of the Note).
 
  Definition of an Objective Rate. Subject to certain exceptions, an objective
rate is a rate (other than a qualified floating rate) that is determined using
a single fixed formula and that is based on (i) one or more qualified floating
rates, (ii) one or more rates where each rate would be a qualified floating
rate for a debt instrument denominated in a currency other than the currency in
which the debt instrument is denominated, (iii) the yield or changes in the
price of one or more items of personal property that are actively traded (other
than the stock or the debt of the issuer or certain related parties) or (iv) a
combination of rates described in the three foregoing clauses. For purposes of
clause (iii) of the preceding sentence, a foreign currency for which there is
an active interbank market is presumed to be actively traded. Notwithstanding
the first sentence of this paragraph, a rate on a debt instrument 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 be either
significantly less than or significantly greater than the average value of the
rate during the final half of the debt instrument's term. The IRS may designate
rates other than those described in the first sentence of this paragraph that
will be treated as objective rates. As of the date hereof, no such other rates
have been designated.
 
  An objective rate described in the preceding paragraph is a "qualified
inverse floating rate" if (a) the rate is equal to a fixed rate minus a
qualified floating rate and (b) the variations in the rate can reasonably be
expected to reflect inversely contemporaneous variations in the cost of newly
borrowed funds (disregarding any caps, floors, governors or similar
restrictions that would not, as described above, cause a rate to fail to be a
qualified floating rate). If interest on a Note is stated at a fixed rate for
an initial period of less than one year, followed by a variable rate that is
either a qualified floating rate or an objective rate for a subsequent period,
and the value of the variable rate on the issue date is intended to approximate
the fixed rate, the fixed rate and the variable rate together constitute a
single qualified floating rate or objective rate.
 
  On December 16, 1994, proposed Treasury Regulations (the "1994 Proposed
Regulations") were issued that would (among other things) expand the definition
of an objective rate. Under the 1994 Proposed Regulations, an objective rate
would be a rate that is determined using a single fixed formula that is based
on objective financial or economic information that is neither within the
control of the issuer (or a related party) nor unique to the circumstances of
the issuer (or a related party). Examples of rates that should qualify under
the 1994 Proposed Regulations include a rate based on the consumer price index
or on the price level of actively traded property. Whereas the definition of
objective rate under the current Treasury Regulations (as discussed above) is
generally limited to rates derived by formula from qualified floating rates and
rates based on the yield or change in price (rather than the price itself) of
actively traded property, such as stocks, bonds and commodities, and
combinations of these rates, an objective rate under the 1994 Proposed
Regulations is not so limited. The definition of objective rate in the 1994
Proposed Regulations is proposed to be effective for debt instruments issued on
or after the date that is 60 days after the publication of final Treasury
Regulations.
 
                                      S-23

 
 Taxation of Original Issue Discount--General Rules for Fixed Rate Notes
 
  Definition of OID. OID is the excess of a Note's "stated redemption price at
maturity" over its "issue price." A Note's stated redemption price at maturity
is the sum of all payments provided by the Note other than payments of
qualified stated interest. Thus, any payments provided by a Note that are not
payments of qualified stated interest are included in the Note's stated
redemption price at maturity, whether such payments are designated as interest
or as principal.
 
  United States Holders of Notes with OID that mature more than one year from
their issue date generally are required to include such OID in income as it
accrues in accordance with the constant yield method described below, before
the receipt of the related cash payments. A United States Holder's tax basis in
a Note is increased by each accrual of OID and decreased by each payment other
than a payment of qualified stated interest.
 
  If the amount of OID with respect to a Note is less than a specified de
minimis amount, the amount of OID is treated as zero. The de minimis amount is
an amount equal to .0025 multiplied by the product of the stated redemption
price at maturity and the number of complete years to maturity. In the case of
a Note that is an installment obligation, the de minimis amount is determined
by reference to the weighted average maturity of the Note rather than the
number of complete years to maturity.
 
  Treatment of De Minimis OID. If a Note has de minimis OID, all payments of
stated interest are treated as payments of qualified stated interest. As
discussed above, in general, qualified stated interest is includible in a
United States Holder's income according to such Holder's regular method of
accounting (i.e., the cash method or an accrual method). Any de minimis OID
that is not included in payments of stated interest is included in income as
capital gain as principal payments are made. The amount includible equals the
product of the total amount of de minimis OID and a fraction, the numerator of
which is the amount of the principal payment made and the denominator of which
is the stated principal amount of the Note.
 
  Inclusion of OID in Income. The general rules for including OID on a Note in
the income of a United States Holder are as follows. These general rules apply
to Fixed Rate Notes but do not apply to Notes, such as Floating Rate Notes and
Indexed Notes, on which interest accrues based on an index. The special rules
that apply to this type of Notes are described below under "Taxation of OID on
Floating Rate Notes and Indexed Notes."
 
  The amount of OID includible in the income of a United States Holder for any
taxable year is determined under the constant yield method, in four steps.
 
  In the first step, the "yield to maturity" of the Note is computed. The yield
to maturity is the discount rate that, when used in computing the present value
of all interest and principal payments to be made under the Note (including
payments of qualified stated interest) produces an amount equal to the issue
price of the Note. The yield to maturity is constant over the term of the Note
and, when expressed as a percentage, must be calculated to at least two decimal
places.
 
  In the second step, the term of the Note is divided into "accrual periods."
Accrual periods may be of any length and may vary in length over the term of
the Note, provided that each accrual period is no longer than one year and that
each scheduled payment of principal or interest occurs either on the final day
of an accrual period or on the first day of an accrual period.
 
  In the third step, the total amount of OID on the Note is allocated among
accrual periods. In general, the OID allocable to an accrual period equals the
product of the "adjusted issue price" of the Note at the beginning of the
accrual period and the yield to maturity of the Note, less the amount of any
qualified stated interest allocable to the accrual period. The adjusted issue
price of a Note at the beginning of the first accrual period is its issue
price. Thereafter, the adjusted issue price of the Note is its issue price,
increased by the amount of OID previously includible in the gross income of any
United States Holder and decreased by the
 
                                      S-24

 
amount of any payment previously made on the Note other than a payment of
qualified stated interest. For purposes of computing the adjusted issue price
of a Note, the amount of OID previously includible in the gross income of any
United States Holder is determined without regard to "premium" and "acquisition
premium," as those terms are defined below.
 
  In the fourth step, the "daily portions" of OID are determined. The daily
portions of OID are determined by allocating to each day in an accrual period
its ratable portion of the OID allocable to the accrual period.
 
  A United States Holder includes in income in any taxable year the daily
portions of OID for each day during the taxable year that such Holder held
Notes. In general, under the constant yield method described above, United
States Holders generally are required to include in income increasingly greater
amounts of OID in successive accrual periods.
 
  In the case of a Note that is redeemable at the option of the Company or
repayable by the Company at the option of the holder, the maturity and the
yield to maturity of the Note are determined by assuming that the Company and
the holder will exercise or not exercise the options available to them in a
manner that minimizes the yield, in the case of options available to the
Company, or maximizes the yield, in the case of options available to the
holder. Unless specified to the contrary in the applicable Pricing Supplement,
the Redemption Price payable by the Company upon the exercise of an option to
redeem is at all times at least equal to the principal amount of the Note
redeemed plus accrued interest and the repayment price payable by the Company
upon exercise of the holder's option is at all times equal to the principal
amount of the Note so repaid plus accrued interest. Accordingly, the existence
of such options should not generally affect the determination of the maturity
and the yield to maturity of Notes having an issue price equal to 100% of the
principal amount.
 
 Taxation of OID on Floating Rate Notes and Indexed Notes
 
  The taxation of OID (i.e., interest that is not qualified stated interest) on
a Floating Rate Note or an Indexed Note depends on whether the Note is a VRDI,
as that term is defined above.
 
  Notes that are VRDIs. The tax treatment of a Floating Rate Note or an Indexed
Note that is a VRDI depends on whether the VRDI provides for annual interest at
a single variable rate. A VRDI is considered to provide for annual interest at
a single variable rate if it provides for stated interest at a single qualified
floating rate or objective rate that is unconditionally payable in cash or in
property (other than debt instruments of the issuer), or that will be
constructively received under general principles of federal income tax law, at
least annually.
 
  VRDIs that Provide for Interest at a Single Variable Rate. In the case of a
VRDI that provides for interest at a single variable rate, the amount of OID
includible in income during a taxable year, if any, is determined under the
rules applicable to fixed rate debt instruments by assuming that the variable
rate is a fixed rate. Those rules are set forth above under "--Taxation of
Original Issue Discount--General Rules for Fixed Rate Notes." In the case of a
qualified floating rate or a qualified inverse floating rate, the assumed fixed
rate is the value, as of the issue date, of the qualified floating rate or
qualified inverse floating rate. In the case of an objective rate (other than a
qualified inverse floating rate), the assumed fixed rate is a fixed rate that
reflects the yield that is reasonably expected for the debt instrument.
 
  The 1994 Proposed Regulations would extend the rules described in the
preceding paragraph to the accrual of qualified stated interest on a VRDI that
provides for interest at a single variable rate. Under the 1994 Proposed
Regulations, which in this respect are proposed to be effective for debt
instruments issued on or after April 4, 1994, the amount of qualified stated
interest that accrues during an accrual period on such a VRDI would be
determined by assuming that the VRDI bears interest at a fixed rate determined
in the manner described in the preceding paragraph. Qualified stated interest
allocable to an accrual period would be 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.
 
                                      S-25

 
  Other VRDIs. If a Floating Rate Note or an Indexed Note that is a VRDI does
not provide for interest either at a single variable rate or at a fixed rate,
the amount of interest and OID accruals are determined by constructing an
equivalent fixed rate debt instrument, using the following four steps.
 
  The first step is to determine the fixed rate substitute for each variable
rate provided by the Floating Rate Note or Indexed Note. The fixed rate
substitute for each qualified floating rate provided by the Floating Rate Note
or Indexed Note is the value of that qualified floating rate on the issue date.
If the Note provides for two or more qualified floating rates with different
intervals between interest adjustment dates (e.g., the 30-day Commercial Paper
Rate and quarterly LIBOR), the fixed rate substitutes are based on intervals
that are equal in length (e.g., the 90-day Commercial Paper Rate and quarterly
LIBOR, or the 30-day Commercial Paper Rate and monthly LIBOR). The fixed rate
substitute for an objective rate that is a qualified inverse floating rate is
the value of the qualified inverse floating rate on the issue date. The fixed
rate substitute for an objective rate that is not a qualified inverse floating
rate is a fixed rate that reflects the yield that is reasonably expected for
the Floating Rate Note or Indexed Note.
 
  The second step is to construct an equivalent fixed rate debt instrument that
has terms that are identical to those provided under the Floating Rate Note or
Indexed Note, except that the equivalent fixed rate debt instrument provides
for the fixed rate substitutes determined in the first step, in lieu of the
qualified floating rates or objective rates provided by the Floating Rate Note
or Indexed Note.
 
  The third step is to determine the amount of qualified stated interest and
OID for the equivalent fixed rate debt instrument under the rules described
above for Fixed Rate Notes. These amounts are taken into account as if the
United States Holder held the equivalent fixed rate debt instrument.
 
  The fourth step is to make appropriate adjustments for the actual values of
the variable rates. In this step, qualified stated interest or OID allocable to
an accrual period is increased (or decreased) if the interest actually accrued
or paid during the accrual period exceeds (or is less than) the interest
assumed to be accrued or paid during the accrual period under the equivalent
fixed rate debt instrument.
 
  Notes that are not VRDIs. The law applicable to Floating Rate Notes and
Indexed Notes that are not VRDIs ("contingent debt instruments") is unclear as
of the date hereof. Set forth below are the rules that would apply to
contingent debt instruments under the 1994 Proposed Regulations.
 
  In the case of a contingent debt instrument issued for cash, the 1994
Proposed Regulations would require the issuer to construct a projected schedule
of payments under the instrument. The projected payments would consist of any
noncontingent payments provided by the debt instrument and the projected
amounts of the contingent payments. Interest income would then be accrued on
the debt instrument by the United States Holder under the general rules
applicable to OID obligations, on the assumption that the projected amounts are
actually paid. Whenever a contingent payment is fixed at the projected amount,
no further adjustments would be required. Whenever a contingent payment is
fixed at an amount that is above (or below) the projected amount, a positive
(or negative) adjustment would be made with respect to the interest income
previously accrued by the United States Holder.
 
  The 1994 Proposed Regulations refer to this method as the "noncontingent bond
method," because it is based on the construction of a hypothetical
noncontingent bond, the payments on which equal the expected amount of the
contingent payments provided for by the debt instrument in question. The
projected payment schedule established at the issuance of the instrument would
remain in place through its life. Consequently, interest accruals with respect
to contingent payments not yet fixed might be higher or lower at any point in
time than they would be if the projected values were to be revised to take into
account current information.
 
  The 1994 Proposed Regulations would introduce a distinction between "quotable
contingent payments" and "nonquotable contingent payments." If the right to a
contingent payment is substantially similar to a right to property for which
quotes of forward prices are readily available, the contingent payment would be
considered to be a quotable contingent payment. If not, it would be a
nonquotable contingent payment. To the extent that the debt instrument provides
for quotable contingent payments, the 1994 Proposed Regulations would require
the projected payment schedule to be based on quoted forward prices.
 
                                      S-26

 
  To the extent that the contingent payments are nonquotable, the 1994 Proposed
Regulations would require the issuer to construct the projected payment
schedule by determining the projected yield of the contingent debt instrument
and then selecting a projected amount for each nonquotable contingent payment
so that the projected payment schedule produced this yield and reasonably
reflected the relative expected values of the nonquotable contingent payments.
The 1994 Proposed Regulations indicate that the projected yield should be a
reasonable rate for the debt instrument, taking into account not only the terms
of the instrument, but also market conditions and the creditworthiness of the
issuer. The issuer's determination of the projected payment schedule would be
respected unless it is unreasonable. If the projected payment schedule set by
the issuer is unreasonable (or if the issuer does not provide a projected
payment schedule), the 1994 Proposed Regulations would require the United
States Holder to set the projected payment schedule. The 1994 Proposed
Regulations would require a United States Holder that uses its own projected
payment schedule to explicitly disclose this fact on its income tax return and
the reason why such Holder set its own schedule.
 
  In general, any gain realized by a United States Holder on the sale, exchange
or retirement of a contingent debt instrument would be treated as interest
income under the 1994 Proposed Regulations. Any loss on a contingent debt
instrument accounted for under the method described in the preceding paragraph
would be ordinary loss to the extent not exceeding such Holder's prior interest
inclusions on the instrument (net of negative adjustments).
 
  The 1994 Proposed Regulations are proposed to become effective for debt
instruments issued on or after the date that is 60 days after the publication
of final Treasury Regulations. Absent effective regulations dealing
specifically with contingent debt instruments, general principles of federal
income tax law should apply to determine the tax treatment of such instruments.
Under such principles, interest on such Notes would be taken into account by a
United States Holder that uses the cash method of accounting when actually or
constructively received, and would be taken into account by a United States
Holder that uses an accrual method of accounting when the right to receive such
interest is fixed and the amount thereof is determinable with reasonable
accuracy.
 
MARKET DISCOUNT
 
  A United States Holder may be subject to the market discount rules of the
Code. If a United States Holder acquires a Note having a maturity date of more
than one year from the date of its issuance and has a tax basis in the Note
that is, in the case of a Note that does not have OID, less than its stated
redemption price at maturity, or, in the case of a Note that has OID, less than
its adjusted issue price, the amount of such difference is treated as market
discount for federal income tax purposes, unless such difference is less than a
specified de minimis amount. The de minimis amount is 1/4 of one percent of the
stated redemption price at maturity multiplied by the number of complete years
to maturity (from the date of acquisition).
 
  Under the market discount rules of the Code, a United States Holder is
required to treat any principal payment (or, in the case of a Note that has
OID, any payment that is not a payment of qualified stated interest) on, or any
gain on the sale, exchange, retirement or other disposition of, a Note as
ordinary income to the extent of the market discount that has not previously
been included in income and is treated as having accrued on such Note at the
time of such payment or disposition. Thus, partial principal payments are
treated as ordinary income to the extent of market discount that has not
previously been included in income and is treated as having accrued. If such
Note is disposed of by the United States Holder in certain otherwise nontaxable
transactions, accrued market discount is includible as ordinary income by the
United States Holder as if such Holder had sold the Note at its then fair
market value.
 
  In general, the amount of market discount that has accrued is determined on a
ratable basis. A United States Holder may, however, elect to determine the
amount of accrued market discount on a constant yield to maturity basis. This
election is made on a bond-by-bond basis and is irrevocable.
 
  With respect to Notes with market discount, a United States Holder may not be
allowed to deduct immediately a portion of the interest expense on any
indebtedness incurred or continued to purchase or to
 
                                      S-27

 
carry such Notes. A United States Holder may elect to include market discount
in income currently as it accrues, in which case the interest deferral rule set
forth in the preceding sentence does not apply. Such an election applies to all
bonds acquired by the United States Holder on or after the first day of the
first taxable year to which such election applies and is irrevocable without
the consent of IRS. A United States Holder's tax basis in a Note is increased
by the amount of market discount included in such Holder's income under such an
election.
 
PREMIUM AND ACQUISITION PREMIUM
 
  If a United States Holder purchases a Note at a "premium," the United States
Holder does not include any OID in gross income. A Note is purchased at a
premium (or "amortizable bond premium") if its adjusted basis, immediately
after its purchase by such Holder, exceeds the sum of all amounts payable on
the Note after the purchase date other than payments of qualified stated
interest. United States Holders may elect to amortize the premium over the
remaining term of the Note (where such Note is not callable prior to its
maturity date), as a reduction in the amount of the interest payments otherwise
includible in income. If such Note may be called by the Company prior to
maturity after the United States Holder has acquired it, the amount of
amortizable bond premium is determined with reference to either the amount
payable at maturity, or, if it results in a smaller premium attributable to the
period through the earlier call date, with reference to the amount payable on
the earlier call date. If a United States Holder makes this election, the
premium is allocated among all the interest payments on the Note, on the basis
of the United States Holders's yield to maturity, with compounding at the close
of each accrual period. A United States Holder who elects to amortize premium
must reduce the tax basis of the Note by the amount of the premium amortized in
any year. If this election is made with respect to any Note, it will also apply
to all debt instruments held by the United States Holder at the beginning of
the first taxable year to which the election applies and to all debt
instruments acquired by the United States Holder, and will be binding for all
subsequent taxable years unless the election is revoked with the consent of the
IRS.
 
  If a United States Holder does not purchase a Note at a premium, but instead
purchases such Note at an "acquisition premium", the amount of OID that the
United States Holder includes in gross income is reduced to reflect the
acquisition premium. A Note is purchased at an acquisition premium if its
adjusted basis, immediately after its purchase is (a) 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 and (b) greater than the Note's adjusted
issue price.
 
  If a Note is purchased at an acquisition premium, the United States Holder
reduces the amount of OID otherwise includible in income during an accrual
period by a fraction. The numerator of this fraction is the excess of the
adjusted basis of the Note immediately after its acquisition by the purchaser
over the adjusted issue price of the Note. The denominator of the fraction is
the excess of the sum of all amounts payable on the Note after the purchase
date, other than payments of qualified stated interest, over the Note's
adjusted issue price.
 
  As an alternative to reducing the amount of OID otherwise includible in
income by this fraction, the United States Holder may elect to compute OID
accruals by treating the purchase as a purchase at original issuance and
applying the constant yield method described under "--Taxation of Original
Issue Discount--General Rules for Fixed Rate Notes--Inclusion of OID in Income"
above.
 
SHORT-TERM NOTES
 
  In the case of Short-Term Notes, United States Holders that report income for
federal income tax purposes on an accrual method and certain other United
States Holders, including banks and dealers in securities, are required to
include OID in income on such Short-Term Notes on a straight-line basis, unless
an election is made to accrue the OID according to a constant yield method
based on daily compounding. No interest on a Short-Term Note is treated as
qualified stated interest; thus, all interest is included in OID.
 
                                      S-28

 
  Any other United States Holder of a Short-Term Note is not required to accrue
OID for federal income tax purposes, unless it elects to do so. In the case of
a United States Holder that is not required, and does not elect, to include OID
in income currently, any gain realized on the sale, exchange or retirement of a
Short-Term Note is ordinary income to the extent of the OID accrued on a
straight-line basis (or, if elected, according to a constant yield method based
on daily compounding) through the date of sale, exchange or retirement. In
addition, such non-electing United States Holders that are not subject to the
current inclusion requirement described in the first sentence of this paragraph
are required to defer deductions for any interest paid on indebtedness incurred
or continued to purchase or carry a Short-Term Note in an amount not exceeding
the deferred interest income with respect to such Short-Term Note (which
includes both the accrued OID and accrued interest that are payable but that
have not been included in gross income), until such deferred interest income is
realized. A United States Holder of a Short-Term Note may elect to apply the
foregoing rules (except for the rule characterizing gain on sale, exchange or
retirement as ordinary) with respect to "acquisition discount" rather than OID.
Acquisition discount is the excess of the stated redemption price at maturity
of the Short-Term Note over the United States Holder's basis in the Short-Term
Note. This election applies to all obligations acquired by the taxpayer on or
after the first day of the first taxable year to which such election applies,
unless revoked with the consent of the IRS. A United States Holder's tax basis
in a Short-Term Note is increased by the amount included in such Holder's
income on such a Note.
 
ELECTION TO TREAT ALL INTEREST AS OID
 
  United States Holders may elect to include in gross income all interest that
accrues on a Note, including any stated interest, acquisition discount, OID,
market discount, de minimis OID, de minimis market discount and unstated
interest (as adjusted by amortizable bond premium and acquisition premium), by
using the constant yield method described above under "--Taxation of Original
Issue Discount--General Rules for Fixed Rate Notes--Inclusion of OID in
Income." Such an election for a Note with amortizable bond premium results in a
deemed election to amortize bond premium for all debt instruments owned by the
United States Holder with amortizable bond premium and may be revoked only with
the permission of the IRS. Similarly, such an election for a Note with market
discount results in a deemed election to accrue market discount in income
currently for such Note and for all other bonds acquired by the United States
Holder with market discount on or after the first day of the taxable year to
which such election first applies, and may be revoked only with the permission
of the IRS. A United States Holder's tax basis in a Note is increased by each
accrual of the amounts treated as OID under the constant yield election
described in this paragraph.
 
SALE OR EXCHANGE OF NOTES
 
  A United States Holder generally recognizes gain or loss upon the sale or
exchange of a Note equal to the difference between the amount realized upon
such sale or exchange and the United States Holder's adjusted basis in the
Note. Such adjusted basis in the Note generally equals the cost of the Note,
increased by OID, acquisition discount or market discount previously included
in respect thereof, and reduced (but not below zero) by any payments on the
Note other than payments of qualified stated interest and by any premium that
the United States Holder has taken into account. To the extent attributable to
accrued but unpaid interest, the amount realized by the United States Holder is
treated as a payment of interest. Subject to the discussion under "--Foreign
Currency Notes" below, any gain or loss is capital gain or loss, except as
provided under "--Market Discount" and "--Short-Term Notes," above. The excess
of net long-term capital gains over net short-term capital losses is taxed at a
lower rate than ordinary income for certain non-corporate taxpayers. The
distinction between capital gain or loss and ordinary income or loss is also
relevant for purposes of, among other things, limitations on the deductibility
of capital losses.
 
FOREIGN CURRENCY NOTES
 
  The following summary describes special rules that apply, in addition to the
rules described above, to Notes that are denominated in, or provide for
payments determined by reference to, a currency or currency unit other than the
United States dollar ("Foreign Currency Notes"). The treatment of a debt
instrument, such as a Foreign Currency Note, that provides for interest
payments that are not fixed in amount at the
 
                                      S-29

 
time that the debt instrument is issued (like the treatment of a Floating Rate
Note or Indexed Note) depends on whether the debt instrument qualifies as a
VRDI. A Foreign Currency Note qualifying as a VRDI is subject to the rules
discussed above in "--Taxation of Interest--Taxation of Qualified Stated
Interest" and "--Taxation of Interest--Taxation of OID on Floating Rate Notes
and Indexed Notes--Notes that are VRDIs" in addition to the rules discussed
below. Foreign Currency Notes not qualifying as VRDIs may be subject to the
rules discussed above in "--Taxation of Interest--Taxation of OID on Floating
Rate Notes and Indexed Notes--Notes that are Not VRDIs" in addition to the
rules discussed below.
 
 Interest Includible In Income Upon Receipt
 
  An interest payment on a Foreign Currency Note that is not required to be
included in income by the United States Holder prior to the receipt of such
payment (e.g., qualified stated interest received by a cash method United
States Holder) is includible in income by the United States Holder based on the
United States dollar value of the foreign currency determined on the date such
payment is received, regardless of whether the payment is in fact converted to
United States dollars at that time. Such United States dollar value is the
United States Holder's tax basis in the foreign currency received.
 
 Interest Includible In Income Prior To Receipt
 
  In the case of interest income on a Foreign Currency Note that is required to
be included in income by the United States Holder prior to the receipt of
payment (e.g., stated interest on a Foreign Currency Note held by an accrual
basis United States Holder or accrued OID or accrued market discount that is
includible in income as it accrues), a United States Holder is required to
include in income the United States dollar value of the amount of interest
income that has accrued and is otherwise required to be taken into account with
respect to a Foreign Currency Note during an accrual period. Unless the United
States Holder makes the election discussed in the next paragraph, the United
States dollar value of such accrued income is determined by translating such
income at the average rate of exchange for the accrual period or, with respect
to an accrual period that spans two taxable years, at the average rate for the
portion of the accrual period within the taxable year. The average rate of
exchange for the accrual period (or partial period) is the simple average of
the exchange rates for each business day of such period (or other method if
such method is reasonably derived and consistently applied). Such United States
Holder recognizes, as ordinary gain or loss, foreign currency exchange gain or
loss with respect to accrued interest income on the date such income is
actually received, reflecting fluctuations in currency exchange rates between
the last day of the relevant accrual period and the date of payment. The amount
of gain or loss recognized equals the difference between the United States
dollar value of the foreign currency payment received in respect of such
accrual period determined based on the exchange rate on the date such payment
is received and the United States dollar value of interest income that has
accrued during such accrual period (as determined above).
 
  Under the so-called "spot rate convention election," a United States Holder
may, in lieu of applying the rules described in the preceding paragraph, elect
to translate accrued interest income into United States dollars at the exchange
rate in effect on the last day of the relevant accrual period for OID, market
discount or accrued 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
taxable year. Additionally, if a payment of such income is actually received
within five business days of the last day of the accrual period or taxable
year, an electing United States Holder may instead translate such income into
United States dollars at the exchange rate in effect on the day of actual
receipt. Any such election applies to all debt instruments held by the United
States Holder at the beginning of the first taxable year to which the election
applies or thereafter acquired by the United States Holder and is irrevocable
without the consent of the IRS.
 
 Purchase, Sale, Exchange or Retirement
 
  A United States Holder that converts United States dollars to a foreign
currency and immediately uses that currency to purchase a Foreign Currency Note
denominated in the same foreign currency normally does not recognize gain or
loss in connection with such conversion and purchase. However, a United States
Holder that purchases a Foreign Currency Note with previously owned foreign
currency does recognize ordinary
 
                                      S-30

 
income or loss in an amount equal to the difference, if any, between such
Holder's tax basis in the foreign currency and the United States dollar market
value of the Foreign Currency Note on the date of the purchase. A United States
Holder's tax basis in a Foreign Currency Note (and the amount of any subsequent
adjustment to such Holder's tax basis) is the United States dollar value of the
foreign currency amount paid for such Foreign Currency Note (or of the foreign
currency amount of the adjustment) determined on the date of such purchase or
adjustment. In the case of an adjustment resulting from accrual of OID or
market discount, such adjustment is made at the rate at which such OID or
market discount is translated into United States dollars under the rules
described above.
 
  Gain or loss realized upon the sale, exchange or retirement of, or the
receipt of principal on, a Foreign Currency Note, to the extent attributable to
fluctuations in currency exchange rates, is ordinary income or loss. Gain or
loss attributable to fluctuations in exchange rates equals the difference
between (i) the United States dollar value of the foreign currency purchase
price for such Note, determined on the date such Note is disposed of, and (ii)
the United States dollar value of the foreign currency purchase price for such
Note, determined on the date such United States Holder acquired such Note. Any
portion of the proceeds of such sale, exchange or retirement attributable to
accrued interest income may result in exchange gain or loss under the rules set
forth above. Such foreign currency gain or loss is recognized only to the
extent of the overall gain or loss realized by a United States Holder on the
sale, exchange or retirement of the Foreign Currency Note. In general, the
source of such foreign currency gain or loss is determined by reference to the
residence of the United States Holder or the "qualified business unit" of such
Holder on whose books the Note is properly reflected. Any gain or loss realized
by a United States Holder in excess of such foreign currency gain or loss is
capital gain or loss (except to the extent of any accrued market discount not
previously included in such Holder's income or, in the case of a Short-Term
Note having OID, to the extent of any OID not previously included in such
Holder's income).
 
  The tax basis of a United States Holder in any foreign currency received on
the sale, exchange or retirement of a Foreign Currency Note is equal to the
United States dollar value of such foreign currency, determined at the time of
such sale, exchange or retirement. The final Treasury Regulations under Section
988 of the Code (the "Section 988 Regulations") provide a special rule for
purchases and sales of publicly traded debt instruments by a cash method
taxpayer under which units of foreign currency paid or received are translated
into United States dollars at the spot rate on the settlement date of the
purchase or sale. Accordingly, no exchange gain or loss results from currency
fluctuations between the trade date and the settlement of such a purchase or
sale. An accrual method taxpayer may elect the same treatment required of cash
method taxpayers with respect to the purchase and sale of publicly traded debt
instruments provided the election is applied consistently. Such election cannot
be changed without consent of the IRS. United States Holders should consult
their tax advisors concerning the applicability to Foreign Currency Notes of
the special rules summarized in this paragraph.
 
  Market discount, acquisition premium and amortizable bond premium of a
Foreign Currency Note are determined in the relevant foreign currency. The
amount of such market discount or acquisition premium that is included in (or
reduces) income currently is to be determined for any accrual period in the
relevant foreign currency and then translated into United States dollars on the
basis of the average exchange rate in effect during such accrual period or with
reference to the spot rate convention election as described above. Exchange
gain or loss realized with respect to such accrued market discount or
acquisition premium is determined and recognized in accordance with the rules
relating to accrued interest described above. The amount of accrued market
discount (other than market discount that is included in income currently)
taken into account upon the receipt of any partial principal payment or upon
the sale, exchange, retirement or other disposition of a Foreign Currency Note
is the United States dollar value of such accrued market discount, determined
on the date of receipt of such partial principal payment or upon the sale,
exchange, retirement or other disposition, and no portion thereof is treated as
exchange gain or loss. Exchange gain or loss with respect to amortizable bond
premium is determined by treating the portion of premium amortized with
 
                                      S-31

 
respect to any period as a return of principal. With respect to a United States
Holder of a Foreign Currency Note that does not elect to amortize premium, the
amount of premium, if any, is treated as a capital loss when such Note matures.
 
  The Section 988 Regulations do not discuss the tax consequences of the
acquisition of a Foreign Currency Note that is denominated either in a so-
called hyperinflationary currency or in more than one currency, or that does
not qualify as a VRDI and thus is treated under the 1994 Proposed Regulations
as a contingent debt instrument. Foreign Currency Notes containing such
features may be subject to rules that differ from the general rules described
above. United States Holders intending to purchase Foreign Currency Notes with
such a feature should examine the applicable Pricing Supplement and should
consult their own tax advisors with respect to the purchase, ownership and
disposition of such a Foreign Currency Note.
 
FOREIGN HOLDERS
 
  As used herein, the term "non-United States Holder" means a holder of a Note
that is, for United States federal income tax purposes, (i) a nonresident alien
individual, (ii) a foreign corporation, (iii) a nonresident alien fiduciary of
a foreign estate or trust or (iv) a foreign partnership one or more of the
members of which is, for United States federal income tax purposes, a
nonresident alien individual, a foreign corporation or a nonresident alien
fiduciary of a foreign estate or trust.
 
  On April 15, 1996, proposed Treasury Regulations (the "1996 Proposed
Regulations") were issued which, if adopted in final form, could affect the
United States taxation of non-United States Holders. The 1996 Proposed
Regulations are generally proposed to be effective for payments after December
31, 1997, regardless of the issue date of the Note with respect to which such
payments are made, subject to certain transition rules. It cannot be predicted
at this time whether the 1996 Proposed Regulations will become effective as
proposed or what, if any, modifications may be made to them. The discussion
under this heading and under "--Backup Withholding and Information Reporting,"
below, is not intended to be a complete discussion of the provisions of the
1996 Proposed Regulations, and prospective investors are urged to consult their
tax advisors with respect to the effect the 1996 Proposed Regulations may have
if adopted.
 
  Under current United States federal income tax law now in effect, and subject
to the discussion of backup withholding in the following section, payments of
principal and interest (including OID) with respect to a Note by the Company or
by any paying agent to any non-United States Holder are not subject to United
States federal withholding tax, provided, in the case of interest, that (i)
such Holder does not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of the Company entitled to vote,
(ii) such Holder is not for federal income tax purposes a controlled foreign
corporation related, directly or indirectly, to the Company through stock
ownership, (iii) such Holder is not a bank receiving interest described in
Section 881(c)(3)(A) of the Code and (iv) either (A) the beneficial owner of
the Note certifies, under penalties of perjury, to the Company or paying agent,
as the case may be, that such owner is a non-United States Holder and provides
such owner's name and address, or (B) a securities clearing organization, bank
or other financial institution that holds customers' securities in the ordinary
course of its trade or business (a "financial institution") and holds the Note,
certifies, under penalties of perjury, to the Company or paying agent, as the
case may be, that such certificate has been received from the beneficial owner
by it or by a financial institution between it and the beneficial owner and
furnishes the payor with a copy thereof. A certificate described in this
paragraph is effective only with respect to payments of interest (including
OID) made to the certifying non-United States Holder after the issuance of the
certificate in the calendar year of its issuance and the two immediately
succeeding calendar years. Under temporary Treasury Regulations, the foregoing
certification may be provided by the beneficial owner of a Note on IRS Form W-
8.
 
  The 1996 Proposed Regulations provide optional documentation procedures
designed to simplify compliance by withholding agents. The 1996 Proposed
Regulations would not affect the documentation rules
 
                                      S-32

 
described in the preceding paragraph, but would add "intermediary
certification" options for certain qualifying withholding agents. Under one
such option, a withholding agent would be allowed to rely on IRS Form W-8
furnished by a financial institution or other intermediary on behalf of one or
more beneficial owners (or other intermediaries) without having to obtain the
beneficial owner certificate described in the preceding paragraph, provided
that the financial institution or intermediary has entered into a withholding
agreement with the IRS and thus is a "qualified intermediary." Under another
option, an authorized foreign agent of a U.S. withholding agent would be
permitted to act on behalf of the U.S. withholding agent, provided certain
conditions are met.
 
  The 1996 Proposed Regulations, if adopted, would also provide certain
presumptions with respect to withholding for holders not providing the required
certifications to qualify for the withholding exemption described above. In
addition, the 1996 Proposed Regulations would replace a number of current tax
certification forms (including IRS Form W-8 and IRS Form 4224, discussed below)
with a single, restated form and standardize the period of time for which
withholding agents could rely on such certifications.
 
  Notwithstanding the foregoing, interest described in Section 871(h)(4) of the
Code is subject to United States withholding tax at a 30% rate (or such lower
rate as may be provided by an applicable treaty). In general, interest
described in Section 871(h)(4) of the Code includes (subject to certain
exceptions) any interest the amount of which is determined by reference to
receipts, sales or other cash flow of the issuer or a related person, any
income or profits of the issuer or a related person, any change in the value of
any property of the issuer or a related person or any dividends, partnership
distribution or similar payments made by the issuer or a related person.
Interest described in Section 871(h)(4) of the Code may include other types of
contingent interest identified by the IRS in future Treasury Regulations.
 
  If a non-United States Holder is engaged in a trade or business in the United
States and interest (including OID) on the Note is effectively connected with
the conduct of such trade or business, the non-United States Holder, although
exempt from the withholding tax discussed in the preceding paragraphs, is
subject to United States federal income tax on such interest (including OID) in
the same manner as if it were a United States Holder. In lieu of the
certificate described above, such Holder must provide a properly executed IRS
Form 4224 annually in order to claim an exemption from withholding tax. In
addition, if such Holder is a foreign corporation, it may be subject to a
branch profits tax equal to 30% (or such lower rate as may be specified by an
applicable treaty) of its effectively connected earnings and profits for the
taxable year, subject to adjustments. For this purpose, interest (including
OID) on a Note is included in the earnings and profits of such Holder if such
interest (including OID) is effectively connected with the conduct by such
Holder of a trade or business in the United States.
 
  Generally, any gain or income (other than that attributable to accrued
interest or OID) realized upon the sale, exchange, retirement or other
disposition of a Note is not subject to federal income tax unless (i) such gain
or income is effectively connected with a trade or business in the United
States of the non-United States Holder or (ii) in the case of a non-United
States Holder who is an individual, the non-United States Holder is present in
the United States for 183 days or more in the taxable year of such sale,
exchange, retirement or other disposition and either (a) such individual has a
"tax home" (as defined in Section 911(d)(3) of the Code) in the United States
or (b) the gain is attributable to an office or other fixed place of business
maintained by such individual in the United States.
 
BACKUP WITHHOLDING AND INFORMATION REPORTING
 
  Under current United States federal income tax law, information reporting
requirements apply to interest (including OID) and principal payments made to,
and to the proceeds of sales before maturity by, certain non-corporate United
States Holders. In addition, a 31% backup withholding tax applies if the non-
corporate United States Holder (i) fails to furnish such Holder's Taxpayer
Identification Number ("TIN") (which, for an individual, would be his or her
Social Security Number) to the payor in the manner required, (ii) furnishes an
incorrect TIN and the payor is so notified by the IRS, (iii) is notified by the
IRS that such Holder has
 
                                      S-33

 
failed properly to report payments of interest and dividends or (iv) in certain
circumstances, fails to certify, under penalties of perjury, that such Holder
has not been notified by the IRS that it is subject to backup withholding for
failure properly to report interest and dividend payments. Backup withholding
does not apply with respect to payments made to certain exempt recipients, such
as corporations (within the meaning of Section 7701(a) of the Code) and tax-
exempt organizations.
 
  In the case of a non-United States Holder, under Treasury Regulations, backup
withholding and information reporting do not apply to payments of principal and
interest made by the Company or any paying agent thereof on a Note with respect
to which such Holder has provided the required certification under penalties of
perjury that such Holder is a non-United States Holder or has otherwise
established an exemption, provided that (i) the Company or paying agent, as the
case may be, does not have actual knowledge that the payee is a United States
person and (ii) certain other conditions are satisfied.
 
  Subject to the discussion below, payments to or through the United States
office of a broker are subject to backup withholding and information reporting
unless the Holder (i) certifies under penalties of perjury as to such Holder's
status as a non-United States Holder, establishes certain other qualifications
and provides such Holder's name and address (and no agent of the broker who is
responsible for receiving or reviewing such certification has actual knowledge
that it is incorrect) or (ii) otherwise establishes an exemption.
 
  In general, if principal or interest payments on a Note are collected outside
the United States by a foreign office of a custodian, nominee or other agent
acting on behalf of a beneficial owner of a Note, such custodian, nominee or
other agent is not required to apply backup withholding to such payments made
to such beneficial owner and is not subject to information reporting. However,
if such custodian, nominee or other agent is a United States person, a
controlled foreign corporation for United States tax purposes, or a foreign
person 50% or more of whose gross income is effectively connected with its
conduct of a United States trade or business for a specified three-year period,
such custodian, nominee or other agent may be subject to certain information
reporting (but not backup withholding) requirements with respect to such
payment unless such custodian, nominee or other agent has in its records
documentary evidence that the beneficial owner is not a United States person
and certain conditions are met or the beneficial owner otherwise establishes an
exemption.
 
  Under Treasury Regulations, payments on the sale, exchange or retirement of a
Note to or through a foreign office of a broker are not subject to backup
withholding. However, if such broker is a United States person, a controlled
foreign corporation for United States tax purposes, or a foreign person 50% or
more of whose gross income is effectively connected with its conduct of a
United States trade or business for a specified three-year period, information
reporting (but not backup withholding) is required unless such broker has in
its records documentary evidence that the beneficial owner is not a United
States person and certain other conditions are met or the beneficial owner
otherwise establishes an exemption.
 
  The 1996 Proposed Regulations would, if adopted, alter the foregoing rules in
certain respects. In particular, the 1996 Proposed Regulations would provide
certain presumptions under which non-United States Holders may be subject to
backup withholding in the absence of required certifications.
 
  Backup withholding tax is not an additional tax. Rather, any amounts withheld
from a payment to a Holder under the backup withholding rules are allowed as a
refund or a credit against such Holder's United States federal income tax,
provided that the required information is furnished to the IRS.
 
  Holders should consult their tax advisors regarding the application of
information reporting and backup withholding to their particular situations,
the availability of an exemption therefrom, and the procedure for obtaining
such an exemption, if available.
 
                                      S-34

 
                         PLAN OF DISTRIBUTION OF NOTES
 
  The Notes are being offered on a continuing basis for sale by the Company,
through Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Goldman, Sachs & Co. or Salomon Brothers Inc, each as agent
(collectively, the "Agents"), each of which has agreed to use its reasonable
best efforts to solicit offers to purchase the Notes. The Company will pay a
commission to an Agent, in the form of a discount, ranging from .125% to .750%
of the principal amount of a Note, depending upon its Stated Maturity, sold
through such Agent. Commissions with respect to Notes with Stated Maturity
Dates in excess of 30 years that are sold through an Agent will be negotiated
between the Company and such Agent at the time of such sale. The Company may
also sell Notes to any Agent, as principal, for resale to investors and other
purchasers at varying prices relating to prevailing market prices at the time
of resale as determined by such Agent, or, if so specified in the applicable
Pricing Supplement, for resale at a fixed public offering price. Unless
otherwise specified in the applicable Pricing Supplement, any Note sold to an
Agent as principal will be purchased by such Agent at a price equal to 100% of
the principal amount thereof less a percentage of the principal amount equal to
the commission applicable to an agency sale (as described above) of a Note of
identical maturity. The Company may appoint other agents to solicit sales of
the Notes on the same terms and conditions as the Agents have agreed to. The
names of any other agents so appointed will be set forth in the applicable
Pricing Supplement.
 
  Any Agent may sell Notes it has purchased from the Company as principal to
other dealers for resale to investors and other purchasers, and may allow any
portion of the discount received in connection with such purchase from the
Company to such dealers. After the initial public offering of Notes, the public
offering price (in the case of Notes to be resold at a fixed public offering
price), the concession and the discount may be changed.
 
  The Company reserves the right to withdraw, cancel or modify the offer made
hereby without notice and may reject orders in whole or in part whether placed
directly with the Company or through any Agent. Each Agent will have the right,
in its discretion reasonably exercised, to reject in whole or in part any offer
to purchase Notes received by it on an agency basis.
 
  Unless otherwise specified in the applicable Pricing Supplement, payment of
the purchase price of the Notes will be required to be made in immediately
available funds in New York City on the date of settlement.
 
  No Note will have an established trading market when issued. Unless otherwise
specified in the applicable Pricing Supplement, the Notes will not be listed on
any securities exchange. Any Agent may from time to time purchase and sell
Notes in the secondary market, but such Agent is not obligated to do so, and
there can be no assurance that there will be a secondary market for the Notes
or liquidity in the secondary market if one develops. From time to time, any
Agent may make a market in the Notes, but such Agent is not obligated to do so
and may discontinue any market-making activity at any time.
 
  The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). The Company has
agreed to indemnify the Agents against certain liabilities including
liabilities under the Securities Act, or to contribute to payments the Agents
may be required to make in respect thereof. The Company has agreed to reimburse
the Agents for certain other expenses.
 
  The Agents and certain affiliates thereof engage in transactions with and
perform services for the Company in the ordinary course of business.
 
  Concurrently with the offering of Notes through any Agent as described
herein, the Company may issue other Debt Securities pursuant to the Indenture
referred to herein.
 
  The Company reserves the right to sell Notes directly to investors on its own
behalf in those jurisdictions where it is authorized to do so or as otherwise
provided in the applicable Pricing Supplement. In such circumstances, the
Company will have the sole right to accept offers to purchase Notes and may
reject any offer to purchase Notes in whole or in part. In the case of sales
made directly by the Company, no commissions will be paid.
 
                                      S-35

 
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A         +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE   +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY  +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT        +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR   +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE      +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE    +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF  +
+ANY SUCH STATE.                                                               +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
                     SUBJECT TO COMPLETION, APRIL 25, 1996
 
PROSPECTUS
 
                                TRIBUNE COMPANY
 
                              DEBT SECURITIES AND
                      WARRANTS TO PURCHASE DEBT SECURITIES
 
  Tribune Company (the "Company") intends to issue from time to time in one or
more series its unsecured debt securities ("Debt Securities") and warrants
("Warrants") to purchase Debt Securities (the Debt Securities and the Warrants
being herein collectively called the "Securities") with an aggregate initial
public offering price or purchase price of up to $500,000,000, or the
equivalent thereof if any of the Securities are denominated in a foreign
currency or composite currency such as the European Currency Unit ("ECU"). The
Debt Securities of each series and the Warrants will be offered on terms to be
determined at the time of sale. See "Description of Debt Securities" and
"Description of Warrants." The Debt Securities and Warrants may be sold for
United States dollars, foreign currencies or composite currencies such as the
ECU, and the principal of, premium, if any, and any interest on the Debt
Securities may be payable in United States dollars, foreign currencies or
composite currencies such as the ECU. The specific designation, aggregate
principal amount, the currency or composite currency in which the principal,
premium, if any, and any interest are payable, the rate (or method of
calculation) and the time and place of payment of any interest, authorized
denominations, maturity, offering price, any redemption terms and any other
specific terms of the Debt Securities in respect of which this Prospectus is
being delivered are set forth in the accompanying Prospectus Supplement (the
"Prospectus Supplement"). With regard to the Warrants, if any, in respect of
which this Prospectus is being delivered, the Prospectus Supplement sets forth
a description of the Debt Securities for which the Warrants are exercisable and
the offering price, if any, exercise price, duration and any other specific
terms of the Warrants.
 
THESE SECURITIES  HAVE NOT BEEN APPROVED  OR DISAPPROVED BY THE  SECURITIES AND
 EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
  AND EXCHANGE COMMISSION OR ANY  STATE SECURITIES COMMISSION PASSED UPON  THE
  ACCURACY  OR ADEQUACY OF  THIS PROSPECTUS. ANY  REPRESENTATION TO THE  CON-
   TRARY IS A CRIMINAL OFFENSE.
 
  The Securities may be sold by the Company directly to purchasers, through
agents designated from time to time, or to or through underwriters or dealers.
If underwriters or agents are involved in the offering of Securities, the names
of the underwriters or agents will be set forth in the Prospectus Supplement.
If an underwriter, agent or dealer is involved in the offering of any
Securities, the underwriter's discount, agent's commission or dealer's purchase
price will be set forth in, or may be calculated from the information set forth
in, the Prospectus Supplement, and the net proceeds to the Company from such
offering will be the public offering price of the Securities less such discount
in the case of an offering through an underwriter or the purchase price of the
Securities less such commission in the case of an offering through an agent,
and less, in each case, the other expenses of the Company associated with the
issuance and distribution of the Securities. See "Plan of Distribution."
 
               The date of this Prospectus is             , 1996

 
                             AVAILABLE INFORMATION
 
  Tribune Company (the "Company") is subject to the informational requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission") and with the New
York, Chicago and Pacific stock exchanges, on which the Company's Common Stock
is listed. Such reports, proxy statements and other information concerning the
Company can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the Commission's Regional Offices at Seven World Trade Center, 13th
Floor, New York, New York 10048; and Citicorp Center, 500 W. Madison Street,
14th Floor, Chicago, Illinois 60661. Copies of such materials can be obtained
upon written request addressed to the Commission, Public Reference Section, 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition,
such materials may be inspected at the offices of the New York Stock Exchange,
20 Broad Street, New York, New York 10005; the Chicago Stock Exchange, 440
South LaSalle Street, Chicago, Illinois 60605; and the Pacific Stock Exchange,
301 Pine Street, San Francisco, California 94104.
 
  The Company has filed with the Commission a registration statement on Form S-
3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is made to the Registration Statement.
 
                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
 
  The following documents filed by the Company with the Commission pursuant to
Sections 13 and 14 of the Exchange Act (File No. 1-8572) are incorporated
herein by reference: (i) the Company's Annual Report on Form 10-K for the year
ended December 31, 1995 and (ii) the Company's Current Reports on Form 8-K
dated January 8, 1996 and dated March 15, 1996. All documents filed by the
Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the termination of the
offering of the Securities shall be deemed to be incorporated by reference in
this Prospectus.
 
  Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
 
  The Company will provide without charge to each person to whom a copy of this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the documents incorporated herein by reference, excluding the
exhibits to such documents (unless such exhibits are specifically incorporated
by reference in such documents). Requests should be directed to the Corporate
Relations Department, Tribune Company, Suite 600, 435 North Michigan Avenue,
Chicago, Illinois 60611, telephone (312) 222-3238.
 
                                       2

 
                                  THE COMPANY
 
  Tribune Company is an information, entertainment and education company.
Through its subsidiaries, the Company is engaged in the publishing of
newspapers, books, educational reference material and information in print and
digital formats and the broadcasting, production and syndication of information
and entertainment in metropolitan areas in the United States. The Company was
founded in 1847 and incorporated in Illinois in 1861. As a result of a
corporate restructuring in 1968, the Company became a holding company
incorporated in Delaware. The executive offices of the Company are located at
435 North Michigan Avenue, Chicago, Illinois 60611. Its telephone number is
(312) 222-9100.
 
                                USE OF PROCEEDS
 
  The Company expects to add substantially all of the net proceeds from the
sale of the Securities to its general funds to be used for general corporate
purposes, including capital expenditures, working capital, repayment of long-
term and short-term debt, securities repurchase programs and the financing of
possible future acquisitions. Funds not required immediately may be invested in
short-term marketable securities.
 
                      RATIOS OF EARNINGS TO FIXED CHARGES
 
  The Company's Ratios of Earnings to Fixed Charges for each of the periods
indicated are as follows:
 


                                                           FISCAL YEAR ENDED
                                                                DECEMBER
                                                        ------------------------
                                                        1995 1994 1993 1992 1991
                                                        ---- ---- ---- ---- ----
                                                             
Ratio of Earnings to Fixed Charges..................... 8.7  8.2  6.4  4.9  4.0

 
  For purposes of computing the foregoing ratios: (i) Earnings consist of
income from continuing operations before cumulative effects of accounting
changes plus income tax expense and losses on equity investments plus Fixed
Charges (including amortization of capitalized interest but excluding
capitalized interest and interest related to the Company's guarantees of the
debt of its Employee Stock Ownership Plan); and (ii) Fixed Charges consist of
interest, whether expensed or capitalized, the portion of rental payments on
operating leases estimated to represent an interest component and interest
related to the Company's guarantees of the debt of its Employee Stock Ownership
Plan.
 
                         DESCRIPTION OF DEBT SECURITIES
 
GENERAL
 
  The Debt Securities will be issued under an Indenture dated as of March 1,
1992, as supplemented from time to time in accordance with its terms (the
"Indenture"), between the Company and First Trust of Illinois, National
Association, as successor trustee (the "Trustee"). The following brief summary
of the Indenture and the Debt Securities is subject to the detailed provisions
of the Indenture, a copy of which is an exhibit to the Registration Statement.
Wherever references are made to particular provisions of the Indenture, such
provisions are incorporated by reference as a part of the statements made
herein and such statements are qualified in their entirety by such reference.
Certain defined terms in the Indenture are capitalized herein. References in
italics are to section numbers of the Indenture.
 
  The Indenture does not limit the amount of Debt Securities which may be
issued thereunder. It provides that Debt Securities may be issued from time to
time in series. The Debt Securities will be unsecured obligations of the
Company and will rank pari passu with all other unsecured and unsubordinated
indebtedness of the Company.
 
                                       3

 
  Reference is made to the Prospectus Supplement for a description of the
following terms of the Debt Securities in respect of which this Prospectus is
being delivered: (i) the title of such Debt Securities; (ii) the limit, if any,
upon the aggregate principal amount of such Debt Securities; (iii) the dates on
which or periods during which such Debt Securities may be issued and the date
or dates on which the principal of (and premium, if any, on) such Debt
Securities will be payable; (iv) the rate or rates, if any, or the method of
determination thereof, at which such Debt Securities 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; (v) the obligation, if any, of the
Company to redeem, repay or purchase such Debt Securities pursuant to any
sinking fund or analogous provisions or at the option of a holder and the
periods within which or the dates on which, the prices at which and the terms
and conditions upon which such Debt Securities will be redeemed, repaid or
purchased, in whole or in part, pursuant to such obligation; (vi) the periods
within which or the dates on which, the prices, if any, at which and the terms
and conditions upon which such Debt Securities may be redeemed, in whole or in
part, at the option of the Company; (vii) if other than denominations of $1,000
and any integral multiple thereof, the denominations in which such Debt
Securities will be issuable; (viii) whether such Debt Securities are to be
issued at less than the principal amount thereof and the amount of discount
with which such Debt Securities will be issued; (ix) provisions, if any, for
the defeasance of such Debt Securities; (x) if other than United States
dollars, the currency or composite currency in which such Debt Securities are
to be denominated, or in which payment of the principal of (and premium, if
any) and interest on such Debt Securities will be made and the circumstances,
if any, when such currency of payment may be changed; (xi) if the principal of
(and premium, if any) or interest on such Debt Securities are to be payable, at
the election of the Company or a holder, in a currency or composite currency
other than that in which such Debt Securities are denominated or stated to be
payable, the periods within which, and the terms and conditions upon which,
such election may be made and the time and the manner of determining the
exchange rate between the currency or composite currency in which such Debt
Securities are denominated or stated to be payable and the currency in which
such Debt Securities are to be paid pursuant to such election; (xii) if the
amount of payments of principal of (and premium, if any) or interest on the
Debt Securities may be determined with reference to an index including, but not
limited to an index based on a currency or currencies other than that in which
such Debt Securities are stated to be payable, the manner in which such amounts
shall be determined; (xiii) whether such Debt Securities will be issued in the
form of one or more Global Securities and, if so, the identity of the
Depository for such Global Securities; (xiv) any additional Events of Default
or covenants relating solely to such Debt Securities or any Events of Default
or covenants generally applicable to Debt Securities which are not to apply to
the particular series of Debt Securities in respect of which this Prospectus is
being delivered; and (xv) any other terms of such Debt Securities not
inconsistent with the provisions of the Indenture. (Section 3.01) Unless
otherwise indicated in the applicable Prospectus Supplement, the Indenture does
not afford the holder of any series of Debt Securities the right to tender such
Debt Securities to the Company for repurchase, or provide for any increase in
the rate or rates of interest per annum at which such Debt Securities will bear
interest, in the event the Company should become involved in a highly leveraged
transaction.
 
  The Debt Securities may be issued under the Indenture bearing no interest or
interest at a rate below the prevailing market rate at the time of issuance, to
be offered and sold at a discount below their stated principal amount. Federal
income tax consequences and other special considerations applicable to any such
discounted Debt Securities or to other Debt Securities offered and sold at par
which are treated as having been issued at a discount for federal income tax
purposes will be described in the Prospectus Supplement relating thereto.
 
  A substantial portion of the assets of the Company is held by subsidiaries.
The Company's right and the rights of its creditors, including the holders of
Debt Securities, to participate in the assets of any subsidiary upon its
liquidation or recapitalization would be subject to the prior claims of such
subsidiary's creditors, except to the extent that the Company may itself be a
creditor with recognized claims against such subsidiary. There is no
restriction in the Indenture against subsidiaries of the Company incurring
unsecured indebtedness.
 
                                       4

 
  Unless otherwise described in the Prospectus Supplement, the Debt Securities
will be issued only in fully registered form without coupons, in denominations
of $1,000 and multiples of $1,000, and will be payable only in United States
dollars. (Section 3.02) In addition, all or a portion of the Debt Securities of
any series may be issued in permanent registered global form which will be
exchangeable for definitive Debt Securities only under certain conditions.
(Section 2.03) The Prospectus Supplement indicates the denominations to be
issued, the procedures for payment of interest and principal thereon, and other
matters. No service charge will be made for any registration of transfer or
exchange of the Debt Securities, but the Company may, in certain instances,
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. (Section 3.05)
 
GLOBAL SECURITIES
 
  The Debt Securities of a particular series may be issued in the form of one
or more Global Securities which will be deposited with a Depositary, or its
nominee, each of which will be identified in the Prospectus Supplement relating
to such series. Unless and until exchanged, in whole or in part, for Debt
Securities in definitive registered form, a Global Security may not be
transferred except as a whole by the Depositary for such Global Security to a
nominee of such Depositary, by a nominee of such Depositary to such Depositary
or another nominee of such Depositary or by such Depositary or any such nominee
to a successor of such Depositary or a nominee of such successor. (Section
2.03) The specific terms of the depository arrangement with respect to any
portion of a particular series of Debt Securities to be represented by a Global
Security will be described in the Prospectus Supplement relating to such
series. The Company anticipates that the following provisions will apply to all
depository arrangements.
 
  Upon the issuance of a Global Security, the Depositary therefor or its
nominee will credit, on its book entry and registration system, the respective
principal amounts of the Debt Securities represented by such Global Security to
the accounts of such persons having accounts with such Depositary
("participants") as shall be designated by the underwriters or agents
participating in the distribution of such Debt Securities or by the Company if
such Debt Securities are offered and sold directly by the Company. Ownership of
beneficial interests in a Global Security will be limited to participants or
persons that may hold beneficial interests through participants. Ownership of
beneficial interests in a Global Security will be shown on, and the transfer of
such ownership will be effected only through, records maintained by the
Depositary therefor or its nominee (with respect to beneficial interests of
participants) or by participants or persons that hold through participants
(with respect to interests of persons other than participants). The laws of
some states require certain purchasers of securities to take physical delivery
thereof in definitive form. Such depository arrangements and such laws may
impair the ability to transfer beneficial interests in a Global Security.
 
  So long as the Depositary for a Global Security or its nominee is the
registered owner thereof, such Depositary or such nominee, as the case may be,
will be considered the sole owner or holder of the Debt Securities represented
by such Global Security for all purposes under the Indenture. Except as
provided below, owners of beneficial interests in a Global Security will not be
entitled to have Debt Securities of the series represented by such Global
Security registered in their names, will not receive or be entitled to receive
physical delivery of Debt Securities of such series in definitive form and will
not be considered the owners or holders thereof under the Indenture.
 
  Principal, premium, if any, and interest payments on a Global Security
registered in the name of a Depositary or its nominee will be made to such
Depositary or nominee, as the case may be, as the registered owner of such
Global Security. None of the Company, the Trustee or any paying agent for Debt
Securities of the series represented by such Global Security will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial interests in such Global Security or for
maintaining, supervising or reviewing any records relating to such beneficial
interests.
 
  The Company expects that the Depositary for a Global Security or its nominee,
upon receipt of any payment of principal, premium or interest, will immediately
credit participants' accounts with payments in
 
                                       5

 
amounts proportionate to their respective beneficial interests in the principal
amount of such Global Security as shown on the records of such Depositary or
its nominee. The Company also expects that payments by participants to owners
of beneficial interests in such Global Security held through such participants
will be governed by standing instructions and customary practices, as is now
the case with securities held for the accounts of customers registered in
"street name," and will be the responsibility of such participants.
 
  If the Depositary for a Global Security representing Debt Securities of a
particular series is at any time unwilling or unable to continue as Depositary
and a successor Depositary is not appointed by the Company within 90 days, the
Company will issue Debt Securities of such series in definitive form in
exchange for such Global Security. In addition, the Company may at any time and
in its sole discretion determine not to have the Debt Securities of a
particular series represented by one or more Global Securities and, in such
event, will issue Debt Securities of such series in definitive form in exchange
for all of the Global Securities representing Debt Securities of such series.
 
CERTAIN COVENANTS OF THE COMPANY
 
  Limitation on Indebtedness Secured by a Mortgage. The Indenture provides that
neither the Company nor any Restricted Subsidiary will create, assume,
guarantee or suffer to exist any Indebtedness secured by any mortgage, pledge,
lien, security interest, conditional sale or other title retention agreement or
other similar encumbrance ("Mortgage") on any assets of the Company or a
Restricted Subsidiary unless the Company secures or causes such Restricted
Subsidiary to secure the Debt Securities equally and ratably with, or prior to,
such secured Indebtedness. This restriction will not apply to Indebtedness
secured by (i) Mortgages on the property of any corporation which Mortgages
existed at the time such corporation became a Restricted Subsidiary; (ii)
Mortgages in favor of the Company or a Restricted Subsidiary; (iii) Mortgages
on property of the Company or a Restricted Subsidiary in favor of the United
States of America or any State or political subdivision thereof, or in favor of
any other country or any political subdivision thereof, to secure payment
pursuant to any contract or statute or to secure any indebtedness incurred for
the purpose of financing all or part of the purchase price or the cost of
construction or improvement of the property subject to such Mortgages; (iv)
Mortgages on any property subsequently acquired by the Company or any
Restricted Subsidiary, contemporaneously with such acquisition or within 120
days thereafter, to secure or provide for the payment of any part of the
purchase price of such property, or Mortgages assumed by the Company or any
Restricted Subsidiary upon any property subsequently acquired by the Company or
any Restricted Subsidiary which were existing at the time of such acquisition,
provided that the amount of any Indebtedness secured by any such Mortgage
created or assumed does not exceed the cost to the Company or Restricted
Subsidiary, as the case may be, of the property covered by such Mortgage; (v)
Mortgages representing the extension, renewal or refunding of any Mortgage
referred to in the foregoing clauses (i) through (iv), inclusive; and (vi) any
other Mortgage, other than Mortgages referred to in the foregoing clauses (i)
through (v), inclusive, so long as the aggregate of all Indebtedness secured by
Mortgages pursuant to this clause (vi) and the aggregate Value of the Sale and
Lease-Back Transactions in existence at that time (not including those in
connection with which the Company has voluntarily retired funded debt as
provided in the Indenture) does not exceed 10% of Consolidated Net Tangible
Assets of the Company and its consolidated Subsidiaries. (Section 10.07)
 
  Limitation on Sale and Lease-Back Transactions. The Indenture provides that
neither the Company nor any Subsidiary will enter into any Sale and Lease-Back
Transaction with respect to any Principal Property unless either (i) the
Company or such Subsidiary would be entitled, pursuant to the foregoing
covenant relating to "Limitation on Indebtedness Secured by a Mortgage," to
create, assume, guarantee or suffer Indebtedness in a principal amount equal to
or exceeding the Value of such Sale and Lease-Back Transaction secured by a
Mortgage on the property to be leased without equally and ratably securing the
Debt Securities or (ii) the Company, within four months after the effective
date of such transaction, applies an amount equal to the greater of (x) the net
proceeds of the sale of the property subject to the Sale and Lease-Back
Transaction and (y) the Value of such Sale and Lease-Back Transaction, to the
voluntary retirement of the Debt Securities or other unsubordinated
Indebtedness of the Company. (Section 10.08)
 
                                       6

 
  Certain Definitions. A "Sale and Lease-Back Transaction" is defined in the
Indenture as the leasing by the Company or a Subsidiary for a period of more
than three years of any Principal Property which has been sold or is to be sold
or transferred by the Company or any such Subsidiary to any party (other than
the Company or a Subsidiary) to which funds have been or will be advanced by
such party on the security of the leased property. (Section 10.08)
 
  "Value" is defined in the Indenture to mean, with respect to any particular
Sale and Lease-Back Transaction, as of any particular time, the amount equal to
the greater of (i) the net proceeds of the sale or transfer of the property
leased pursuant to such Sale and Lease-Back Transaction or (ii) the fair value
in the opinion of the Board of Directors of the Company of such property at the
time of the Company's entering into such Sale and Lease-Back Transaction,
subject to adjustment at any particular time for the length of the remaining
initial lease term. (Section 10.08)
 
  "Principal Property" is defined in the Indenture to mean any manufacturing or
printing plant, warehouse, office building, power plant or transmission
facility owned by the Company or any Subsidiary or any property or right owned
by or granted to the Company or any Subsidiary and used or held for use in the
newspaper, newsprint, radio or television business conducted by the Company or
any Subsidiary, except for any such property or right which, in the opinion of
the Board of Directors of the Company, is not material to the total business
conducted by the Company and its Subsidiaries considered as one enterprise.
(Section 1.01)
 
  "Indebtedness" is defined in the Indenture to mean (i) long-term liabilities
representing borrowed money and purchase money obligations as shown on the
liability side of a balance sheet (other than liabilities evidenced by
obligations under leases and contracts payable for broadcast rights), (ii)
indebtedness secured by any mortgage, pledge or lien existing on property owned
subject to such mortgage, pledge or lien, whether or not such secured
indebtedness has been assumed and (iii) contingent obligations in respect of,
or to purchase or otherwise acquire, any such indebtedness of others described
in the foregoing clauses (i) and (ii) above, including guarantees and
endorsements (other than for purposes of collection in the ordinary course of
business of any such indebtedness). (Section 10.07)
 
  "Consolidated Net Tangible Assets" is defined in the Indenture to mean total
consolidated assets of the Company and its Consolidated Subsidiaries, less (i)
current liabilities of the Company and its Consolidated Subsidiaries; (ii)
contracts payable for broadcast rights; (iii) the net book amount of all
intangible assets of the Company and its Consolidated Subsidiaries; (iv)
appropriate amounts to account for minority interests of other persons holding
stock in Subsidiaries; and (v) investments in Subsidiaries (other than
Restricted Subsidiaries) aggregating in excess of 10% of the Net Worth of the
Company and its Consolidated Subsidiaries. (Section 10.07)
 
  "Consolidated Subsidiary" is defined in the Indenture to mean a Subsidiary
the accounts of which are consolidated with those of the Company for public
financial reporting purposes. (Section 1.01)
 
  "Restricted Subsidiary" is defined in the Indenture to mean each Subsidiary
of the Company as of the date of the Indenture and each Subsidiary thereafter
created or acquired, unless expressly excluded by resolution of the Board of
Directors of the Company before, or within 120 days following, such creation or
acquisition. (Section 10.07)
 
  "Subsidiary" is defined in the Indenture to mean a corporation more than 50%
of the outstanding voting stock of which is owned, directly or indirectly, by
the Company or by one or more other Subsidiaries or by the Company and one or
more other Subsidiaries. For the purposes of this definition, "voting stock"
means stock which ordinarily has voting power for the election of directors,
whether at all times or only so long as no senior class of stock has such
voting power by reason of any contingency. (Section 1.01)
 
  "Net Worth" is defined in the Indenture to mean the aggregate amount of
stockholders' investment as determined in accordance with generally accepted
accounting principles. (Section 10.07)
 
                                       7

 
CONSOLIDATION, MERGER AND SALE OF ASSETS
 
  The Indenture provides that the Company may not consolidate with or merge
into any other corporation, or convey, transfer or lease its properties and
assets substantially as an entirety to any other party, unless (i) the
corporation formed by such consolidation or into which the Company is merged or
the party which acquires by conveyance or transfer, or which leases the
properties and assets of the Company substantially as an entirety, is organized
and existing under the laws of the United States, any State thereof or the
District of Columbia and expressly assumes the Company's obligations on the
Debt Securities and under the Indenture by means of an indenture supplemental
to the Indenture; and (ii) immediately after giving effect to such transaction
no Event of Default, and no event which, after notice or lapse of time, or
both, would become an Event of Default, shall have happened and be continuing;
and (iii) certain other conditions are met. (Section 8.01)
 
EVENTS OF DEFAULT, WAIVER AND NOTICE
 
  With respect to the Debt Securities an Event of Default is defined in the
Indenture as being (i) default for 30 days in payment of any interest upon the
Debt Securities; (ii) default in payment of the principal of or premium, if
any, on the Debt Securities when due either at maturity or upon acceleration,
redemption or otherwise; (iii) default by the Company in the performance of any
other of the covenants or warranties in the Indenture applicable to the Company
which shall not have been remedied for a period of 60 days after Notice of
Default; and (iv) certain events of bankruptcy, insolvency or reorganization of
the Company or any Significant Subsidiary. (Section 5.01) Within 90 days after
the occurrence of any default under the Indenture, the Trustee is required to
notify the Holders of Debt Securities of any default (except in payment of
principal of or premium, if any, or interest on any Debt Securities), unless
the Board of Directors, the executive committee or a trust committee of the
Board of Directors or Responsible Officers of the Trustee in good faith
considers it in the interest of the Holders of Debt Securities not to do so.
(Section 6.02)
 
  "Significant Subsidiary" is defined in the Indenture to mean any Subsidiary
(i) which, as of the close of the fiscal year of the Company immediately
preceding the date of determination, contributed more than 7% of the
consolidated gross operating revenues of the Company and its Subsidiaries for
such year or (ii) the Net Worth of which (determined in a manner consistent
with the manner of determining consolidated Net Worth of the Company and its
Subsidiaries) as of the close of such immediately preceding fiscal year
exceeded 7% of the consolidated Net Worth of the Company and its Subsidiaries.
(Section 5.01)
 
  The Indenture provides that if an Event of Default with respect to Debt
Securities shall have occurred and be continuing, either the Trustee or the
Holders of at least 25% in aggregate principal amount of the Debt Securities
then outstanding may declare the entire principal and accrued interest of all
Debt Securities to be due and payable immediately. However, any time after a
declaration of acceleration with respect to the Debt Securities has been made,
but before a judgment or decree for the payment of money based on such
acceleration has been obtained by the Trustee, the Holders of a majority in
principal amount of the Outstanding Debt Securities, may, under certain
circumstances, rescind and annul such acceleration. The Holders of a majority
in principal amount of the Outstanding Debt Securities may waive any past
defaults under the Indenture with respect to the Debt Securities, except
defaults in payment of principal of or premium, if any (other than by a
declaration of acceleration), or interest on the Debt Securities or covenants
that may not be modified or amended without the consent of the Holders of all
Outstanding Debt Securities. (Sections 5.02 and 5.13)
 
  The Company will be required to furnish to the Trustee annually a statement
as to the performance by the Company of its covenants and agreements under the
Indenture. (Section 10.09)
 
  Subject to certain conditions set forth in the Indenture, the Holders of a
majority in principal amount of the then Outstanding Debt Securities shall have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee under the Indenture in respect of such
series. No
 
                                       8

 
Holder of any Debt Securities shall have any right to institute any
proceedings, judicial or otherwise, with respect to the Indenture or any remedy
thereunder unless, among other things, the Holder or Holders of Debt Securities
shall have offered to the Trustee reasonable indemnity against costs, expenses
and liabilities relating to such proceedings. (Sections 5.12 and 5.07)
 
MODIFICATION OF THE INDENTURE
 
  With respect to the Debt Securities, modification or amendment of the
Indenture may be made by the Company and the Trustee with the consent of the
Holders of a majority in aggregate principal amount of the Debt Securities,
except that no such modification or amendment may, without the consent of the
Holders of all then Outstanding Debt Securities (i) change the due date of the
principal of, or any installment of principal of or interest on, any Debt
Securities; (ii) reduce the principal amount of, or rate of interest on, or any
premium payable on redemption of any Debt Securities; (iii) reduce the
principal amount of any Debt Securities payable upon acceleration of the
maturity thereof; (iv) change the place or the currency of payment of principal
of, or any premium or interest on, any Debt Securities; (v) impair the right to
institute suit for the enforcement of any payment on or with respect to any
Debt Securities on or after the due date thereof (or, in the case of
redemption, on or after the redemption date thereof); (vi) reduce the
percentage in principal amount of Debt Securities then outstanding, the consent
of whose holders is required for modification or amendment of the Indenture or
for waiver of compliance with certain provisions of the Indenture or for waiver
of certain defaults; or (vii) modify certain provisions of the Indenture
regarding the amendment or modification of, or waiver with respect to, any
provision of the Indenture or the Debt Securities. (Section 9.02)
 
DEFEASANCE
 
  If provision is made pursuant to Section 3.01 of the Indenture for the
defeasance of a series of Debt Securities, and if such series is payable only
in United States dollars (unless otherwise specifically provided), the Company,
at its option, in respect of such series of Debt Securities (i) will be
discharged from any and all obligations in respect of such Debt Securities
(except for certain obligations to register the transfer or exchange of Debt
Securities, replace stolen, lost or mutilated Debt Securities, maintain paying
agencies and hold moneys for payment in trust and obligations with respect to
subordination) or (ii) will not be subject to provisions of the Indenture
described above under "Consolidation, Merger and Sale of Assets," "Limitation
on Indebtedness Secured by a Mortgage," and "Limitation on Sale and Lease-Back
Transactions" if the Company deposits with the Trustee, in trust, money or U.S.
Government Obligations which through the payment of interest thereon and
principal thereof in accordance with their terms will provide money in an
amount sufficient to pay all the principal of, and interest on, such Debt
Securities on the dates such payments are due in accordance with the terms of
such Debt Securities. To exercise any such option, the Company is required to
deliver to the Trustee (x) an opinion of a nationally recognized tax counsel to
the effect that the deposit and related defeasance would not cause the holders
of the Debt Securities to recognize income, gain or loss for federal income tax
purposes as a result of the Company's exercise of its option and (y) if the
Debt Securities are then listed on the New York Stock Exchange (the "NYSE"), an
opinion of counsel to the effect that the Debt Securities would not be delisted
from the NYSE as a result of the exercise of such option. (Sections 13.01 and
13.02)
 
THE TRUSTEE
 
  First Trust of Illinois, National Association is the Trustee under the
Indenture. The Trustee is a depository for funds of and performs other services
for and transacts other banking business with the Company in the normal course
of business. The Trustee also acts as trustee under (i) the indenture relating
to the Company's Medium-Term Notes, Series B, $122,300,000 aggregate principal
amount of which were outstanding as of March 31, 1996 and (ii) the Indenture
pursuant to which there were $253,000,000 aggregate principal amount of the
Company's Medium-Term Notes, Series C outstanding as of March 31, 1996.
 
                                       9

 
                            DESCRIPTION OF WARRANTS
 
  The following description of the terms of the Warrants sets forth certain
general terms and provisions of the Warrants to which any Prospectus Supplement
may relate. The particular terms of the Warrants offered by any Prospectus
Supplement and the extent, if any, to which such general provisions may apply
to the Warrants so offered will be described in the Prospectus Supplement
relating to such Warrants.
 
GENERAL
 
  Warrants may be offered together with any series of Debt Securities offered
by a Prospectus Supplement and if so offered will be attached to such Debt
Securities and will entitle the holder thereof to purchase additional Debt
Securities having the same terms and interest rate as the offered Debt
Securities. Each series of Warrants will be issued under a separate warrant
agreement (a "Warrant Agreement") to be entered into between the Company and a
bank or trust company, as warrant agent (the "Warrant Agent"), all as described
in the Prospectus Supplement relating to such series of Warrants. The Warrant
Agent will act solely as the agent of the Company under the applicable Warrant
Agreement and in connection with the certificates for the Warrants (the
"Warrant Certificates") of such series, and will not assume any obligation or
relationship of agency or trust for or with any holders of such Warrant
Certificates or beneficial owners of Warrants. A copy of the form of Warrant
Agreement, including the form of Warrant Certificates, is filed as an exhibit
to the Registration Statement. The following summary of certain provisions of
the forms of Warrant Agreement and Warrant Certificates does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
all the provisions of the Warrant Agreement and the Warrant Certificates.
 
  Reference is hereby made to the Prospectus Supplement relating to the
particular series of Warrants, if any, offered thereby for the terms of such
Warrants, including, where applicable: (i) the offering price; (ii) the
currency or currencies in which such Warrants are being offered; (iii) the
designation, aggregate principal amount, currency or currencies, denominations
and other terms of the series of Debt Securities purchasable upon exercise of
such Warrants; (iv) the designation and terms of the series of Debt Securities
with which such Warrants are being offered and the number of such Warrants
being offered with each such Debt Security; (v) the date on and after which
such Warrants and the related series of Debt Securities will be transferable
separately; (vi) the principal amount of the Debt Securities purchasable upon
exercise of each such Warrant and the price at which and currency or currencies
in which such principal amount of Debt Securities may be purchased upon such
exercise; (vii) the date on which the right to exercise such Warrants shall
commence (the "Exercise Date") and the date on which such right shall expire
(the "Expiration Date"); and (viii) any other terms of such Warrants not
inconsistent with the applicable Warrant Agreement.
 
  Warrants of any series will be exchangeable into Warrants of the same series
representing in the aggregate the number of Warrants surrendered for exchange.
Warrant Certificates may be presented for exchange or transfer at the corporate
trust office of the Warrant Agent for such series of Warrants (or any other
office indicated in the Prospectus Supplement relating to such series of
Warrants). Prior to the exercise of their Warrants, holders of Warrants will
not have any of the rights of holders of the series of Debt Securities
purchasable upon such exercise, including the right to receive payments of
principal of, premium, if any, or interest, if any, on the Debt Securities
purchasable upon such exercise, or to enforce any of the covenants in the
Indenture.
 
EXERCISE OF WARRANTS
 
  Each Warrant will entitle the holder thereof to purchase such principal
amount of the related series of Debt Securities at such exercise price as shall
in each case be set forth in, or calculable as set forth in, the Prospectus
Supplement relating to such Warrant. Warrants of a series may be exercised at
the corporate trust office of the Warrant Agent for such series (or any other
office indicated in the Prospectus Supplement relating to such series) at any
time on or after the Exercise Date and prior to 5:00 P.M., Chicago time (unless
otherwise indicated in the related Prospectus Supplement), on the Expiration
Date set forth in the Prospectus
 
                                       10

 
Supplement relating to such series of Warrants. After the close of business on
the Expiration Date relating to such series of Warrants, unexercised Warrants
of such series will be void.
 
  Warrants of a series may be exercised by delivery to the appropriate Warrant
Agent of payment, as provided in the Prospectus Supplement relating to such
series of Warrants, of the consideration required to purchase the principal
amount of the series of Debt Securities purchasable upon such exercise,
together with certain information as set forth on the reverse side of the
Warrant Certificate evidencing such Warrants. Such Warrants will be deemed to
have been exercised upon receipt of the exercise price, subject to the receipt
of the Warrant Certificate evidencing such Warrants within five business days.
Upon receipt of such payment and such Warrant Certificate, properly completed
and duly executed, at the corporate trust office of the appropriate Warrant
Agent (or any other office indicated in the Prospectus Supplement relating to
such series of Warrants), the Company will, as soon as practicable, issue and
deliver the principal amount of the series of Debt Securities purchasable upon
such exercise. If fewer than all of the Warrants represented by a Warrant
Certificate are exercised, a new Warrant Certificate will be issued and
delivered for the remaining amounts of Warrants.
 
                              PLAN OF DISTRIBUTION
 
  The Company may sell the Securities in any of three ways: (i) to or through
underwriters or dealers, (ii) through agents or (iii) directly to one or more
purchasers. With respect to each series of Securities being offered hereby, the
terms of the offering of the Securities of such series, including the name or
names of any underwriters or agents, the purchase price of such Securities and
the proceeds to the Company from such sale, any underwriting discounts, selling
commissions and other items constituting underwriters', dealers' or agents'
compensation, any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers or agents, and any
securities exchanges on which the Securities of such series may be listed, will
be set forth in, or may be calculated from the information set forth in, the
Prospectus Supplement. Only underwriters so named in the Prospectus Supplement
are deemed to be underwriters in connection with the Securities offered
thereby.
 
  If underwriters are used in the sale, the Securities will be acquired by the
underwriters for their own account and may be resold from time to time in one
or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. The
Securities may be offered to the public either through underwriting syndicates
represented by managing underwriters or by underwriters without a syndicate.
Unless otherwise set forth in the Prospectus Supplement, 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
offered by the Prospectus Supplement if any of such Securities 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.
 
  Securities may also be sold directly by the Company or through agents (who
may also act as principals) designated by the Company from time to time. Any
agent involved in the offer or sale of the Securities in respect of which this
Prospectus is delivered will be named, and any commissions payable by the
Company to such agent will be set forth in, or may be calculated from the
information set forth in, the Prospectus Supplement. Unless otherwise indicated
in the Prospectus Supplement, any such agent will be acting on a best efforts
basis for the period of its appointment. In the case of sales made directly by
the Company, no commission will be payable.
 
  If so indicated in the Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers by certain specified
institutions to purchase Securities from the Company at the public offering
price set forth in the Prospectus Supplement pursuant to delayed delivery
contracts providing for payment and delivery on a future date specified in the
Prospectus Supplement. Such contracts will be subject to the
 
                                       11

 
conditions set forth in the Prospectus Supplement, and the Prospectus
Supplement will set forth the commissions payable for solicitation of such
contracts.
 
  Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act of 1933, as
amended, or to contribution with respect to payments which the agents or
underwriters may be required to make in respect thereof. Agents and
underwriters may be customers of, engage in transactions with, or perform
services for the Company or its affiliates in the ordinary course of business.
 
  In the event that the Securities of any series are not listed on a national
securities exchange, certain broker-dealers may make a market in the Securities
of such series, but will not be obligated to do so and may discontinue any
market making at any time without notice. No assurance can be given that any
broker-dealer will make a market in the Securities or as to the liquidity of
the trading market for the Securities. The Prospectus Supplement with respect
to the Securities of any series will state, if known, whether or not any
broker-dealer intends to make a market in such Securities. If no such
determination has been made, the Prospectus Supplement will so state.
 
                                 LEGAL MATTERS
 
  Certain legal matters relating to the Securities will be passed upon for the
Company by Sidley & Austin, Chicago, Illinois, and for the underwriters and
agents, if any, by Mayer, Brown & Platt, Chicago, Illinois.
 
                                    EXPERTS
 
  The financial statements incorporated in this Prospectus by reference to the
Annual Report on Form 10-K of Tribune Company for the year ended December 31,
1995 have been so incorporated in reliance on the report of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
 
                                       12

 
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 NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS SUP-
PLEMENT (INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT) AND THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT (INCLUDING THE AC-
COMPANYING PRICING SUPPLEMENT) AND THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHO-
RIZED BY THE COMPANY OR THE AGENTS. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT (INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT) OR THE PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICA-
TION THAT THERE HAS NOT BEEN ANY CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE
DATE HEREOF. THIS PROSPECTUS SUPPLEMENT (INCLUDING THE ACCOMPANYING PRICING
SUPPLEMENT) AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER IS NOT QUALIFIED TO DO SO OR TO ANYONE TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
                               TABLE OF CONTENTS
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                                                                            PAGE
                                                                            ----
 
                             Prospectus Supplement
 
 
                                                                         
Use of Proceeds............................................................  S-2
Description of Notes.......................................................  S-2
Special Provisions and Risks Relating to Foreign Currency Notes............ S-18
United States Federal Income Tax Consequences.............................. S-21
Plan of Distribution of Notes.............................................. S-35
 
                                   Prospectus
 
Available Information......................................................    2
Incorporation of Certain Documents By Reference............................    2
The Company................................................................    3
Use of Proceeds............................................................    3
Ratios of Earnings to Fixed Charges........................................    3
Description of Debt Securities.............................................    3
Description of Warrants....................................................   10
Plan of Distribution.......................................................   11
Legal Matters..............................................................   12
Experts....................................................................   12

 
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                                  $500,000,000
 
                                TRIBUNE COMPANY
 
                          MEDIUM-TERM NOTES, SERIES D
 
                               ----------------
 
                             PROSPECTUS SUPPLEMENT
 
                               ----------------
 
                              MERRILL LYNCH & CO.
 
                              GOLDMAN, SACHS & CO.
 
                              SALOMON BROTHERS INC
 
                                  MAY 8, 1996
 
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