Filed Pursuant to Rule 424(b)(5) 
                                                              File No. 33-56415

           PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED OCTOBER 2, 1995
 
                                 $400,000,000
 
                       [LOGO OF SUPERVALU APPEARS HERE]
 
                          MEDIUM-TERM NOTES, SERIES B
               DUE FROM 9 MONTHS TO 30 YEARS FROM DATE OF ISSUE
 
                               ----------------
 
  SUPERVALU INC. (the "Company") may offer from time to time its Medium-Term
Notes, Series B, due from 9 months to 30 years from the date of issue, as
selected by the purchaser and agreed to by the Company, at an aggregate
initial public offering price not to exceed $400,000,000 or its equivalent in
another currency or composite currency.
  The Notes may be denominated in U.S. dollars or in such foreign currencies
or composite currencies as may be designated by the Company at the time of
offering. The Notes may also be issued with the principal amount thereof
payable at maturity or upon redemption or repayment, or the amount of interest
payable on an interest payment date, to be determined by reference to an index
(e.g., currencies, composite currencies, commodities or financial or non-
financial indices), as specified in the applicable Pricing Supplement to this
Prospectus Supplement. The specific currency, composite currency or any index,
interest rate (if any), issue price and maturity date of any Note will be set
forth in a Pricing Supplement to this Prospectus Supplement. Unless otherwise
specified in the applicable Pricing Supplement, Notes denominated in other
than U.S. dollars or ECUs will not be sold in, or to residents of, the country
issuing the Specified Currency. See "Description of Notes".
                                                       (continued on next page)
 
                               ----------------
 
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY 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, ANY PRICING
SUPPLEMENT HERETO OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
 
                               ----------------
 


                     PRICE TO         AGENTS'               PROCEEDS TO
                    PUBLIC (1)    COMMISSIONS (2)         COMPANY (2) (3)
                    ----------    ---------------         ---------------
                                            
Per Note.........      100%         .125%--.750%          99.875%--99.250%
Total (4)........  $400,000,000 $500,000--$3,000,000 $399,500,000--$397,000,000

- --------
(1) Notes will be issued at 100% of their principal amount, unless otherwise
    specified in the applicable Pricing Supplement.
(2) The Company will pay the Agents a commission (or grant a discount) of from
    .125% to .750%, depending on maturity, of the principal amount of any
    Notes sold through them as Agents. 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 equal to the commission applicable to an
    agency sale of a Note of identical maturity, and may be resold by such
    Agent to investors or other purchasers at varying prices related to
    prevailing market prices at the time of resale to be determined by such
    Agent or, if so agreed, at a fixed public offering price. The Company has
    agreed to indemnify the Agents against certain liabilities, including
    liabilities under the Securities Act of 1933.
(3) Before deducting estimated expenses of U.S. $500,000 payable by the
    Company, including $55,000 of estimated expenses of the Agents to be
    reimbursed by the Company.
(4) Or the equivalent thereof in foreign currencies or currency units.
 
                               ----------------
 
Offers to purchase Notes are being solicited, on a reasonable efforts basis,
from time to time by the Agents on behalf of the Company. Notes may be sold to
the Agents as principals at negotiated discounts. The Company reserves the
right to sell the Notes directly as principal on its own behalf, in which case
no commission will be paid. The Company also reserves the right to withdraw,
cancel or modify the offering contemplated hereby without notice. No
termination date for the offering of the Notes has been established. The
Company or the Agents may reject any order as a whole or in part. See
"Supplemental Plan of Distribution".
 
GOLDMAN, SACHS & CO.
                     BT SECURITIES CORPORATION
                                          CITICORP SECURITIES, INC.
                                                    J.P. MORGAN SECURITIES INC.
 
 
                               ----------------
 
          The date of this Prospectus Supplement is October 2, 1995.

 
(continued from previous page)
 
  Unless otherwise specified in the applicable Pricing Supplement, the Notes,
except Zero Coupon Notes, will bear interest at a fixed rate or rates or at a
floating rate determined by reference to one or more of the Commercial Paper
Rate, the Prime Rate, LIBOR, the Treasury Rate, the CD Rate, the Federal Funds
Rate, the CMT Rate or such other interest rate formula as set forth in the
applicable Pricing Supplement, as adjusted by the Spread or Spread Multiplier,
if any, applicable to such Notes. Interest rates and interest rate formulas
are subject to change by the Company, but no such change will affect any Notes
already issued or as to which an offer to purchase has been accepted by the
Company. Unless otherwise specified in the applicable Pricing Supplement,
interest on the Fixed Rate Notes will be payable on each February 1 and August
1 and at maturity or upon any earlier redemption or repayment dates. Interest
on the Floating Rate Notes will be payable on the dates specified therein and
in the applicable Pricing Supplement. Zero Coupon Notes will not bear
interest. The Notes may be offered with provisions for renewal, extension or
the reset of interest rates, as indicated therein and in the applicable
Pricing Supplement. The Notes may be sold with original issuance discount and
may provide for amortization as indicated therein and in the applicable
Pricing Supplement. See "Description of Notes".
 
  Unless a Redemption Commencement Date or a Repayment Date is specified in
the applicable Pricing Supplement, the Notes will not be redeemable or
repayable prior to their Stated Maturity. If a Redemption Commencement Date or
a Repayment Date is so specified, the Notes will be redeemable at the option
of the Company, or repayable at the option of the Holder, or both (as
specified therein) at any time after such date (or for a limited period) as
described herein.
 
  Unless otherwise specified in the applicable Pricing Supplement, the Notes
will be issued in either global or definitive form in denominations of
$100,000 and integral multiples of $1,000 in excess thereof, or the
approximate equivalent thereof in the Specified Currency as specified in the
applicable Pricing Supplement. A global Note representing Book-Entry Notes
will be registered in the name of The Depository Trust Company or its nominee,
which will act as Depositary (the "Depositary"). 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 participants' interests) and its
participants. Except as described herein under "Description of Notes--Book-
Entry System," owners of beneficial interests in a global Note will not be
considered the Holders thereof and will not be entitled to receive physical
delivery of Notes in definitive form, and no global Note will be exchangeable
except for another global Note of like denomination and terms to be registered
in the name of the Depositary or its nominee. See "Description of Notes".

 
  IN CONNECTION WITH THE DISTRIBUTION OF THE NOTES, THE AGENTS MAY OVER-ALLOT
OR EFFECT TRANSACTIONS IN THE NOTES WITH A VIEW TO STABILIZING OR MAINTAINING
THE MARKET PRICE OF THE NOTES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN ANY OVER-THE-
COUNTER MARKET OR OTHERWISE AND, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
 
                             DESCRIPTION OF NOTES
 
GENERAL
 
  The following description of the particular terms of the Company's Medium-
Term Notes, Series B, due from 9 months to 30 years from the date of issue
(the "Notes") offered hereby supplements, and to the extent inconsistent
therewith replaces, the description of the general terms and provisions of the
Debt Securities set forth in the accompanying Prospectus, to which description
reference is hereby made. Unless different terms or additional terms are
specified in the applicable pricing supplement to this Prospectus Supplement
(the "Pricing Supplement"), the Notes will have the terms described below.
References to interest payments and interest-related information do not apply
to Zero Coupon Notes (as defined below).
 
  The Notes will be issued pursuant to the Indenture dated as of July 1, 1987,
as supplemented by the First Supplemental Indenture dated as of August 1,
1990, the Second Supplemental Indenture dated as of October 1, 1992 and the
Third Supplemental Indenture dated as of September 1, 1995 (as so
supplemented, the "Indenture") between the Company and Bankers Trust Company,
as Trustee (the "Trustee"). The Notes will be unsecured obligations of the
Company and will rank pari passu with all other unsecured and unsubordinated
debt of the Company. The Notes constitute a separate series for purposes of
the Indenture. The Indenture does not limit the aggregate principal amount of
Debt Securities that may be issued thereunder. The following summary of
certain provisions of the Indenture does not purport to be complete and is
subject to and is qualified in its entirety by reference to, all of the
provisions of the Indenture, including the definitions therein of certain
terms. The Notes constitute a single series for purposes of the Indenture and
are limited in amount as set forth on the cover page hereof, less an amount
equal to the aggregate proceeds to the Company from the sale of any other Debt
Securities (as defined in the Prospectus) issued from time to time. The
foregoing limit, however, may be increased by the Company if in the future it
determines that it may wish to sell additional Notes. For a description of the
rights attaching to different series of Debt Securities under the Indenture,
see "Description of Debt Securities" in the Prospectus.
 
  Unless previously redeemed or repaid, a Note will mature on the date
("Stated Maturity") from 9 months to 30 years from its date of issue that is
specified on the face thereof and in the applicable Pricing Supplement.
 
  Each Note will be denominated in a currency or composite currency
("Specified Currency") as specified on the face thereof and in the applicable
Pricing Supplement, which may include U.S. dollars, Australian dollars, New
Zealand dollars, Canadian dollars, Danish kroner, Italian lire, European
Currency Units ("ECUs") or any other currency set forth in the applicable
Pricing Supplement. Purchasers of the Notes are required to pay for them by
delivery of the requisite amount of the Specified Currency to an Agent, unless
other arrangements have been made. Unless otherwise specified in the
applicable Pricing Supplement, payments on the Notes will be made in the
applicable Specified Currency; provided that, at the election of the Holder
thereof and in certain circumstances at the option of the Company, payments on
Notes denominated in other than U.S. dollars may be made in U.S. dollars. See
"Payment of Principal and Interest".
 
  Each Note will be represented by either a global security (a "Global
Security") registered in the name of The Depository Trust Company or its
nominee, which will act as depositary (the "Depositary") and deposited with
the Trustee as custodian for the Depositary (each such Note represented by a
Global Security being herein referred to as a "Book-Entry Note") or a
certificate issued in definitive registered form, without coupons (a
"Certificated Note"), as set forth in the applicable Pricing
 
                                      S-2

 
Supplement. Except as set forth under "Book-Entry System" below, Book-Entry
Notes will not be issuable in certificated form. So long as the Depositary or
its nominee, as the case may be, is the registered owner of any Global
Security, the Depositary or its nominee, as the case may be, will be
considered the sole owner or Holder of the Book-Entry Note or Notes
represented by such Global Security for all purposes under the Indenture and
the Book-Entry Notes. It is currently contemplated that only Notes that have a
Specified Currency of U.S. dollars will be issued as Book-Entry Notes. See
"Book-Entry System" below.
 
  Unless otherwise specified in the applicable Pricing Supplement, the
authorized denominations of any Note denominated in U.S. dollars will be
$100,000 and integral multiples of $1,000 in excess thereof.The authorized
denominations of any Note denominated in other than U.S. dollars will be the
amount of the Specified Currency for such Note equivalent, at the noon buying
rate for cable transfers in The City of New York for such Specified Currency
(the "Exchange Rate") on the first Business Day next preceding the date on
which the Company accepts the offer to purchase such Note, to U.S. $100,000
(rounded down to an integral multiple of 1,000 units of such Specified
Currency) and any greater amount that is an integral multiple of 1,000 units
of such Specified Currency.
 
  Notes will be sold in individual issues of Notes having such interest rate
or interest rate formula, if any, Stated Maturity and date of original
issuance as shall be selected by the initial purchasers and agreed to by the
Company. Unless otherwise indicated in the applicable Pricing Supplement, each
Note, except any Zero Coupon Note (as defined below), will bear interest at
either (i) a fixed rate (a "Fixed Rate Note"), which may be zero in the case
of Notes issued at a discount from the principal amount payable at maturity
thereof (a "Zero Coupon Note") or (ii) a floating rate (a "Floating Rate
Note") determined by reference to one or more of the interest rate formulas
which may be adjusted by adding or subtracting the Spread or multiplying by
the Spread Multiplier (each term as defined in "Floating Rate Notes" below).
 
  Notes may be issued from time to time as Original Issue Discount Notes.
"Original Issue Discount Notes" are Notes, including any Zero Coupon Note,
which are issued at a price lower than the principal amount thereof and which
provide that upon redemption, repayment or acceleration of the maturity
thereof an amount less than the principal thereof shall become due and
payable. In the event of redemption, repayment or acceleration of the maturity
of an Original Issue Discount Note, the amount payable to the Holder of such
Note upon such redemption, repayment or acceleration will be determined in
accordance with the terms of the Note, but will be an amount less than the
amount payable at the Stated Maturity of such Note. In addition, a Note issued
at a discount may, for United States federal income tax purposes, be
considered an original issue discount note, regardless of the amount payable
upon redemption, repayment or acceleration of maturity of such Note. See
"United States Taxation--Original Issue Discount" below.
 
  Notes may be issued from time to time as Indexed Notes. "Indexed Notes" are
Notes issued with the principal amount payable at maturity or upon redemption
or repayment, or the amount of interest payable on an interest payment date,
to be determined by reference to a currency exchange rate, composite currency,
commodity price or other financial or non-financial index as set forth in the
applicable Pricing Supplement. Holders of Indexed Notes may receive a
principal amount at maturity that is greater than or less than the face amount
of such Notes depending upon the value at maturity of the applicable index.
Information as to the methods for determining the principal amount payable at
maturity or the amount of interest payable on an interest payment date, as the
case may be, any currency or commodity market to which principal or interest
is indexed, foreign exchange risks and certain additional tax considerations
with respect to Indexed Notes will be set forth in the applicable Pricing
Supplement.
 
  Notes may be issued from time to time as Amortizing Notes. "Amortizing
Notes" are Notes for which payments of principal and interest are made in
installments over the life of the Notes. Interest on each Amortizing Note will
be computed on the basis of a 360-day year of twelve 30-day months.
 
                                      S-3

 
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. A table setting forth repayment information in respect of each
Amortizing Note will be provided in the applicable Pricing Supplement.
 
  Unless otherwise specified in the applicable Pricing Supplement, the Notes
will not be subject to any sinking fund and, unless an initial date on which a
Note may be redeemed by the Company (a "Redemption Commencement Date") or a
date on which a Note may be repayable at the option of a holder thereof (a
"Repayment Date") is specified in the applicable Pricing Supplement, will not
be redeemable or repayable prior to their Stated Maturity. If a Redemption
Commencement Date or Repayment Date is so specified with respect to any Note,
the applicable Pricing Supplement will also specify one or more redemption or
repayment prices (expressed as a percentage of the principal amount of such
Note) ("Redemption Prices" or "Repayment Prices," respectively) and the
redemption or repayment period or periods ("Redemption Periods" or "Repayment
Periods," respectively) during which such Redemption Prices or Repayment
Prices shall apply. Unless otherwise specified in the Pricing Supplement, any
such Note shall be redeemable at the option of the Company, as a whole or from
time to time in part, or repayable at the option of the Holder thereof (as
specified in such Pricing Supplement) at any time on or after such specified
Redemption Commencement Date or Repayment Date, as the case may be, for a
limited period (as specified in such Pricing Supplement), at the specified
Redemption Price or Repayment Price applicable to the Redemption Period or
Repayment Period during which such Note may be redeemed or repaid, together
with interest accrued to the date on which such Notes are redeemed or repaid.
With respect to the redemption of Global Securities, the Depositary advises
that if less than all of the Notes with like tenor and terms are to be
redeemed, the particular interests (in integral multiples of $1,000) in the
Book-Entry Notes representing the Notes to be redeemed shall be selected by
the Depositary's impartial lottery procedures.
 
  In the event that the option of the Holder to elect repayment as described
above is deemed to be a "tender offer" within the meaning of Rule 14e-1 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
Company will comply with Rule 14e-1 as then in effect to the extent
applicable.
 
  The Pricing Supplement relating to each Note will describe the following
terms: (i) the Specified Currency with respect to such Note (and, if such
Specified Currency is other than U.S. dollars, certain other terms relating to
such Note, including the authorized denominations); (ii) the price (expressed
as a percentage of the aggregate principal amount thereof) at which such Note
will be issued; (iii) the date on which such Note will be issued; (iv) the
date on which such Note will mature; (v) whether such Note is a Fixed Rate
Note or a Floating Rate Note; (vi) if such Note is a Fixed Rate Note, the rate
per annum at which such Note will bear interest, if any, the Interest Payment
Dates, if different from those set forth below under "Fixed Rate Notes"; (vii)
if such Note is a Floating Rate Note, the interest rate basis (the "Interest
Rate Basis") for each such Floating Rate Note which will be (a) the Commercial
Paper Rate, in which case such Note will be a Commercial Paper Rate Note, (b)
the Prime Rate, in which case such Note will be a Prime Rate Note, (c) the
London Inter-Bank Offered Rate ("LIBOR"), in which case such Note will be a
LIBOR Note, (d) the Treasury Rate, in which case such Note will be a Treasury
Rate Note, (e) the CD Rate, in which case such Note will be a CD Rate Note,
(f) the Federal Funds Rate, in which case such Note will be a Federal Funds
Rate Note, (g) the CMT Rate, in which case such Note will be a CMT Rate Note,
or (h) such other interest rate formula as is set forth in such Pricing
Supplement, and, if applicable, the Calculation Agent, the Index Maturity, the
Spread or Spread Multiplier, the Maximum Rate, the Minimum Rate, the Initial
Interest Rate, the Interest Payment Dates, the Regular Record Dates, the
Calculation Date, the Interest Determination Date and the Interest Reset Date
with respect to such Floating Rate Note; (viii) whether such Note is an
Original Issue Discount Note, and if so, the yield to maturity; (ix) whether
such Note is an Indexed Note, and if so, the principal amount thereof payable
at maturity, or the amount of interest payable on an interest payment date, as
determined by reference to the applicable index, in addition to certain other
information relating to the Indexed Note; (x) whether such Note is an
Amortizing Note, and if so, repayment information with respect to installments
of principal and interest; (xi) whether any Note is a Renewable Note (as
defined below), and if so, the Renewal Dates (as defined below); (xii) whether
the Company has the option to reset the interest rate, in the case of a Fixed
Rate Note, or to reset the
 
                                      S-4

 
Spread and/or Spread Multiplier, in the case of a Floating Rate Note, and if
so, the date or dates on which such interest rate or such Spread and/or Spread
Multiplier, as the case may be, may be reset and the basis or formula, if any,
for such resetting; (xiii) whether the Company will have the option to extend
the Maturity Date of any Note for one or more Extension Periods (as defined
below) up to but not beyond the Final Maturity Date (as defined below), and if
so, the basis or formula, if any, for setting the interest rate, in the case
of a Fixed Rate Note, or the Spread and/or Spread Multiplier, in the case of a
Floating Rate Note, applicable to any such Extension Period; (xiv) whether
such Note may be redeemed at the option of the Company, or repaid at the
option of the holder, prior to the Stated Maturity Date and if so, the
provisions relating to such redemption or repayment; (xv) whether such Note
will be issued initially as a Book-Entry Note or a Certificated Note; and
(xvi) any other terms of such Note not inconsistent with the provisions of the
Indenture.
 
  Certificated Notes may be presented for registration of transfer or exchange
at the Corporate Trust Office of the Trustee in The City of New York.
 
  Unless otherwise indicated in a Pricing Supplement, neither the covenants of
the Company under the Indenture nor those contained in the Notes will
necessarily afford Holders of the Notes protection in the event of a highly
leveraged transaction involving the Company, such as a leveraged buyout.
 
FIXED RATE NOTES
 
  Each Fixed Rate Note (except any Zero Coupon Note) will bear interest from
its date of issue or from the most recent Payment Date to which interest on
such Note has been paid or duly provided for at the fixed rate per annum
stated on the face thereof and in the applicable Pricing Supplement until the
principal thereof is paid or made available for payment. Unless otherwise
specified in the applicable Pricing Supplement, interest on such Fixed Rate
Note will be payable semi-annually each February 1 and August 1 (each an
"Interest Payment Date") and at maturity or upon earlier redemption or
repayment. Each payment of interest in respect of an Interest Payment Date
will include interest accrued to but excluding such Interest Payment Date.
Interest on Fixed Rate Notes will be computed on the basis of a 360-day year
of twelve 30-day months. Interest will be payable on each Interest Payment
Date and at maturity as specified below under "Payment of Principal and
Interest".
 
FLOATING RATE NOTES
 
  Each Floating Rate Note will bear interest from its date of issue, at the
rate per annum determined 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 on each Interest
Payment Date and at maturity as specified below under "Payment of Principal
and Interest".
 
  The interest rate for each Floating Rate Note will be determined by
reference to an interest rate formula which may be adjusted by adding or
subtracting the Spread and/or multiplying by the Spread Multiplier (both terms
as defined below). A Floating Rate Note may also have either or both of the
following: (a) a maximum numerical interest rate limitation, or ceiling, on
the rate of interest which may accrue during any interest period (a "Maximum
Rate"); and (b) a minimum numerical interest rate limitation, or floor, on the
rate of interest which may accrue during any interest period (a "Minimum
Rate"). The "Spread" is the number of basis points specified in the applicable
Pricing Supplement as being applicable to the interest rate for such Note, and
the "Spread Multiplier" is the percentage specified in the applicable Pricing
Supplement as being applicable to the interest rate for such Note. "Index
Maturity" means, with respect to a Floating Rate Note, the period to maturity
of the instrument or obligation on which the interest rate formula is based,
as specified in the applicable Pricing Supplement. Unless otherwise provided
in the applicable Pricing Supplement, Bankers Trust Company will be the
calculation agent (the "Calculation Agent") with respect to the Floating Rate
Notes.
 
  The rate of interest on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semi-annually or annually (each an "Interest Reset Date"),
as specified in the applicable Pricing Supplement. The Interest Reset Date
will be, in the case of Floating Rate Notes which reset daily, each Business
Day; in the case of Floating Rate Notes (other than Treasury Rate Notes) which
reset
 
                                      S-5

 
weekly, the Wednesday of each week; in the case of Treasury Rate Notes which
reset weekly, the Tuesday of each week; in the case of Floating Rate Notes
which reset monthly, the third Wednesday of each month; in the case of
Floating Rate Notes which reset quarterly, the third Wednesday of March, June,
September and December; in the case of Floating Rate Notes which reset semi-
annually, the third Wednesday of two months of each year as specified in the
applicable Pricing Supplement; and in the case of Floating Rate Notes which
reset annually, the third Wednesday of one month of each year as specified in
the applicable Pricing Supplement; provided, however, that the interest rate
in effect from the date of issue to the first Interest Reset Date with respect
to a Floating Rate Note will be the Initial Interest Rate (as set forth in the
applicable Pricing Supplement). If any Interest Reset Date for any Floating
Rate Note would otherwise be a day that is not a Market Day (as defined below)
with respect to such Floating Rate Note, the Interest Reset Date for such
Floating Rate Note shall be postponed to the next day that is a Market Day
with respect to such Floating Rate Note, except that in the case of a LIBOR
Note, if such Market Day is in the next succeeding calendar month, such
Interest Reset Date shall be the immediately preceding Market Day. As used
herein, the term "Market Day" means (a) with respect to any Note (other than
any LIBOR Note), any Business Day, and (b) with respect to any LIBOR Note, any
such Business Day which is also a London Business Day. The term "London
Business Day" means any day on which dealing in deposits in U.S. dollars are
transacted in the London interbank market. The term "Business Day" means each
Monday, Tuesday, Wednesday, Thursday and Friday which is (i) not a day on
which banking institutions in The City of New York generally are authorized or
obligated by law or executive order to close, and (ii) if the Note is
denominated in a Specified Currency (as defined below) other than U.S.
dollars, not a day on which banking institutions are authorized or obligated
by law or executive order to close in the financial center of the country
issuing the Specified Currency (which in the case of ECUs shall be Luxembourg,
in which case "Business Day" shall not include any day that is a non-ECU
clearing day as determined by the ECU Banking Association in Paris).
 
  The Interest Determination Date pertaining to an Interest Reset Date for a
Commercial Paper Rate Note (the "Commercial Paper Interest Determination
Date"), for a Prime Rate Note (the "Prime Rate Interest Determination Date"),
for a CD Rate Note (the "CD Rate Interest Determination Date"), for a Federal
Funds Rate Note (the "Federal Funds Rate Interest Determination Date") and for
a CMT Rate Note (the "CMT Rate Interest Determination Date") will be the
second Market Day preceding such Interest Reset Date. The Interest
Determination Date pertaining to an Interest Reset Date for a LIBOR Note (the
"LIBOR Interest Determination Date") will be the second London Business Day
preceding such Interest Reset Date. The Interest Determination Date pertaining
to an Interest Reset Date for a Treasury Rate Note (the "Treasury Interest
Determination Date") will be the day of the week in which such Interest Reset
Date falls on which Treasury bills would normally be auctioned. Treasury bills
are usually sold at auction on the Monday of each week, unless that day is a
legal holiday, in which case the auction is usually held on the following
Tuesday, except that such auction may be held on the preceding Friday. If, as
the result of a legal holiday, an auction is so held on the preceding Friday,
such Friday will be the Treasury Interest Determination Date pertaining to the
Interest Reset Date occurring in the next succeeding week. If an auction date
shall fall on any Interest Reset Date for a Treasury Rate Note, then such
Interest Reset Date shall instead be the first Market Day immediately
following such auction date.
 
  All percentages resulting from any calculations referred to in this
Prospectus Supplement will be rounded upwards, if necessary, to the next
higher one hundred-thousandth of a percentage point, with five one-millionths
of a percentage point rounded upward (e.g., 9.876545% (or .09876545) being
rounded to 9.87655% (or .0987655)), and all U.S. dollar amounts used in or
resulting from such calculations will be rounded to the nearest cent (with
one-half cent or more being rounded upwards).
 
  In addition to any maximum interest rate which may be applicable to any
Floating Rate Note pursuant to the above provisions, the interest rate on the
Floating Rate Notes will in no event be higher than the maximum rate permitted
by New York law, as the same may be modified by United States law of general
application. Under present New York law the maximum rate of interest is 25%
per annum on a simple interest basis, with certain exceptions. The limit may
not apply to Floating Rate Notes in which U.S. $2,500,000 or more has been
invested.
 
                                      S-6

 
  Upon the request of the Holder of any Floating Rate Note, the Calculation
Agent will provide the interest rate then in effect, and, if determined, the
interest rate which will become effective on the next Interest Reset Date with
respect to such Floating Rate Note. The Calculation Agent's determination of
any interest rate will be final and binding in the absence of manifest error.
 
  COMMERCIAL PAPER RATE NOTES. Commercial Paper Rate Notes will bear interest
at the interest rates (calculated with reference to the Commercial Paper Rate
and the Spread and/or Spread Multiplier, if any) and will be payable on the
dates specified on the face of the Commercial Paper Rate Note and in the
applicable Pricing Supplement. Unless otherwise indicated in the applicable
Pricing Supplement, the "Calculation Date" pertaining to a Commercial Paper
Interest Determination Date will be the tenth day after such Commercial Paper
Interest Determination Date or, if any such day is not a Market Day, the next
succeeding Market Day.
 
  Unless otherwise indicated in the applicable Pricing Supplement, "Commercial
Paper Rate" means, with respect to any Interest Reset Date, the Money Market
Yield (calculated as described below) of the per annum rate (quoted on a bank
discount basis) for the relevant Commercial Paper Interest Determination Date
for commercial paper having the specified Index Maturity as published by the
Board of Governors of the Federal Reserve System in "Statistical Release
H.15(519), Selected Interest Rates" or any successor publication of the Board
of Governors of the Federal Reserve System ("H.15(519)") under the heading
"Commercial Paper". In the event that such rate is not published prior to 9:00
a.m. New York City time, on the relevant Calculation Date, then the Commercial
Paper Rate with respect to such Interest Reset Date shall be the Money Market
Yield of such rate on such Commercial Paper Interest Determination Date for
commercial paper having the specified Index Maturity as published by the
Federal Reserve Bank of New York in its daily statistical release, "Composite
3:30 p.m. Quotations for United States Government Securities" or any successor
publication published by the Federal Reserve Bank of New York ("Composite
Quotations") under the heading "Commercial Paper". If by 3:00 p.m., New York
City time, on such Calculation Date such rate is not yet published in either
H.15(519) or Composite Quotations, the Commercial Paper Rate with respect to
such Interest Reset Date shall be calculated by the Calculation Agent and
shall be the Money Market Yield of the arithmetic mean of the offered per
annum rates (quoted on a bank discount basis), as of 11:00 a.m., New York City
time, on such Commercial Paper Interest Determination Date, of three leading
dealers of commercial paper in The City of New York selected by the
Calculation Agent for commercial paper of the specified Index Maturity placed
for an industrial issuer whose bond rating is "AA," or the equivalent, from a
nationally recognized statistical rating agency; provided, however, that if
fewer than three dealers selected as aforesaid by the Calculation Agent are
quoting as mentioned in this sentence, the Commercial Paper Rate with respect
to such Interest Reset Date will be the Commercial Paper Rate in effect on
such Commercial Paper Interest Determination Date.
 
  "Money Market Yield" shall be a yield (expressed as a percentage) calculated
in accordance with the following formula:
 
                                                  360 x D
                                               ------------
                    Money Market Yield = 100 x 360 - (D x M)
 
where "D" refers to the 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 period from the Interest Reset Date to but excluding the day
that numerically corresponds to such Interest Reset Date (or, if there is not
any such numerically corresponding day, the last day) in the calendar month
that is the number of months corresponding to the specified Index Maturity
after the month in which such Interest Reset Date falls.
 
  PRIME RATE NOTES. Prime Rate Notes will bear interest at the interest rates
(calculated with reference to the Prime Rate and the Spread and/or Spread
Multiplier, if any), and will be payable on the dates specified on the face of
the Prime Rate Note and in the applicable Pricing Supplement. Unless otherwise
indicated in the applicable Pricing Supplement, the "Calculation Date"
pertaining to a Prime Rate Interest Determination Date will be the tenth day
after such Prime Rate Interest Determination Date or, if any such day is not a
Market Day, the next succeeding Market Day.
 
                                      S-7

 
  Unless otherwise indicated in the applicable Pricing Supplement, "Prime
Rate" means, with respect to any Interest Reset Date, the rate set forth for
the relevant Prime Rate Interest Determination Date in H.15(519) under the
heading "Bank Prime Loan". In the event that such rate is not published prior
to 9:00 a.m., New York City time, on the relevant Calculation Date, then the
Prime Rate with respect to such Interest Reset Date will be the arithmetic
mean of the rates of interest publicly announced by each bank that appears on
the display designated as page "NYMF" on the Reuters Monitor Money Rates
Service (or such other page as may replace the NYMF page on that service for
the purpose of displaying prime rates or base lending rates of major United
States banks) ("Reuters Screen NYMF Page") as such bank's prime rate or base
lending rate as in effect for such Prime Rate Interest Determination Date. If
fewer than four such rates appear on the Reuters Screen NYMF Page on such
Prime Rate Interest Determination Date, the Prime Rate with respect to such
Interest Reset Date will be the arithmetic mean of the prime rates or base
lending 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 three major banks in The City of New York
selected by the Calculation Agent; provided, however, that if fewer than three
banks selected as aforesaid by the Calculation Agent are quoting as mentioned
in this sentence, the Prime Rate with respect to such Interest Reset Date will
be the Prime Rate in effect on such Prime Rate Interest Determination Date.
 
  LIBOR NOTES. LIBOR Notes will bear interest at the interest rates
(calculated with reference to LIBOR and the Spread and/or Spread Multiplier,
if any), and will be payable on the dates specified on the face of the LIBOR
Note and in the applicable Pricing Supplement.
 
  Unless otherwise indicated in the applicable Pricing Supplement, LIBOR, with
respect to any Interest Reset Date, will be determined by the Calculation
Agent in accordance with the following provisions:
 
    (i) With respect to a LIBOR Interest Determination Date, LIBOR will be
  determined on the basis of the offered rates for deposits in the Index
  Currency (as defined below) having the Index Maturity designated in the
  applicable Pricing Supplement, commencing on the second Business Day
  immediately following that LIBOR Interest Determination Date, that appear
  as of 11:00 a.m., London time, on that LIBOR Interest Determination Date on
  the display screen designated "Page 3750" by Telerate Data Service, or such
  other page as may replace such page on that service or such other service
  or services as may be nominated by the British Bankers' Association for the
  purpose of displaying London interbank offered rates for deposits in the
  relevant Index Currency ("Telerate Page 3750"). If no such rate appears on
  Telerate Page 3750, then LIBOR in respect of that LIBOR Interest
  Determination Date will be the arithmetic mean of the offered rates (unless
  the display referred to below by its terms provides only for a single rate,
  in which case such single rate shall be used) for deposits in the London
  interbank market in the Index Currency having the Index Maturity designated
  in the applicable Pricing Supplement and commencing on the second Business
  Day immediately following such LIBOR Interest Determination Date that
  appear on the display on the Reuters Monitor Money Rates Service for the
  purpose of displaying the London interbank offered rates of major banks for
  the applicable Index Currency as of 11:00 a.m., London time, on such LIBOR
  Interest Determination Date, if at least two such offered rates appear
  (unless, as aforesaid, only a single rate is required). If fewer than two
  such rates appear (or, if such display by its terms provides for only a
  single rate, in which case if no such rate appears), then LIBOR in respect
  of such LIBOR Interest Determination Date will be determined as if the
  parties had specified the rate described in clause (ii) below.
 
    (ii) If LIBOR with respect to a LIBOR Interest Determination Date is to
  be determined pursuant to this clause (ii), the Calculation Agent will
  request the principal London offices of each of three 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
 
                                      S-8

 
  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 Date will be the arithmetic mean of the rates quoted
  at approximately 11:00 a.m., or such other time specified in the applicable
  Pricing Supplement, in the applicable Principal Financial Center (as
  defined below), 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 United States dollars.
 
  "Principal Financial Center" will generally be the capital city of the
country of the specified Index Currency, except that with respect to United
States dollars, Deutsche marks, Italian lira, Swiss francs, Dutch guilders and
ECUs, the Principal Financial Center shall be The City of New York, Frankfurt,
Milan, Zurich, Amsterdam and Luxembourg, respectively.
 
  TREASURY RATE NOTES. Treasury Rate Notes will bear interest at the interest
rates (calculated with reference to the Treasury Rate and the Spread and/or
Spread Multiplier, if any) and will be payable on the dates specified on the
face of the Treasury Rate Note and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Calculation Date" with respect to a Treasury Interest Determination Date will
be the tenth day after such Treasury Interest Determination Date or, if any
such day is not a Market Day, the next succeeding Market Day.
 
  Unless otherwise indicated in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Interest Reset Date, the rate for the auction
on the relevant Treasury Interest Determination Date of direct obligations of
the United States ("Treasury bills") having the specified Index Maturity as
published in H.15(519) under the heading "United States Government
Securities--Treasury Bills--auction average (investment)" or, if not so
published by 9:00 a.m., New York City time, on the relevant 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) for such
auction as otherwise announced by the United States Department of the
Treasury. In the event that the results of such auction of Treasury bills
having the specified Index Maturity are not published or reported as provided
above by 3:00 p.m., New York City time, on such Calculation Date, or if no
such auction is held during such week, then the Treasury Rate shall be the
rate set forth in H.15(519) for the relevant Treasury Rate Interest
Determination Date for the specified Index Maturity under the heading "United
States Government Securities--Treasury Bills--Secondary Market". In the event
such rate is not so published by 3:00 p.m., New York City time, on the
relevant Calculation Date, the Treasury Rate with respect to such Interest
Reset Date shall be calculated by the Calculation Agent and shall 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 Interest Determination Date, of three primary United
States government securities dealers in The City of New York selected by the
Calculation Agent for the issue of Treasury bills with a remaining maturity
closest to the specified Index Maturity; provided, however, that if fewer than
three dealers selected as aforesaid by the Calculation Agent are quoting as
mentioned in this sentence, the Treasury Rate with respect to such Interest
Reset Date will be the Treasury Rate in effect on such Treasury Interest
Determination Date.
 
  CD RATE NOTES. CD Rate Notes will bear interest at the interest rates
(calculated with reference to the CD Rate and the Spread and/or Spread
Multiplier, if any), and will be payable on the dates specified on the face of
the CD Rate Note and in the applicable Pricing Supplement. Unless otherwise
indicated in the applicable Pricing Supplement, the "Calculation Date"
pertaining to a CD Rate Interest
 
                                      S-9

 
Determination Date will be the tenth day after such CD Rate Interest
Determination Date or, if such day is not a Market Day, the next succeeding
Market Day.
 
  Unless otherwise indicated in the applicable Pricing Supplement, "CD Rate"
means, with respect to any Interest Reset Date, the rate for the relevant CD
Rate Interest Determination Date for negotiable certificates of deposit having
the specified Index Maturity as published in H.15(519) under the heading "CDs
(Secondary Market)". In the event that such rate is not published prior to
9:00 a.m., New York City time, on the relevant Calculation Date, then the CD
Rate with respect to such Interest Reset Date shall be the rate on such CD
Rate Interest Determination Date for negotiable certificates of deposit having
the specified Index Maturity as published in Composite Quotations under the
heading "Certificates of Deposit". If by 3:00 p.m., New York City time, on
such Calculation Date such rate is not published in either H.15(519) or
Composite Quotations, the CD Rate with respect to such Interest Reset Date
shall be calculated by the Calculation Agent and shall 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
of negotiable U.S. 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 with a remaining maturity closest to
the specified Index Maturity in a denomination of U.S. $5,000,000; provided,
however, that if fewer than three dealers selected as aforesaid by the
Calculation Agent are quoting as mentioned in this sentence, the CD Rate with
respect to such Interest Reset Date will be the CD Rate in effect on such CD
Rate Interest Determination Date.
 
  FEDERAL FUNDS RATE NOTES. Federal Funds Rate Notes will bear interest at the
interest rates (calculated with reference to the Federal Funds Rate and the
Spread and/or Spread Multiplier, if any), and will be payable on the dates
specified on the face of the Federal Funds Rate Note and in the applicable
Pricing Supplement. Unless otherwise indicated in the applicable Pricing
Supplement, the "Calculation Date" pertaining to a Federal Funds Interest
Determination Date will be the tenth day after such Federal Funds Interest
Determination Date or, if such day is not a Market Day, the next succeeding
Market Day.
 
  Unless otherwise indicated in the applicable Pricing Supplement, "Federal
Funds Rate" means, with respect to any Interest Reset Date, the rate on the
relevant Federal Funds Interest Determination Date for Federal Funds as
published in H.15(519) under the heading "Federal Funds (Effective)". In the
event that such rate is not published prior to 9:00 a.m., New York City time,
on the relevant Calculation Date, then the Federal Funds Rate with respect to
such Interest Reset Date will be the rate on such Federal Funds Interest
Determination Date for Federal Funds as published in Composite Quotations
under the heading "Federal Funds/Effective Rate". If by 3:00 p.m., New York
City time, on such Calculation Date such rate is not published in either
H.15(519) or Composite Quotations, the Federal Funds Rate with respect to such
Interest Reset Date shall be calculated by the Calculation Agent and shall be
the arithmetic mean of the rates, as of 9:00 a.m., New York City time, on such
Federal Funds Interest Determination Date, for the last transaction in
overnight Federal Funds arranged by three leading brokers of Federal Funds
transactions in The City of New York selected by the Calculation Agent;
provided, however, that if fewer than three brokers selected as aforesaid by
the Calculation Agent are quoting as mentioned in this sentence, the Federal
Funds Rate with respect to such Interest Reset Date will be the Federal Funds
Rate in effect on such Federal Funds Interest Determination Date.
 
  CMT RATE NOTES. CMT Rate Notes will bear interest at the interest rates
(calculated with reference to the CMT Rate and the Spread and/or Spread
Multiplier, if any) and will be payable on the dates specified on the face of
the CMT Rate Note and in the applicable Pricing Supplement. Unless otherwise
specified in the applicable Pricing Supplement, the "Calculation Date" with
respect to a CMT Interest Determination Date will be the tenth day after such
CMT Interest Determination Date or, if any such day is not a Market Day, the
next succeeding Market Day.
 
  Unless otherwise specified in the applicable Pricing Supplement, "CMT Rate"
means, with respect to any CMT Interest Determination Date, the rate displayed
on the Designated CMT Telerate Page (as defined below) under the caption
". . . Treasury Constant Maturities . . . Federal Reserve Board
 
                                     S-10

 
Release H.15 . . . Mondays Approximately 3:45 p.m.," under the column for the
Designated CMT Maturity Index (as defined below) for (i) if the Designated CMT
Telerate Page is 7055, the rate on such CMT 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
Interest Determination Date occurs. If such rate is no longer displayed on the
relevant page, or is not displayed prior to 3:00 p.m., New York City time, on
the relevant Calculation Date, then the CMT Rate with respect to such CMT
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 such Calculation Date, then the CMT Rate for such CMT Interest
Determination Date will be such Treasury Constant Maturity rate for the
Designated CMT Maturity Index (or other United States Treasury rate for the
Designated CMT Maturity Index) for the CMT 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 for the CMT 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 the CMT 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 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 cannot obtain three
such Treasury notes quotations, the CMT Rate for such CMT 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 the CMT
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 $100,000,000. 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 selected by the Calculation Agent are quoting as
described herein, the CMT Rate will be the CMT Rate in effect on such CMT
Interest Determination Date. If two Treasury notes with an original maturity
as described in the third preceding sentence have remaining terms to maturity
equally close to the Designated CMT Maturity Index, the quotes for the CMT
Rate Note with the shorter remaining term to maturity will be used.
 
  "Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page designated 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.
 
                                     S-11

 
PAYMENT OF PRINCIPAL AND INTEREST
 
  Payments of principal of (and premium, if any) and interest on all Book-
Entry Notes will be payable in accordance with the procedures described below
under "Book-Entry System". Unless otherwise specified in the applicable
Pricing Supplement, payments of principal of (and premium, if any) and
interest on all Fixed Rate Certificated Notes and Floating Rate Certificated
Notes will be made in the applicable Specified Currency; provided, however,
that payments of principal (and premium, if any) and interest on Notes
denominated in other than U.S. dollars will nevertheless be made in U.S.
dollars (i) with respect to Certificated Notes, at the option of the Holders
thereof under the procedures described in the two following paragraphs and
(ii) with respect to any Notes, at the option of the Company in the case of
imposition of exchange controls or other circumstances beyond the control of
the Company as described in the last paragraph under this heading. If
specified in the applicable Pricing Supplement, the amount of principal
payable on the Notes therein described will be determined by reference to an
index or formula described in such Pricing Supplement.
 
  Unless otherwise specified in the applicable Pricing Supplement, and except
as provided in the next paragraph, payments of interest and principal (and
premium, if any) with respect to any Certificated Note denominated in other
than U.S. dollars will be made in U.S. dollars if the registered Holder of
such Note on the relevant Regular Record Date or at maturity, as the case may
be, has transmitted a written request for such payment in U.S. dollars to the
Trustee at its Corporate Trust Office in The City of New York on or prior to
such Regular Record Date or the date 15 days prior to maturity, as the case
may be. Such request may be in writing (mailed or hand delivered) or by cable
or telex or, if promptly confirmed in writing, by other form of facsimile
transmission. Any such request made with respect to any Certificated Note by a
registered Holder will remain in effect with respect to any further payments
of interest and principal (and premium, if any) with respect to such Note
payable to such Holder, unless such request is revoked on or prior to the
relevant Regular Record Date or the date 15 days prior to maturity, as the
case may be. Holders of Certificated Notes denominated in other than U.S.
dollars whose Notes are registered 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 U.S. dollars may be made.
 
  Unless otherwise specified in the applicable Pricing Supplement, the U.S.
dollar amount to be received by a Holder of a Note (including a Book-Entry
Note) denominated in other than U.S. dollars who elects to receive payment in
U.S. dollars will be based on the highest bid quotation in The City of New
York received by the Exchange Rate Agent (as defined below) as of 11:00 a.m.,
New York City time, on the second Business Day next preceding the applicable
payment date from three recognized foreign exchange dealers (one of which may
be the Exchange Rate Agent) for the purchase by the quoting dealer of the
Specified Currency for U.S. dollars for settlement on such payment date in the
aggregate amount of the Specified Currency payable to all Holders of Notes
electing to receive U.S. dollar payments and at which the applicable dealer
commits to execute a contract. If three such bid quotations are not available
on the second Business Day preceding the date of payment of principal (and
premium, if any) or interest with respect to any Note, such payment will be
made in the Specified Currency. All currency exchange costs associated with
any payment in U.S. dollars on any such Note will be borne by the Holder
thereof by deductions from such payment. Unless otherwise provided in the
applicable Pricing Supplement, Bankers Trust Company will be the Exchange Rate
Agent (the "Exchange Rate Agent") with respect to the Notes.
 
  Interest and, in the case of Amortizing Notes, principal, will be payable to
the person in whose name a Note is registered (which in the case of Global
Securities representing Book-Entry Notes will be the Depositary or a nominee
of the Depositary) at the close of business on the Regular Record Date next
preceding such Interest Payment Date; provided, however, that interest payable
on the Stated Maturity or upon redemption or repayment will be payable to the
person to whom principal shall be payable (which in the case of Global
Securities representing Book-Entry Notes will be the Depositary or a nominee
of the Depositary). The first payment of interest and, in the case of
Amortizing Notes, principal, on any Note originally issued after a Regular
Record Date and on or before an Interest Payment Date will be made on the
Interest Payment Date following the next succeeding Regular Record Date to the
registered owner on such next succeeding Regular Record Date. Unless otherwise
 
                                     S-12

 
indicated in the applicable Pricing Supplement, the "Regular Record Date" with
respect to any Floating Rate Note shall be the date 15 calendar days prior to
each Interest Payment Date, whether or not such date shall be a Market Day,
and the "Regular Record Date" with respect to any Fixed Rate Note shall be the
January 15 and July 15 next preceding the February 1 and August 1 Interest
Payment Dates, whether or not such date shall be a Market Day.
 
  Unless otherwise indicated in the applicable Pricing Supplement and except
as provided below, interest will be payable: (i) in the case of Floating Rate
Notes which reset daily or weekly, on the third Wednesday of March, June,
September and December of each year; (ii) in the case of Floating Rate Notes
which reset monthly, on the third Wednesday of each month or on the third
Wednesday of March, June, September and December of each year (as indicated in
the applicable Pricing Supplement); (iii) in the case of Floating Rate Notes
which reset quarterly, on the third Wednesday of March, June, September and
December of each year; (iv) in the case of Floating Rate Notes which reset
semi-annually, on the third Wednesday of the two months of each year specified
in the applicable Pricing Supplement; and (v) in the case of Floating Rate
Notes which reset annually, on the third Wednesday of the month specified in
the applicable Pricing Supplement (each an "Interest Payment Date"), and in
each case, at maturity. If any Interest Payment Date for any Floating Rate
Note would fall on a day that is not a Market Day with respect to such Note,
such Interest Payment Date will be the following day that is a Market Day with
respect to such Note and interest will accrue to such Market Day, except that,
in the case of a LIBOR Note, if such Market Day is in the next succeeding
calendar month, such Interest Payment Date will be the immediately preceding
day that is a Market Day with respect to such LIBOR Note. If the maturity date
(or date of redemption or repayment) of any Floating Rate Note would fall on a
day that is not a Market Day, the payment of interest and principal (and
premium, if any) may be made on the next succeeding Market Day (or, in the
case of a LIBOR Note, if such day falls in the next calendar month, the next
preceding Market Day), and no interest on such payment will accrue for the
period from and after the maturity date (or the date of redemption or
repayment).
 
  Payments of interest on any Fixed Rate Note or Floating Rate Note with
respect to any Interest Payment Date will include interest accrued to but
excluding such Interest Payment Date; provided, however, that if the Interest
Reset Dates with respect to any Floating Rate Note are daily or weekly,
interest payable on such Note on any Interest Payment Date, other than
interest payable on the date on which principal on such Note is payable,
unless otherwise specified in the applicable Pricing Supplement, will include
interest accrued through but excluding the day following the next preceding
Regular Record Date.
 
  With respect to a Floating Rate Note, accrued interest from the date of
issue or from the last date to which interest has been paid is calculated by
multiplying the face amount of such Floating Rate Note by an accrued interest
factor. Such accrued interest factor is computed by adding the interest factor
calculated for each day from the date of issue, or from the last date to which
interest has been paid, to but excluding the date for which accrued interest
is being calculated. The interest factor (expressed as a decimal) for each
such day is computed by dividing the interest rate (expressed as a decimal)
applicable to such date by 360, in the case of Commercial Paper Rate Notes,
Prime Rate Notes, LIBOR Notes, CD Rate Notes or Federal Funds Rate Notes, or
by the actual number of days in the year, in the case of Treasury Rate Notes
or CMT Rate Notes. Interest on Fixed Rate Notes will be computed on the basis
of a 360-day year of twelve 30-day months.
 
  If any Interest Payment Date or the maturity date (or the date of redemption
or repayment) of any Fixed Rate Note falls on a day that is not a Market Day,
the payment will be made on the next Market Day (or, in the case of a LIBOR
Note, if such day falls in the next calendar month, the next preceding Market
Day) as if it were 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 the maturity date (or the date of redemption or repayment), as
the case may be.
 
  Payment of the principal of (and premium, if any) and any interest due with
respect to any Certificated Note at maturity to be made in U.S. dollars will
be made in immediately available funds upon surrender of such Note at the
Corporate Trust Office of the Trustee in The City of New York,
 
                                     S-13

 
provided that the Certificated Note is presented to the Paying Agent in time
for the Paying Agent to make such payments in such funds in accordance with
its normal procedures. Payments of interest with respect to Certificated Notes
to be made in U.S. dollars other than at maturity will be made by check mailed
to the address of the person entitled thereto as it appears in the Security
Register or by wire transfer to such account as may have been appropriately
designated by such Person.
 
  The total amount of any principal, premium, if any, and interest due on any
Global Security representing one or more Book-Entry Notes on any Interest
Payment Date or at maturity will be made available to the Trustee on such
date. As soon as possible thereafter, the Trustee will make such payments to
the Depositary. The Depositary will allocate such payments to each Book-Entry
Note represented by such Global Security and make payments to the owners
thereof in accordance with its existing operating procedures. Neither the
Company nor the Trustee shall have any responsibility or liability for such
payments by the Depositary. So long as the Depositary or its nominee is the
registered owner of any Global Security, the Depositary or its nominee, as the
case may be, will be considered the sole owner or Holder of the Book-Entry
Note or Notes represented by such Global Security for all purposes under the
Indenture and the Book-Entry Notes. The Company understands, however, that
under existing industry practice, the Depositary will authorize the persons on
whose behalf it holds a Global Security to exercise certain rights of Holders
of Securities. See "Book-Entry System".
 
  Unless otherwise specified in the applicable Pricing Supplement, payments of
interest and principal (and premium, if any) with respect to any Certificated
Note to be made in a Specified Currency other than U.S. dollars will be made
by wire transfer of immediately available funds to such account with a bank
located in the country issuing the Specified Currency (or, with respect to
Certificated Notes denominated in ECUs, to an ECU account) or other
jurisdiction acceptable to the Company and the Trustee as shall have been
designated at least 10 Business Days prior to the Interest Payment Date or
Stated Maturity, as the case may be, by the registered Holder of such Note on
the relevant Regular Record Date or maturity, provided that, in the case of
payment of principal (and premium, if any) and any interest due at maturity,
the Certificated Note is presented to the Paying Agent in time for the Paying
Agent to make such payments in such funds in accordance with its normal
procedures. Such designation shall be made by filing the appropriate
information with the Trustee at its Corporate Trust Office in The City of New
York and, unless revoked, any such designation made with respect to any
Certificated Note by a registered Holder will remain in effect with respect to
any further payments with respect to such Note payable to such Holder. If a
payment with respect to any such Note cannot be made by wire transfer because
the required designation has not been received by the Trustee on or before the
requisite date or for any other reason, a notice will be mailed to the Holder
at its registered address requesting a designation pursuant to which such wire
transfer can be made and, upon the Trustee's receipt of such a designation,
such payment will be made within five Business Days of such receipt. The
Company will pay any administrative costs imposed by banks in connection with
making payments by wire transfer, but any tax, assessment or governmental
charge imposed upon payments will be borne by the Holders of the Notes in
respect of which payments are made.
 
  If the principal of (and premium, if any) or interest on any Note (including
any Book-Entry Note) is payable in other than U.S. dollars and such Specified
Currency is not available 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 the Notes by making such payment in
U.S. dollars on the basis of the most recently available Exchange Rate. Any
payment made under such circumstances in U.S. dollars where the required
payment is in other than U.S. dollars will not constitute an Event of Default
under the Indenture.
 
INTEREST RATE RESET
 
  If the Company has the option with respect to any Note to reset the interest
rate, in the case of a Fixed Rate Note, or to reset the Spread and/or Spread
Multiplier, in the case of a Floating Rate Note, the Pricing Supplement
relating to such Note will indicate such option, and, if so, (i) the date or
dates on which such interest rate or such Spread and/or Spread Multiplier, as
the case may be, may be reset (each an "Optional Reset Date") and (ii) the
basis or formula, if any, for such resetting.
 
                                     S-14

 
  The Company may exercise such option with respect to a Note by notifying the
Trustee in writing of such exercise at least 45 but not more than 60 days
prior to an Optional Reset Date for such Note and providing the information to
be included in the Reset Notice (as defined below). Not later than 40 days
prior to such Optional Reset Date, the Trustee will mail, first class, postage
prepaid, to the Holder of such Note a notice (the "Reset Notice") setting
forth (i) the election of the Company to reset the interest rate, in the case
of a Fixed Rate Note, or the Spread and/or Spread Multiplier, in the case of a
Floating Rate Note, (ii) such new interest rate or such new Spread and/or
Spread Multiplier, as the case may be, and (iii) the provisions, if any, for
redemption during the period from such Optional Reset Date to the next
Optional Reset Date or, if there is no such next Optional Reset Date, to the
Stated Maturity of such Note (each such period a "Subsequent Interest
Period"), including the date or dates on which or the period or periods during
which and the price or prices at which such redemption may occur during such
Subsequent Interest Period.
 
  Notwithstanding the foregoing, not later than 20 days prior to an Optional
Reset Date for a Note, the Company may, at its option, revoke the interest
rate, in the case of a Fixed Rate Note, or the Spread and/or Spread
Multiplier, in the case of a Floating Rate Note, in either case as provided
for in the Reset Notice, and establish a higher interest rate, in the case of
a Fixed Rate Note, or a higher Spread and/or Spread Multiplier, in the case of
a Floating Rate Note, for the Subsequent Interest Period commencing on such
Optional Reset Date by hand delivering or mailing, first class, postage
prepaid, or by causing the Trustee to hand deliver or mail, first class,
postage prepaid, notice of such higher interest rate or higher Spread and/or
Spread Multiplier, as the case may be, to the Holder of such Note. Such notice
shall be irrevocable. All Notes with respect to which the interest rate or
Spread and/or Spread Multiplier is reset on an Optional Reset Date will bear
such higher interest rate, in the case of a Fixed Rate Note, or higher Spread
and/or Spread Multiplier, in the case of a Floating Rate Note.
 
  If the Company elects to reset the interest rate or the Spread and/or Spread
Multiplier of a Note, the Holder of such Note will have the option to elect
repayment of such Note by the Company on any Optional Reset Date at a price
equal to the principal amount thereof plus any accrued interest to such
Optional Reset Date. In order for a Note to be so repaid on an Optional Reset
Date, the Holder thereof must follow the procedures for repayment set forth in
the applicable Pricing Supplement.
 
EXTENSION OF MATURITY
 
  If the Company has the option to extend the Stated Maturity of any Note for
one or more periods (each an "Extension Period") up to but not beyond the date
(the "Final Maturity Date") set forth in the applicable Pricing Supplement,
such Pricing Supplement will indicate such option and the basis or formula, if
any, for setting the interest rate, in the case of a Fixed Rate Note, or the
Spread and/or Spread Multiplier, in the case of a Floating Rate Note,
applicable to any such Extension Period.
 
  The Company may exercise such option with respect to a Note by notifying the
Trustee in writing of such exercise at least 45 but not more than 60 days
prior to the Stated Maturity of such Note in effect prior to the exercise of
such option (the "Original Stated Maturity") and providing the information to
be included in the Extension Notice (as defined below). No later than 40 days
prior to the Original Stated Maturity, the Trustee will mail to the Holder of
such Note a notice (the "Extension Notice") relating to such Extension Period,
first class, postage prepaid, setting forth (i) the election of the Company to
extend the Stated Maturity of such Note, (ii) the new Stated Maturity, (iii)
in the case of a Fixed Rate Note, the interest rate applicable to the
Extension Period or, in the case of a Floating Rate Note, the Spread and/or
Spread Multiplier applicable to the Extension Period, and (iv) the provisions,
if any, for redemption during the Extension Period, including the date or
dates on which or the period or periods during which and the price or prices
at which such redemption may occur during the Extension Period. Upon the
mailing by the Trustee of an Extension Notice to the Holder of a Note, the
Stated Maturity of such Note shall be extended automatically as set forth in
the Extension Notice, and, except as modified by the Extension Notice and as
described in the next paragraph, such Note will have the same terms as prior
to the mailing of such Extension Notice.
 
                                     S-15

 
  Notwithstanding the foregoing, not later than 20 days prior to the Original
Stated Maturity for a Note, the Company may, at its option, revoke the
interest rate, in the case of a Fixed Rate Note, or the Spread and/or Spread
Multiplier, in the case of a Floating Rate Note, provided for in the Extension
Notice and establish a higher interest rate, in the case of a Fixed Rate Note,
or a higher Spread and/or Spread Multiplier, in the case of a Floating Rate
Note, for the Extension Period by mailing or causing the Trustee to mail
notice of such higher interest rate or higher Spread and/or Spread Multiplier,
as the case may be, first class, postage prepaid, to the Holder of such Note.
Such notice shall be irrevocable. All Notes with respect to which the Stated
Maturity is extended will bear such higher interest rate, in the case of a
Fixed Rate Note, or higher Spread and/or Spread Multiplier, in the case of a
Floating Rate Note, for the Extension Period.
 
  If the Company elects to extend the Stated Maturity of a Note, the Holder of
such Note will have the option to elect repayment of such Note by the Company
at the Original Stated Maturity at a price equal to the principal amount
thereof plus any accrued interest to such date. In order for a Note to be so
repaid on the Original Stated Maturity, the Holder thereof must follow the
procedures for repayment set forth in the applicable Pricing Supplement.
 
RENEWABLE NOTES
 
  If so specified in the applicable Pricing Supplement, the Company may from
time to time offer Notes which will mature on an Interest Payment Date
specified in the applicable Pricing Supplement occurring in or prior to the
twelfth month following the Original Issue Date of such Notes (the "Initial
Maturity Date") unless the term of all or any portion of any such Note (a
"Renewable Note") is renewed in accordance with the procedures described
below.
 
  On the Interest Payment Date occurring in the sixth month (unless a
different interval (the "Special Election Interval") is specified in the
applicable Pricing Supplement) prior to the Initial Maturity Date of a
Renewable Note (the "Initial Renewal Date") and on the Interest Payment Date
occurring in each sixth month (or in the last month of each Special Election
Interval) after such Initial Renewal Date (each, together with the Initial
Renewal Date, a "Renewal Date"), the term of such Renewable Note may be
extended to the Interest Payment Date occurring in the twelfth month (or, if a
Special Election Interval is specified in the applicable Pricing Supplement,
the last month in a period equal to twice the Special Election Interval) after
such Renewal Date, if the Holder of such Renewable Note elects to extend the
term of such Renewable Note or any portion thereof as described below. If a
Holder does not elect to extend the term of any portion of the principal
amount of a Renewable Note during the specified period prior to any Renewal
Date, such portion will become due and payable on the Interest Payment Date
occurring in the sixth month (or the last month in the Special Election
Interval) after such Renewal Date (the "New Maturity Date").
 
  A Holder of a Renewable Note may elect to renew the term of such Renewable
Note, or if so specified in the applicable Pricing Supplement, any portion
thereof, by written notice to such effect, hand delivered or mailed, first
class, postage prepaid, to the Trustee at the Corporate Trust Office not less
than 15 nor more than 30 days prior to such Renewal Date (unless another
period is specified in the applicable Pricing Supplement as the "Special
Election Period"). Such election will be irrevocable and will be binding upon
each subsequent Holder of such Renewable Note. An election to renew the term
of a Renewable Note may be exercised with respect to less than the entire
principal amount of such Renewable Note only if so specified in the applicable
Pricing Supplement and only in such principal amount, or any integral multiple
in excess thereof, as is specified in the applicable Pricing Supplement.
Notwithstanding the foregoing, the term of the Renewable Notes may not be
extended beyond the Stated Maturity specified for such Renewable Notes in the
applicable Pricing Supplement.
 
  If the Holder does elect to renew the term, such Renewable Note must be
presented to the Trustee (or any duly appointed paying agent) simultaneously
with notice of such election (or, in the event notice of such election,
together with a guarantee of delivery within five Business Days, is
transmitted on behalf of a Holder from a member of a national securities
exchange, the National Association of Securities Dealers, Inc. or a commercial
bank or trust company in the United States, within five Business Days of the
date of such notice.) With respect to a Renewable Note that it is a
 
                                     S-16

 
Certificated Note, as soon as practicable following receipt of such Renewable
Note the Trustee shall issue in exchange therefor in the name of such Holder
(i) a Note, in a principal amount equal to the principal amount of such
exchanged Renewable Note for which the election to renew the term thereof was
exercised, with terms identical to those specified on such Renewable Note
(except for the Original Issue Date and the Initial Interest Rate and except
that such Note shall have a fixed, nonrenewable Stated Maturity on the New
Maturity Date) and (ii) if such election is made with respect to less than the
full principal amount of such Holder's Renewable Note, a replacement Renewable
Note, in a principal amount equal to the principal amount of such exchanged
Renewable Note for which the election was made, with terms identical to such
exchanged Renewable Note.
 
COMBINATION OF PROVISIONS
 
  If so specified in the applicable Pricing Supplement, any Note may be
subject to all of the provisions, or any combination of the provisions,
described above under "Interest Rate Reset", "Extension of Maturity" and
"Renewable Notes".
 
BOOK-ENTRY SYSTEM
 
  Upon issuance, all Book-Entry Notes of the same series and bearing interest
(if any) at the same rate or pursuant to the same formula, having the same
date of issuance, redemption or repayment provisions, if any, Specified
Currency, Stated Maturity 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 located in the Borough of
Manhattan, The City of New York, will be registered in the name of the
Depositary or a nominee of the Depositary and will be held by the Trustee as
custodian for the Depositary.
 
  Upon the issuance of a Global Security, the Depositary for such Global
Security will credit the accounts of persons held with it with the respective
principal or face amounts of the Book-Entry Notes represented by such Global
Security. The accounts to be credited shall be designated initially by the
Agents through which the Notes were sold, or by the Company if such Notes are
offered and sold directly by the Company. Ownership of beneficial interests in
a Global Security will be limited to institutions that have accounts with the
Depositary ("participants") and to persons that may hold interests through
such participants. Ownership of beneficial interests by participants in a
Global Security will be shown on, and the transfer of that ownership interest
will be effected only through, records maintained by the Depositary for such
Global Security (with respect to a participant's interest) and records
maintained by participants (with respect to interests of persons other than
participants).
 
  Payment of principal of and any premium and interest on Book-Entry Notes
represented by any Global Security will be made to the Depositary or its
nominee, as the case may be, as the sole registered owner and the sole Holder
of the Book-Entry Notes represented thereby for all purposes under the
Indenture. Neither the Company or the Trustee, nor any agent of the Company or
the Trustee will have any responsibility or liability for any aspect of the
Depositary's records relating to or payments made on account of beneficial
ownership interests in a Global Security representing any Book-Entry Notes or
any other aspect of the relationship between the Depositary and its
participants or the relationship between such participants and the owner of
beneficial interests in a Global Security owning through such participants or
for maintaining, supervising or reviewing any of the Depositary's records
relating to such beneficial ownership interests.
 
  With respect to any Book-Entry Note denominated in a Specified Currency
other than U.S. dollars, the Depositary currently has elected to have payments
of principal (and premium, if any) and interest on such Note made in U.S.
dollars unless notified by any of its participants through which an interest
in such Note is held that it elects to receive such payment of principal (or
premium, if any) or interest in such Specified Currency. Unless otherwise
specified in the applicable Pricing Supplement, a beneficial owner of Book-
Entry Notes denominated in a Specified Currency other than U.S. dollars
electing to receive payments of principal or any premium or interest in a
currency other than U.S. 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 the
maturity
 
                                     S-17

 
date, in the case of principal or premium, of such beneficial owner's election
to receive all or a portion of such payment in such Specified Currency. Such
participant must notify the Depositary of such election on or prior to the
third Business Day after such Record Date or after such sixteenth day. The
Depositary will notify the Trustee of such election on or prior to the fifth
Business Day after such Record Date or after such sixteenth day. If complete
instructions are received by the participant and forwarded by the participant
to the Depositary and by the Depositary to the Trustee, on or prior to such
dates, the beneficial owner will receive payments in the Specified Currency.
 
  The Company has been advised by the Depositary that upon receipt of any
payment of principal of or any premium or interest on any Global Security, the
Depositary will immediately credit, on its book-entry registration and
transfer system, the accounts of participants with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Global Security as shown on the records of the Depositary. Payments by
participants to owners of beneficial interests in a Global Security held
through such participants will be governed by standing instructions and
customary practices, as is the case with securities held by such participants
for customer accounts registered in "street name," and will be the sole
responsibility of such participants.
 
  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 any such nominee to a successor of the Depositary or a
nominee of such successor.
 
  Unless otherwise specified in the applicable Pricing Supplement, a Global
Security representing Book-Entry Notes is exchangeable for Certificated Notes
of the same series and bearing interest (if any) at the same rate or pursuant
to the same formula, having the same date of issuance, redemption provisions
or repayment (if any), stated maturity and other terms and of differing
authorized denominations aggregating a like amount, only if (i) the Depositary
notifies the Company that it is unwilling or unable to continue as Depositary
for such Global Security or if at any time the Depositary ceases to be a
clearing agency registered under the Exchange Act, (ii) the Company in its
sole discretion determines that all such Global Securities shall be
exchangeable for Certificated Notes in registered form, or (iii) there shall
have occurred and be continuing an Event of Default or an event which, after
notice or lapse of time or both, would constitute an Event of Default with
respect to the Notes. Any Global Security that is exchangeable pursuant to the
preceding sentence shall be exchangeable for Certificated Notes issuable in
denominations of $100,000 and integral multiples of $1,000 in excess thereof
and registered in such names as the Depositary holding such Global Security
shall direct. Such Certificated Notes shall be registered in the names of the
owners of the beneficial interests in such Global Security as provided by the
Depositary's relevant participant (as identified by the Depositary). Subject
to the foregoing, a Global Security is not exchangeable, except for a Global
Security of like denomination to be registered in the name of the Depositary
or its nominee.
 
  So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or Holder of Book-Entry
Notes represented by such Global Security for the purposes of receiving
payment on the Notes, receiving notices and for all other purposes under the
Indenture and the Notes. Except as provided above, owners of beneficial
interests in a Global Security will not be entitled to receive physical
delivery of Notes in definitive form and will not be considered the Holders
thereof for any purpose under the Indenture. Accordingly, each person owning a
beneficial interest in such a Global Security must rely on the procedures of
the Depositary and, if such person is not a participant, on the procedures of
the participant through which such person owns its interest, to exercise any
rights of a Holder under 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. The Indenture
provides that the Depositary may grant proxies and otherwise authorize
participants to give or take any request, demand, authorization, direction,
notice, consent, waiver or other action which a Holder is entitled to give or
take under the Indenture. The Company understands that under existing industry
practices, in the event that the Company requests any action of Holders or
that an owner of a beneficial interest in such a Global Security desires to
give or take any action which a Holder is entitled
 
                                     S-18

 
to give or take under the Indenture, the Depositary would authorize the
participants holding the relevant beneficial interests to give or take such
action, and such participants would authorize beneficial owners owning through
such participants to give or take such action or would otherwise act upon the
instructions of beneficial owners owning through them.
 
  The Depositary has advised the Company that 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 under the
Exchange Act. The Depositary was created to hold the securities of its
participants and to facilitate the clearance and settlement of securities
transactions, such as transfers and pledges, among its participants in such
securities through electronic computerized book-entry changes in accounts of
the participants, thereby eliminating the need for physical movement of
securities certificates. The Depositary's participants include securities
brokers and dealers (including the Agents), banks (including the Trustee),
trust companies, clearing corporations, and certain other organizations some
of which (and/or their representatives) own the Depositary. Access to the
Depositary's book-entry system is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
 
                            UNITED STATES TAXATION
 
  The following summary of the principal United States federal income tax
consequences of ownership of Notes deals only with Notes held as capital
assets by initial purchasers, and not with special classes of holders, such as
dealers in securities or currencies, banks, tax-exempt organizations, life
insurance companies, persons that hold Notes that are a hedge or that are
hedged against currency risks or that are part of a straddle or conversion
transaction, persons that are not "United States Holders," as defined below,
or persons whose functional currency is not the U.S. dollar. The summary is
based on the Internal Revenue Code of 1986, as amended (the "Code"), its
legislative history, existing and proposed regulations thereunder, published
rulings and court decisions, all as currently in effect and all subject to
change at any time, perhaps with retroactive effect.
 
  Prospective purchasers of Notes should consult their own tax advisors
concerning the consequences, in their particular circumstances, under the Code
and the laws of any other taxing jurisdiction, of ownership of Notes.
 
PAYMENTS OF INTEREST
 
  Interest on a Note, whether payable in U.S. dollars or a currency, composite
currency or basket of currencies other than U.S. dollars (a "foreign
currency"), other than interest on a "Discount Note" that is not "qualified
stated interest" (each as defined below under "Original Issue Discount--
General"), will be taxable to a United States Holder as ordinary income at the
time it is received or accrued, depending on the holder's method of accounting
for tax purposes. A United States Holder is a beneficial owner who or that is
(i) a citizen or resident of the United States, (ii) a domestic corporation or
(iii) otherwise subject to United States federal income taxation on a net
income basis in respect of the Note.
 
  If an interest payment is denominated in, or determined by reference to, a
foreign currency, the amount of income recognized by a cash basis United
States Holder will be the U.S. dollar value of the interest payment, based on
the exchange rate in effect on the date of receipt, regardless of whether the
payment is in fact converted into U.S. dollars.
 
  An accrual basis United States Holder may determine the amount of income
recognized with respect to an interest payment denominated in, or determined
by reference to, a foreign currency in accordance with either of two methods.
Under the first method, the amount of income accrued will be based on the
average exchange rate in effect during the interest accrual period (or, with
respect to an accrual period that spans two taxable years, the part of the
period within the taxable year).
 
                                     S-19

 
(continued from previous page)
 
  Unless otherwise specified in the applicable Pricing Supplement, the Notes,
except Zero Coupon Notes, will bear interest at a fixed rate or rates or at a
floating rate determined by reference to one or more of the Commercial Paper
Rate, the Prime Rate, LIBOR, the Treasury Rate, the CD Rate, the Federal Funds
Rate, the CMT Rate or such other interest rate formula as set forth in the
applicable Pricing Supplement, as adjusted by the Spread or Spread Multiplier,
if any, applicable to such Notes. Interest rates and interest rate formulas
are subject to change by the Company, but no such change will affect any Notes
already issued or as to which an offer to purchase has been accepted by the
Company. Unless otherwise specified in the applicable Pricing Supplement,
interest on the Fixed Rate Notes will be payable on each February 1 and August
1 and at maturity or upon any earlier redemption or repayment dates. Interest
on the Floating Rate Notes will be payable on the dates specified therein and
in the applicable Pricing Supplement. Zero Coupon Notes will not bear
interest. The Notes may be offered with provisions for renewal, extension or
the reset of interest rates, as indicated therein and in the applicable
Pricing Supplement. The Notes may be sold with original issuance discount and
may provide for amortization as indicated therein and in the applicable
Pricing Supplement. See "Description of Notes".
  Unless a Redemption Commencement Date or a Repayment Date is specified in
the applicable Pricing Supplement, the Notes will not be redeemable or
repayable prior to their Stated Maturity. If a Redemption Commencement Date or
a Repayment Date is so specified, the Notes will be redeemable at the option
of the Company, or repayable at the option of the Holder, or both (as
specified therein) at any time after such date (or for a limited period) as
described herein.
  Unless otherwise specified in the applicable Pricing Supplement, the Notes
will be issued in either global or definitive form in denominations of
$100,000 and integral multiples of $1,000 in excess thereof, or the
approximate equivalent thereof in the Specified Currency as specified in the
applicable Pricing Supplement. A global Note representing Book-Entry Notes
will be registered in the name of The Depository Trust Company or its nominee,
which will act as Depositary (the "Depositary"). 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 participants' interests) and its
participants. Except as described herein under "Description of Notes--Book-
Entry System," owners of beneficial interests in a global Note will not be
considered the Holders thereof and will not be entitled to receive physical
delivery of Notes in definitive form, and no global Note will be exchangeable
except for another global Note of like denomination and terms to be registered
in the name of the Depositary or its nominee. See "Description of Notes".
 
                                      S-2

 
  Under the second method, the United States Holder may elect to determine the
amount of income accrued on the basis of the exchange rate in effect on the
last day of the accrual period or, in the case of an accrual period that spans
two taxable years, the exchange rate in effect on the last day of the part of
the period within the taxable year. Additionally, if a payment of interest is
actually received within five business days of the last day of the accrual
period or taxable year, an electing accrual basis United States Holder may
instead translate such accrued interest into U.S. dollars at the exchange rate
in effect on the day of actual receipt. Any such election will apply 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 will be irrevocable without the consent of the
Internal Revenue Service (the "Service").
 
  Upon receipt of the interest payment (including a payment attributable to
accrued but unpaid interest upon the sale or retirement of a Note) denominated
in, or determined by reference to, a foreign currency, the United States
Holder will recognize ordinary income or loss measured by the difference
between (x) the average exchange rate used to accrue interest income, or the
exchange rate as determined under the second method described above if the
United States Holder elects that method, and (y) the exchange rate in effect
on the date of receipt, regardless of whether the payment is in fact converted
into U.S. dollars.
 
ORIGINAL ISSUE DISCOUNT
 
  GENERAL. A Note, other than a Note with a term of one year or less (a
"short-term Note"), will be treated as issued at an original issue discount (a
"Discount Note") if the excess of the Note's "stated redemption price at
maturity" over its "issue price" is more than a "de minimis amount" (as
defined below). Generally, the issue price of a Note will be the first price
at which a substantial amount of Notes included in the issue of which the Note
is a part is sold to purchasers other than bond houses, brokers, or similar
persons or organizations acting in the capacity of underwriters, placement
agents, or wholesalers. The stated redemption price at maturity of a Note is
the total of all payments provided by the Note other than payments of
"qualified stated interest". A qualified stated interest payment is generally
any one of a series of stated interest payments on a Note that are
unconditionally payable at least annually at a single fixed rate (with certain
exceptions for lower rates paid during some periods) applied to the
outstanding principal amount of the Note. Special rules for "Variable Rate
Notes" (as defined below under "Original Issue Discount--Variable Rate Notes")
are described below under "Original Issue Discount--Variable Rate Notes".
 
  In general, if the excess of a Note's stated redemption price at maturity
over its issue price is less than 1/4 of 1 percent of the Note's stated
redemption price at maturity multiplied by the number of complete years to its
maturity (the "de minimis amount"), then such excess, if any, constitutes "de
minimis original issue discount" and the Note is not a Discount Note. Unless
the election described below under "Election to Treat All Interest as Original
Issue Discount" is made, a United States Holder of a Note with de minimis
original issue discount must include such de minimis original issue discount
in income as stated principal payments on the Note are made. The includible
amount with respect to each such payment will equal the product of the total
amount of the Note's de minimis original issue discount 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.
 
  United States Holders of Discount Notes having a maturity of more than one
year from their date of issue must, generally, include original issue discount
("OID") in income calculated on a constant-yield method before the receipt of
cash attributable to such income and, except in the case of Amortizing Notes,
generally will have to include in income increasingly greater amounts of OID
over the life of the Note. The amount of OID includible in income by a United
States Holder of a Discount Note is the sum of the daily portions of OID with
respect to the Discount Note for each day during the taxable year or portion
of the taxable year in which the United States Holder holds such Discount Note
("accrued OID"). The daily portion is determined by allocating to each day in
any "accrual period" a pro rata portion of the OID allocable to that accrual
period. Accrual periods with respect to a Note may be of any length selected
by the United States Holder and may vary in length over the term of the Note
as long as (i) no accrual period is longer than one year and (ii) each
scheduled payment of interest or
 
                                     S-20

 
principal on the Note occurs on either the final or first day of an accrual
period. The amount of OID allocable to an accrual period equals the excess of
(a) the product of the Discount Note's adjusted issue price at the beginning
of the accrual period and such Note's yield to maturity (determined on the
basis of compounding at the close of each accrual period and properly adjusted
for the length of the accrual period) over (b) the sum of the payments of
qualified stated interest on the Note allocable to the accrual period. The
"adjusted issue price" of a Discount Note at the beginning of any accrual
period is the issue price of the Note increased by (x) the amount of accrued
OID for each prior accrual period and decreased by (y) the amount of any
payments previously made on the Note that were not qualified stated interest
payments. For purposes of determining the amount of OID allocable to an
accrual period, if an interval between payments of qualified stated interest
on the Note contains more than one accrual period, the amount of qualified
stated interest payable at the end of the interval (including any qualified
stated interest that is payable on the first day of the accrual period
immediately following the interval) is allocated pro rata on the basis of
relative lengths to each accrual period in the interval, and the adjusted
issue price at the beginning of each accrual period in the interval must be
increased by the amount of any qualified stated interest that has accrued
prior to the first day of the accrual period but that is not payable until the
end of the interval. The amount of OID allocable to an initial short accrual
period may be computed using any reasonable method if all other accrual
periods other than a final short accrual period are of equal length. The
amount of OID allocable to the final accrual period is the difference between
(x) the amount payable at the maturity of the Note (other than any payment of
qualified stated interest) and (y) the Note's adjusted issue price as of the
beginning of the final accrual period.
 
  ACQUISITION PREMIUM. A United States Holder that purchases a Note for an
amount 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 but in
excess of its adjusted issue price (any such excess being "acquisition
premium") and that does not make the election described below under "Election
to Treat All Interest as Original Issue Discount" is permitted to reduce the
daily portions of OID by a fraction, the numerator of which is the excess of
the United States Holder's adjusted basis in the Note immediately after its
purchase over the adjusted issue price of the Note, and the denominator of
which 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.
 
  MARKET DISCOUNT. A Note, other than a short-term Note, will be treated as
purchased at a market discount (a "Market Discount Note") if (i) the amount
for which a United States Holder purchased the Note is less than the Note's
issue price (as determined above under "Original Issue Discount--General") and
(ii) the Note's stated redemption price at maturity or, in the case of a
Discount Note, the Note's "revised issue price," exceeds the amount for which
the United States Holder purchased the Note by at least 1/4 of 1 percent of
such Note's stated redemption price at maturity or revised issue price,
respectively, multiplied by the number of complete years to the Note's
maturity. If such excess is not sufficient to cause the Note to be a Market
Discount Note, then such excess constitutes "de minimis market discount". The
Code provides that, for these purposes, the "revised issue price" of a Note
generally equals its issue price, increased by the amount of any OID that has
accrued on the Note.
 
  Any gain recognized on the maturity or disposition of a Market Discount Note
will be treated as ordinary income to the extent that such gain does not
exceed the accrued market discount on such Note. Alternatively, a United
States Holder of a Market Discount Note may elect to include market discount
in income currently over the life of the Note. Such an election shall apply to
all debt instruments with market discount acquired by the electing United
States Holder on or after the first day of the first taxable year to which the
election applies. This election may not be revoked without the consent of the
Service.
 
  Market discount on a Market Discount Note will accrue on a straight-line
basis unless the United States Holder elects to accrue such market discount on
a constant-yield method. Such an election shall apply only to the Note with
respect to which it is made and may not be revoked. A United States Holder of
a Market Discount Note that does not elect to include market discount in
income currently
 
                                     S-21

 
generally will be required to defer deductions for interest on borrowings
allocable to such Note in an amount not exceeding the accrued market discount
on such Note until the maturity or disposition of such Note.
 
  PRE-ISSUANCE ACCRUED INTEREST. If (i) a portion of the initial purchase
price of a Note is attributable to pre-issuance accrued interest, (ii) the
first stated interest payment on the Note is to be made within one year of the
Note's issue date, and (iii) the payment will equal or exceed the amount of
pre-issuance accrued interest, then the United States Holder may elect to
decrease the issue price of the Note by the amount of pre-issuance accrued
interest. In that event, a portion of the first stated interest payment will
be treated as a return of the excluded pre-issuance accrued interest and not
as an amount payable on the Note.
 
  NOTES SUBJECT TO CONTINGENCIES INCLUDING OPTIONAL REDEMPTION. In general, if
a Note provides for an alternative payment schedule or schedules applicable
upon the occurrence of a contingency or contingencies and the timing and
amounts of the payments that comprise each payment schedule are known as of
the issue date, the yield and maturity of the Note are determined by assuming
that the payments will be made according to the Note's stated payment
schedule. If, however, based on all the facts and circumstances as of the
issue date, it is more likely than not that the Note's stated payment schedule
will not occur, then, in general, the yield and maturity of the Note are
computed based on the payment schedule most likely to occur.
 
  Notwithstanding the general rules for determining yield and maturity in the
case of Notes subject to contingencies, if the Company or the United States
Holder has an unconditional option or options that, if exercised, would
require payments to be made on the Note under an alternative payment schedule
or schedules, then (i) in the case of an option or options of the Company, the
Company will be deemed to exercise or not exercise an option or combination of
options in the manner that minimizes the yield on the Note and (ii) in the
case of an option or options of the United States Holder, the United States
Holder will be deemed to exercise or not exercise an option or combination of
options in the manner that maximizes the yield on the Note. For purposes of
those calculations, the yield on the Note is determined by using any date on
which the Note may be redeemed or repurchased as the maturity date and the
amount payable on such date in accordance with the terms of the Note as the
principal amount payable at maturity.
 
  If a contingency (including the exercise of an option) actually occurs or
does not occur contrary to an assumption made according to the above rules (a
"change in circumstances") then, except to the extent that a portion of the
Note is repaid as a result of the change in circumstances and solely for
purposes of the accrual of OID, the yield and maturity of the Note are
redetermined by treating the Note as reissued on the date of the change in
circumstances for an amount equal to the Note's adjusted issue price on that
date.
 
  ELECTION TO TREAT ALL INTEREST AS ORIGINAL ISSUE DISCOUNT. A United States
Holder may elect to include in gross income all interest that accrues on a
Note using the constant-yield method described above under the heading
"Original Issue Discount--General," with the modifications described below.
For purposes of this election, interest includes stated interest, OID, de
minimis original issue discount, market discount, de minimis market discount
and unstated interest, as adjusted by any amortizable bond premium (described
below under "Notes Purchased at a Premium") or acquisition premium.
 
  In applying the constant-yield method to a Note with respect to which this
election has been made, the issue price of the Note will equal the electing
United States Holder's adjusted basis in the Note immediately after its
acquisition, the issue date of the Note will be the date of its acquisition by
the electing United States Holder, and no payments on the Note will be treated
as payments of qualified stated interest. This election will generally apply
only to the Note with respect to which it is made and may not be revoked
without the consent of the Service. If this election is made with respect to a
Note with amortizable bond premium, then the electing United States Holder
will be deemed to have elected to apply amortizable bond premium against
interest with respect to all debt instruments with amortizable bond premium
(other than debt instruments the interest on which is excludible from gross
 
                                     S-22

 
income) held by the electing United States Holder as of the beginning of the
taxable year in which the Note with respect to which the election is made is
acquired or thereafter acquired. The deemed election with respect to
amortizable bond premium may not be revoked without the consent of the
Service.
 
  If the election to apply the constant-yield method to all interest on a Note
is made with respect to a Market Discount Note, the electing United States
Holder will be treated as having made the election discussed above under
"Original Issue Discount--Market Discount" to include market discount in
income currently over the life of all debt instruments held or thereafter
acquired by such United States Holder.
 
  VARIABLE RATE NOTES. A "Variable Rate Note" is a Note that: (i) has an issue
price that does not exceed the total noncontingent principal payments by more
than the lesser of (1) the product of (x) the total noncontingent principal
payments, (y) the number of complete years to maturity from the issue date and
(z) .015, or (2) 15 percent of the total noncontingent principal payments, and
(ii) provides for stated interest compounded or paid at least annually at (1)
one or more "qualified floating rates," (2) a single fixed rate and one or
more qualified floating rates, (3) a single "objective rate" or (4) a single
fixed rate and a single objective rate that is a "qualified inverse floating
rate".
 
  A qualified floating rate or objective rate in effect at any time during the
term of the instrument must be set at a "current value" of that rate. A
"current value" of a rate is the value of the rate on any day that is no
earlier than 3 months prior to the first day on which that value is in effect
and no later than 1 year following that first day.
 
  A variable rate is a "qualified floating rate" if (i) variations in the
value of the rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the
Note is denominated or (ii) it is equal to the product of such a rate and
either (a) a fixed multiple that is greater than zero but not more than 1.35,
or (b) a fixed multiple greater than zero but not more than 1.35, increased or
decreased by a fixed rate. A rate is not a qualified floating rate, however,
if the rate is subject to certain restrictions (including caps, floors,
governors, or other similar restrictions) unless such restrictions are fixed
throughout the term of the Note or are not reasonably expected to
significantly affect the yield on the Note.
 
  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 each of which 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 actively traded items of personal
property other than stock or debt of the issuer or a related party, or (iv) a
combination of objective rates. A variable rate is not an objective rate,
however, if it is reasonably expected that the average value of the rate
during the first half of the Note's term will be either significantly less
than or significantly greater than the average value of the rate during the
final half of the Note's term. An objective rate is a "qualified inverse
floating rate" if (i) the rate is equal to a fixed rate minus a qualified
floating rate, and (ii) the variations in the rate can reasonably be expected
to inversely reflect contemporaneous variations in the cost of newly borrowed
funds. Under these rules, Commercial Paper Rate Notes, Prime Rate Notes, LIBOR
Notes, Treasury Rate Notes, CD Rate Notes, Federal Funds Rate Notes and CMT
Rate Notes will generally be treated as Variable Rate Notes.
 
  In general, if a Variable Rate Note provides for stated interest at a single
qualified floating rate or objective rate, all stated interest on the Note is
qualified stated interest and the amount of OID, if any, is determined by
using, in the case of a qualified floating rate or qualified inverse floating
rate, the value as of the issue date of the qualified floating rate or
qualified inverse floating rate, or, in the case of any other objective rate,
a fixed rate that reflects the yield reasonably expected for the Note.
 
  If a Variable Rate Note does not provide for stated interest at a single
qualified floating rate or objective rate, the amount of interest and OID
accruals on the Note are generally determined by (i) determining a fixed rate
substitute for each variable rate provided under the Variable Rate Note
 
                                     S-23

 
(generally, the value of each variable rate as of the issue date or, in the
case of an objective rate that is not a qualified inverse floating rate, a
rate that reflects the reasonably expected yield on the Note), (ii)
constructing the equivalent fixed rate debt instrument (using the fixed rate
substitute described above), (iii) determining the amount of qualified stated
interest and OID with respect to the equivalent fixed rate debt instrument,
and (iv) making the appropriate adjustments for actual variable rates during
the applicable accrual period.
 
  If a Variable Rate Note provides for stated interest either at one or more
qualified floating rates or at a qualified inverse floating rate, and in
addition provides for stated interest at a single fixed rate (other than at a
single fixed rate for an initial period), the amount of interest and OID
accruals are determined as in the immediately preceding paragraph with the
modification that the Variable Rate Note is treated, for purposes of the first
three steps of the determination, as if it provided for a qualified floating
rate (or a qualified inverse floating rate, as the case may be) rather than
the fixed rate. The qualified floating rate (or qualified inverse floating
rate) replacing the fixed rate must be such that the fair market value of the
Variable Rate Note as of the issue date would be approximately the same as the
fair market value of an otherwise identical debt instrument that provides for
the qualified floating rate (or qualified inverse floating rate) rather than
the fixed rate.
 
  SHORT-TERM NOTES. In general, an individual or other cash basis United
States Holder of a short-term Note is not required to accrue OID (as specially
defined below for the purposes of this paragraph) for United States federal
income tax purposes unless it elects to do so (but may be required to include
any stated interest in income as the interest is received). Accrual basis
United States Holders and certain other United States Holders, including
banks, regulated investment companies, dealers in securities, common trust
funds, United States Holders who hold Notes as part of certain identified
hedging transactions, certain pass-through entities and cash basis United
States Holders who so elect, are required to accrue OID on short-term Notes on
either a straight-line basis or under the constant-yield method (based on
daily compounding), at the election of the United States Holder. In the case
of a United States Holder not required and not electing to include OID in
income currently, any gain realized on the sale or retirement of the short-
term Note will be ordinary income to the extent of the OID accrued on a
straight-line basis (unless an election is made to accrue the OID under the
constant-yield method) through the date of sale or retirement. United States
Holders who are not required and do not elect to accrue OID on short-term
Notes will be required to defer deductions for interest on borrowings
allocable to short-term Notes in an amount not exceeding the deferred income
until the deferred income is realized.
 
  For purposes of determining the amount of OID subject to these rules, all
interest payments on a short-term Note, including stated interest, are
included in the short-term Note's stated redemption price at maturity.
 
  FOREIGN CURRENCY DISCOUNT NOTES. OID for any accrual period on a Discount
Note that is denominated in, or determined by reference to, a foreign currency
will be determined in the foreign currency and then translated into U.S.
dollars in the same manner as stated interest accrued by an accrual basis
United States Holder, as described under "Payments of Interest". Upon receipt
of an amount attributable to OID (whether in connection with a payment of
interest or the sale or retirement of a Note), a United States Holder may
recognize ordinary income or loss.
 
NOTES PURCHASED AT A PREMIUM
 
  A United States Holder that purchases a Note for an amount in excess of its
principal amount may elect to treat such excess as "amortizable bond premium,"
in which case the amount required to be included in the United States Holder's
income each year with respect to interest on the Note will be reduced by the
amount of amortizable bond premium allocable (based on the Note's yield to
maturity) to such year. In the case of a Note that is denominated in, or
determined by reference to, a foreign currency, bond premium will be computed
in units of foreign currency, and amortizable bond premium will reduce
interest income in units of the foreign currency. At the time amortized bond
premium offsets interest income, exchange gain or loss (taxable as ordinary
income or loss) is realized measured by the difference between exchange rates
at that time and at the time of the acquisition of the Notes. Any
 
                                     S-24

 
election to amortize bond premium shall apply to all bonds (other than bonds
the interest on which is excludible from gross income) 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 Service. See also "Original Issue Discount--
Election to Treat All Interest as Original Issue Discount".
 
PURCHASE, SALE AND RETIREMENT OF THE NOTES
 
  A United States Holder's tax basis in a Note will generally be its U.S.
dollar cost (as defined below), increased by (i) the amount of any OID or
market discount included in the United States Holder's income with respect to
the Note and (ii) the amount, if any, of income attributable to de minimis
original issue discount and de minimis market discount included in the United
States Holder's income with respect to the Note, and reduced by (iii) the
amount of any payments that are not qualified stated interest payments and
(iv) the amount of any amortizable bond premium applied to reduce interest on
the Note. The U.S. dollar cost of a Note purchased with a foreign currency
will generally be the U.S. dollar value of the purchase price on the date of
purchase or, in the case of Notes traded on an established securities market,
as defined in the applicable Treasury Regulations, that are purchased by a
cash basis United States Holder (or an accrual basis United States Holder that
so elects), on the settlement date for the purchase.
 
  A United States Holder will generally recognize gain or loss on the sale or
retirement of a Note equal to the difference between the amount realized on
the sale or retirement and the tax basis of the Note. The amount realized on a
sale or retirement for an amount in foreign currency will be the U.S. dollar
value of such amount on (i) the date payment is received in the case of a cash
basis United States Holder, (ii) the date of disposition in the case of an
accrual basis United States Holder, or (iii) in the case of Notes traded on an
established securities market, as defined in the applicable Treasury
Regulations, sold by a cash basis United States Holder (or an accrual basis
United States Holder that so elects), on the settlement date for the sale.
Except to the extent described above under "Original Issue Discount--Short-
Term Notes" or "Original Issue Discount--Market Discount" or described in the
next succeeding paragraph or attributable to accrued but unpaid interest, gain
or loss recognized on the sale or retirement of a Note will be capital gain or
loss and will be long-term capital gain or loss if the Note was held for more
than one year.
 
  Gain or loss recognized by a United States Holder on the sale or retirement
of a Note that is attributable to changes in exchange rates will be treated as
ordinary income or loss. However, exchange gain or loss is taken into account
only to the extent of total gain or loss realized on the transaction.
 
EXCHANGE OF AMOUNTS IN OTHER THAN U.S. DOLLARS
 
  Foreign currency received as interest on a Note or on the sale or retirement
of a Note will have a tax basis equal to its U.S. dollar value at the time
such interest is received or at the time of such sale or retirement. Foreign
currency that is purchased will generally have a tax basis equal to the U.S.
dollar value of the foreign currency on the date of purchase. Any gain or loss
recognized on a sale or other disposition of a foreign currency (including its
use to purchase Notes or upon exchange for U.S. dollars) will be ordinary
income or loss.
 
INDEXED NOTES AND AMORTIZING NOTES
 
  The applicable Pricing Supplement will contain a discussion of any special
United States federal income tax rules with respect to Notes that are not
subject to the rules governing Variable Rate Notes payments on which are
determined by reference to any index or with respect to any Amortizing Notes.
 
BACKUP WITHHOLDING AND INFORMATION REPORTING
 
  In general, information reporting requirements will apply to payments of
principal, any premium and interest on a Note and the proceeds of the sale of
a Note before maturity within the United States to, and to the accrual of OID
on a Discount Note with respect to, non-corporate United States Holders, and
"backup withholding" at a rate of 31% will apply to such payments and to
payments of OID if the United States Holder fails to provide an accurate
taxpayer identification number or to report all interest and dividends
required to be shown on its federal income tax returns.
 
                                     S-25

 
                            FOREIGN CURRENCY RISKS
 
GENERAL
 
  EXCHANGE RATES AND EXCHANGE CONTROLS. An investment in Notes that are
denominated in other than U.S. dollars entails significant risks that are not
associated with a similar investment in a security denominated in U.S.
dollars. Such risks include, without limitation, the possibility of
significant changes in rates of exchange between the U.S. dollar and the
various foreign currencies or composite currencies and the possibility of the
imposition or modification of foreign exchange controls by either the U.S. or
foreign governments. Such risks generally depend on factors over which the
Company has no control, such as economic and political events and the supply
of and demand for the relevant currencies. In recent years, rates of exchange
between the U.S. 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 Note. Depreciation of a Specified Currency other than
U.S. dollars against the U.S. dollar would result in a decrease in the
effective yield of such Note below its coupon rate, and in certain
circumstances could result in a loss to the investor on a U.S. dollar basis.
 
  Governments have imposed from time to time and may in the future impose
exchange controls which could affect exchange rates as well as the
availability of the Specified Currency at a Note's maturity. Even if there are
no actual exchange controls, it is possible that the Specified Currency for
any particular Note would not be available at such Note's maturity. In that
event, the Company will repay in U.S. dollars on the basis of the most
recently available Exchange Rate. See "Description of Notes--Payment of
Principal and Interest".
 
  Currently, there are limited facilities in the United States for conversion
of U.S. dollars into foreign currencies, and vice versa. Accordingly, payments
on Notes made in a Specified Currency other than U.S. dollars will be made
from an account with a bank located in the country issuing the Specified
Currency (or, with respect to Notes denominated in ECUs, from an ECU account).
See "Description of Notes--Payment of Principal and Interest".
 
  Unless otherwise specified in the applicable Pricing Supplement, Notes
denominated in other than U.S. dollars or ECUs will not be sold in, or to
residents of, the country issuing the Specified Currency in which particular
Notes are denominated.
 
  THIS PROSPECTUS SUPPLEMENT AND THE ATTACHED PROSPECTUS AND PRICING
SUPPLEMENT DO NOT DESCRIBE ALL THE RISKS OF AN INVESTMENT IN THE NOTES
DENOMINATED IN OTHER THAN U.S. DOLLARS. PROSPECTIVE INVESTORS SHOULD CONSULT
THEIR OWN FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS ENTAILED BY AN
INVESTMENT IN THE NOTES DENOMINATED IN A CURRENCY (INCLUDING ANY COMPOSITE
CURRENCY) OTHER THAN U.S. DOLLARS. SUCH NOTES ARE NOT AN APPROPRIATE
INVESTMENT FOR INVESTORS WHO ARE UNSOPHISTICATED WITH RESPECT TO FOREIGN
CURRENCY TRANSACTIONS.
 
  THE INFORMATION SET FORTH IN THE 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 INTEREST ON THE NOTES. SUCH PERSONS SHOULD CONSULT THEIR OWN
FINANCIAL AND LEGAL ADVISORS WITH REGARD TO SUCH MATTERS.
 
  GOVERNING LAW AND FOREIGN CURRENCY JUDGMENTS. The Notes will be governed by
and construed in accordance with the laws of the State of New York. If an
action based on the Notes were commenced in a court in the United States, it
is likely that such court would grant judgment relating to the Notes only in
U.S. dollars. It is not clear, however, whether, in granting such judgment,
the rate of conversion into U.S. dollars would be determined with reference to
the date of default, the date judgment is rendered or some other date. New
York statutory law provides, however, that a court shall render a judgment in
the foreign currency of the underlying obligation and that the judgment shall
be converted into U.S. dollars at the rate of exchange prevailing on the date
of the entry of the judgment.
 
                                     S-26

 
EXCHANGE RATES AND EXCHANGE CONTROLS FOR SPECIFIED CURRENCIES
 
  With respect to any Note denominated in other than U.S. dollars, a Pricing
Supplement including a currency supplement with respect to the applicable
Specified Currency (which supplement shall include information with respect to
applicable current foreign exchange controls, if any), and the relevant
historical exchange rates for the Specified Currency shall constitute a part
of this Prospectus Supplement. The information therein concerning exchange
rates is furnished as a matter of information only and should not be regarded
as indicative of the range of or trends in fluctuations in currency exchange
rates that may occur in the future.
 
  If payment on a Note is required to be made in ECUs and on a payment date
with respect to such Note ECUs are unavailable due to the imposition of
exchange controls or other circumstances beyond the Company's control or are
no longer used in the European Monetary System, then all payments due on such
payment date shall be made in U.S. dollars. The amount so payable on any
payment date in ECUs shall be converted into U.S. dollars at a rate determined
by the Exchange Rate Agent as of the second Business Day prior to the date on
which such payment is due on the following basis: The component currencies of
the ECUs for this purpose (the "Components") shall be the currency amounts
that were components of the ECUs as of the last date on which ECUs were used
in the European Monetary System. The equivalent of ECUs in U.S. dollars shall
be calculated by aggregating the U.S. dollar equivalents of the Components.
The U.S. dollar equivalent of each of the Components shall be determined by
the Exchange Rate Agent on the basis of the most recently available Market
Exchange Rate for the Components, 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 that currency as a
Component 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 Components 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 that currency as a
Component shall be replaced by amounts of such two or more currencies, each of
which shall have a value on the date of division equal to the amount of the
former component currency divided by the number of currencies into which that
currency was divided.
 
  All determinations referred to above made by the Exchange Rate Agent shall
be at its sole discretion (except to the extent expressly provided herein or
in the applicable Pricing Supplement that any determination is subject to
approval by the Company) and, in the absence of manifest error, shall be
conclusive for all purposes and binding on Holders of the Notes and the
Company, and the Exchange Rate Agent shall have no liability therefor.
 
                       SUPPLEMENTAL PLAN OF DISTRIBUTION
 
  Subject to the terms and conditions set forth in the Distribution Agreement,
dated October 2, 1995 (the "Distribution Agreement"), the Notes are being
offered on a continuing basis by the Company through Goldman, Sachs & Co., BT
Securities Corporation, Citicorp Securities, Inc. and J.P. Morgan Securities
Inc. (the "Agents"), who have agreed to use reasonable efforts to solicit
purchases of the Notes. The Company will have the sole right to accept offers
to purchase Notes and may reject any proposed purchase of Notes as a whole or
in part. The Company reserves the right to accept offers to purchase Notes
through agents other than the Agents, subject to the terms of the Distribution
Agreement. The Agents shall have the right, in their discretion reasonably
exercised, to reject any offer to purchase Notes, as a whole or in part. The
Company will pay the Agents a commission of from .125% to .750% of the
principal amount of Notes, depending upon maturity, for sales made through
them as Agents.
 
  The Company may also sell Notes to the Agents as principals for their own
accounts at a discount to be agreed upon at the time of sale, or the
purchasing Agents may receive from the Company a commission or discount
equivalent to that set forth on the cover page hereof in the case of any such
 
                                     S-27

 
principal transaction in which no other discount is agreed. Such Notes may be
resold at prevailing market prices, or at prices related thereto or, if so
agreed, at a fixed public offering price, at the time of such resale, as
determined by the Agents. The Company reserves the right to sell Notes
directly on its own behalf. No commission will be payable on any Notes sold
directly by the Company.
 
  In addition, the Agents may offer the Notes they have purchased as principal
to other dealers. The Agents may sell Notes to any dealer at a discount and,
unless otherwise specified in the applicable Pricing Supplement, such discount
allowed to any dealer may include all or part of the discount to be received
from the Company. Unless otherwise indicated 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 equal to the commission applicable to any agency sale of a Note of
identical maturity. After the initial public offering of Notes to be resold to
investors and other purchasers on a fixed public offering price basis, the
public offering price, concession and discount may be changed.
 
  The Agents, as agents or principals, may be deemed to be "underwriters"
within the meaning of the Securities Act of 1933 (the "Act"). The Company has
agreed to indemnify the Agents against certain liabilities, including
liabilities under the Act. The Company has agreed to reimburse the Agents for
certain expenses.
 
  Certain of the Agents and their affiliates perform various investment
banking and commercial banking services for the Company from time to time in
the ordinary course of business and may perform such services in the future.
One of the Agents, BT Securities Corporation, is an affiliate of Bankers Trust
Company, the Trustee under the Indenture. See "Description of Debt
Securities--Regarding the Trustee" in the accompanying Prospectus.
 
  Notes may also be sold at the price to the public set forth herein to
dealers who may resell to investors. Such dealers may be deemed to be
"underwriters" within the meaning of the Act.
 
  Unless otherwise indicated in the applicable Pricing Supplement, payment of
the purchase price of the Notes will be required to be made in immediately
available funds.
 
  The Notes are a new issue of securities with no established trading market
and will not be listed on any securities exchange. No assurance can be given
as to the existence or liquidity of the secondary market for the Notes.
 
                               VALIDITY OF NOTES
 
  The validity of the Notes will be passed upon for the Company by Dorsey &
Whitney P.L.L.P., 220 South Sixth Street, Minneapolis, Minnesota 55402, and
for the Agents by Sullivan & Cromwell, 250 Park Avenue, New York, New York
10177. The opinions of Dorsey & Whitney P.L.L.P. and Sullivan & Cromwell will
be conditioned upon, and subject to certain assumptions regarding, future
actions required to be taken by the Company and the Trustee in connection with
the issuance and sale of any particular Note, the specific terms of Notes and
other matters which may affect the validity of Notes but which cannot be
ascertained on the date of such opinions.
 
 
                                     S-28

 
 
                       [LOGO OF SUPERVALU APPEARS HERE]
 
                                DEBT SECURITIES
 
                               ----------------
 
  SUPERVALU INC. (the "Company") may offer from time to time its debt
securities consisting of debentures, notes and/or other unsecured evidences of
indebtedness ("Debt Securities") at an aggregate initial offering price of not
more than $400,000,000 or, if applicable, the equivalent thereof in any other
currency or currencies. The Debt Securities may be offered as separate series
in amounts, at prices and on terms to be determined at the time of sale and to
be set forth in supplements to this Prospectus. The Company may sell Debt
Securities to or through underwriters, and also may sell Debt Securities
directly to other purchasers or through agents. See "Plan of Distribution".
 
  The terms of the Debt Securities, including, where applicable, the specific
designation, aggregate principal amount, denominations, maturity, rate (which
may be fixed or variable) and time of payment of interest, if any, terms for
redemption at the option of the Company or the holder, terms for sinking fund
payments, the initial public offering price, the names of any underwriters or
agents, the principal amounts, if any, to be purchased by underwriters, the
compensation, if any, of such underwriters or agents and any other terms in
connection with the offering and sale of the Debt Securities in respect of
which this Prospectus is being delivered, are set forth in the accompanying
Prospectus Supplement ("Prospectus Supplement"). As used herein, Debt
Securities shall include securities denominated in United States dollars or,
at the option of the Company and if so specified in an applicable Prospectus
Supplement, in any foreign currency or in composite currencies or in amounts
determined by reference to an index.
 
  The Debt Securities may be issued in registered form ("Registered Debt
Securities") or bearer form ("Bearer Debt Securities") with coupons attached
or both. In addition, all or a portion of the Debt Securities of a series may
be issuable in permanent global form. Bearer Debt Securities may be offered
only to non-United States persons and to offices located outside the United
States of certain United States financial institutions.
 
                               ----------------
 
   THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
   EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
   AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
   ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
   IS A CRIMINAL OFFENSE.
 
                               ----------------
 
                THE DATE OF THIS PROSPECTUS IS OCTOBER 2, 1995

 
  UNLESS THE CONTEXT OTHERWISE REQUIRES, THE TERMS "SUPERVALU" AND THE
"COMPANY", AS USED IN THIS PROSPECTUS, MEAN SUPERVALU INC. AND ITS
SUBSIDIARIES.
 
                             AVAILABLE INFORMATION
 
  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 and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by the Company can be inspected and copied at the public reference
facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Commission's Regional Offices at
Seven World Trade Center, Suite 1300, New York, New York 10048 and 1400
Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661. Copies of
such material can be obtained by mail from the Public Reference Branch of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. In addition, reports, proxy statements and other information concerning
the Company may be inspected at the offices of the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005.
 
  SUPERVALU 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
"Act"), of which this Prospectus constitutes a part. This Prospectus does not
contain all 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 hereby made to the
Registration Statement.
 
                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
 
  The following documents filed with the Commission (File No. 1-5418) are
incorporated herein by reference:
 
    1. SUPERVALU's Annual Report on Form 10-K for the 52 weeks ended
       February 25, 1995.
 
    2. SUPERVALU's Quarterly Report on Form 10-Q for the 16 weeks ended
       June 17, 1995 and SUPERVALU's Current Report on Form 8-K dated
       October 2, 1995.
 
  All other documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act, subsequent to the date of this Prospectus and
prior to the termination of the offering of the Debt Securities shall be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the respective dates of filing of such documents.
 
  Any statement contained herein or in a document all or part of which is
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 document subsequently filed with
the Commission 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 any person to whom this
Prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by reference
(not including exhibits thereto unless such exhibits are specifically
incorporated by reference into the information that the Registration Statement
incorporates). Requests for such copies should be directed to Teresa H.
Johnson, Corporate Secretary, SUPERVALU INC., P.O. Box 990, Minneapolis,
Minnesota 55440, telephone number: (612) 828-4000.
 
                                       2

 
                                  THE COMPANY
 
  The Company is a leading food wholesaler and approximately the 12th largest
food retailer in the nation. It is primarily engaged in the business of
selling food and nonfood products at wholesale to approximately 4,600 stores
in 48 states. In addition, the Company operates approximately 300 retail food
supermarkets, discount food superstores, supercenters, combination stores,
limited assortment and other stores. Information in this Prospectus regarding
the number of stores supplied and operated by SUPERVALU is as of September 9,
1995. The Company's fiscal year ends on the last Saturday in February of 1996.
 
  SUPERVALU INC. is a corporation organized under the laws of Delaware as a
successor to two wholesale grocery firms established in the 1870's. The
Company's principal executive offices are located at 11840 Valley View Road,
Eden Prairie, Minnesota 55344, telephone number: (612) 828-4000.
 
                                USE OF PROCEEDS
 
  The Company intends to utilize the net proceeds from the issue and sale of
the Debt Securities offered hereby to repay short-term and other indebtedness,
to finance possible acquisitions and for other general corporate purposes.
 
                                       3

 
                                 CAPITALIZATION
 
  The following table sets forth the capitalization of SUPERVALU as of
September 9, 1995:
 


                                                                    SEPTEMBER 9,
                                                                        1995
                                                                    ------------
                                                                        (IN
                                                                     THOUSANDS)
                                                                 
Short-term debt:
  Notes payable....................................................  $  134,673
  Current maturities of long-term debt.............................      10,181
  Current obligations under capital leases.........................      18,580
                                                                     ----------
    Total short-term debt..........................................     163,434
Long-term debt:
  Long-term debt...................................................   1,208,042
  Long-term obligations under capital leases.......................     245,319
                                                                     ----------
    Total long-term debt...........................................   1,453,361
Stockholders' equity:
  Preferred stock..................................................       5,908
  Common stock.....................................................      75,335
  Capital in excess of par value...................................      12,708
  Retained earnings................................................   1,282,949
  Treasury stock, at cost..........................................    (198,543)
                                                                     ----------
    Total stockholders' equity.....................................  $1,178,357
                                                                     ==========
      Total capitalization.........................................  $2,795,152
                                                                     ==========

 
                                       4

 
                  SELECTED CONSOLIDATED FINANCIAL INFORMATION
 
  The following tables set forth selected consolidated financial information
which was selected or derived from the financial statements and notes thereto
of SUPERVALU. The unaudited interim period financial information, in the
opinion of the Company, includes all adjustments necessary for fair
presentation for the periods shown. The results for the first two quarters of
fiscal 1996 (28 weeks) ended September 9, 1995 are not necessarily indicative
of the results to be expected for the full fiscal year. The information set
forth below is qualified in its entirety by and should be read in conjunction
with the detailed information and consolidated financial statements, including
the notes thereto, included in SUPERVALU's Annual Report on Form 10-K for the
fiscal year ended February 25, 1995 incorporated by reference in and made part
of this Prospectus.
 


                                                                            FISCAL YEAR ENDED
                                                     ----------------------------------------------------------------
                                 TWO QUARTERS
                               (28 WEEKS) ENDED                    (52 WEEKS)                (53 WEEKS)   (52 WEEKS)
                          -------------------------- -------------------------------------- ------------ ------------
                          SEPTEMBER 9, SEPTEMBER 10, FEBRUARY 25, FEBRUARY 26, FEBRUARY 27, FEBRUARY 29, FEBRUARY 23,
                              1995         1994        1995(4)        1994       1993(3)      1992(4)        1991
                          ------------ ------------- ------------ ------------ ------------ ------------ ------------
                                               (IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
                                                                                    
STATEMENT OF EARNINGS
 DATA
 Net sales..............   $8,752,434   $8,764,840   $16,563,772  $15,936,925  $12,568,000  $10,632,301  $10,104,899
 Costs and expenses:
 Cost of sales..........    7,940,385    7,990,435    15,040,117   14,523,434   11,531,394    9,807,633    9,360,886
 Selling and
  administrative
  expenses..............      619,456      584,942     1,169,843    1,044,433      746,857      583,789      531,972
 Restructuring and other
  charges...............          --           --        244,000          --           --           --           --
 Interest, net..........       65,295       54,508       111,271       89,767       54,203       34,320       31,441
 Equity in earnings of
  ShopKo................        3,329        3,575        17,384       14,789       23,072       32,176       45,080
 Gain on sale of ShopKo
  stock.................          --           --            --           --           --        84,105          --
 Earnings before income
  taxes and accounting
  change................      130,627      138,530        15,925      294,080      258,618      322,840      225,680
 Net earnings...........       79,229       84,128        43,334      185,253      164,526      194,377      155,136
BALANCE SHEET DATA
 Current assets.........   $1,564,737   $1,710,839   $ 1,646,340  $ 1,563,313  $ 1,573,593  $ 1,163,270  $   884,894
 Working capital(1).....      358,003      422,806       319,429      452,121      361,093      534,182      196,217
 Total assets...........    4,158,447    4,484,009     4,305,149    4,042,351    4,064,189    2,484,300    2,401,357
 Long-term debt and
  capital leases........    1,453,361    1,472,664     1,459,766    1,262,995    1,347,386      608,241      567,444
 Total stockholders'
  equity................    1,178,357    1,297,709     1,193,222    1,275,458    1,134,820    1,030,981      978,678
PER SHARE DATA
 Earnings per common
  share before
  accounting change.....   $     1.15   $     1.18   $       .61  $      2.58  $      2.31  $      2.78  $      2.06
 Cash dividend per
  common share..........   $      .48   $  .45 1/2   $   .92 1/2  $   .85 1/2  $   .76 1/2  $   .70 1/2  $   .64 1/2
 Book value (at period
  end)..................   $    17.25   $    18.07   $     16.92  $     17.62  $     15.84  $     14.35  $     13.01
RATIO OF EARNINGS TO
 FIXED CHARGES(2).......         2.52         2.78          1.03         3.08         3.70         5.08         3.83

- -------
(1) Calculated after adding back the LIFO reserve.
(2) Earnings used to calculate the ratio of earnings to fixed charges consist
    of earnings from operations before income taxes, adjusted for the portion
    of fixed charges deducted from such earnings and for SUPERVALU's share of
    undistributed earnings of ShopKo Stores, Inc. Fixed charges consist of
    interest on all indebtedness (including capital lease obligations),
    amortization of debt expense and the portion of interest expense on
    operating leases deemed representative of the interest factor. Ratios are
    presented on a consolidated basis.
(3) Fiscal year ended February 27, 1993 includes the results of Wetterau
    Incorporated from October 31, 1992 through year end. Wetterau Incorporated
    was purchased for approximately $1.1 billion; such purchase was financed
    through the issuance and assumption of debt.
(4) Fiscal year ended February 29, 1992 includes a $51.3 million after tax
    gain on the sale of 54% of the Company's interest in ShopKo Stores, Inc.
    The Internal Revenue Service subsequently determined that the partial
    disposition of ShopKo Stores, Inc. was a non-taxable transaction.
    Therefore, $40.8 million of taxes provided by the Company for this
    transaction was reversed and reflected in the financial statements for the
    fiscal year ended February 25, 1995.
 
                                       5

 
                                   BUSINESS
 
OVERVIEW
 
  The Company is a leading food wholesaler and approximately the 12th largest
food retailer in the nation. It is primarily engaged in the business of
selling food and nonfood products at wholesale to approximately 4,600 stores
in 48 states. In addition, the Company operates approximately 300 retail food
supermarkets, discount food superstores, supercenters, combination stores,
limited assortment and other stores, primarily under the names of Cub Foods,
Shop 'n Save, bigg's, Save-A-Lot, Scott's Foods, Laneco and Hornbacher's.
Information in this Prospectus regarding the number of stores supplied and
operated by SUPERVALU is as of September 9, 1995.
 
  In 1991 SUPERVALU began the implementation of a strategy to focus on its
core food distribution and retailing business segments. The Company executed
the first major step of this strategy in October 1991 with the sale of 54% of
SUPERVALU's interest in ShopKo Stores, Inc. ("ShopKo"), its discount general
merchandise subsidiary, through an initial public offering. SUPERVALU
continues to own a 46% interest in ShopKo which, at September 9, 1995,
operated 128 discount department stores in 15 states. The proceeds generated
in connection with the sale of ShopKo were used initially to reduce debt and
subsequently reinvested in the acquisition of Wetterau Incorporated
("Wetterau").
 
  In October 1992, the Company completed the acquisition of Wetterau,
resulting in a significant expansion of the geographic market and customer
base compared with that previously served by SUPERVALU's food wholesale and
retail operations. In fiscal 1994, the Company completed the integration of
Wetterau's administrative and support services and, in fiscal 1994 and 1995,
the Company combined or closed a number of distribution operations to
eliminate inefficiencies and overlap.
 
  In March 1994, the Company acquired Sweet Life Foods, Inc., a privately
owned grocery wholesale distributor serving Massachusetts, Connecticut, Maine
and Eastern New York. This acquisition further strengthened the Company's New
England customer base by adding 280 additional stores as customers.
 
  In May 1994, the Company acquired the assets of Wetterau Properties Inc.
("WPI"), a publicly owned real estate investment trust which was formed by
Wetterau prior to the Company's acquisition of Wetterau. Most of the
properties owned by WPI had been acquired from and leased back to Wetterau;
the Company was the tenant for all but one of the properties acquired from WPI
in the transaction.
 
  In August 1994, the Company acquired Hyper Shoppes, Inc. ("Hyper Shoppes"),
which operates five bigg's supercenters and two bigg's discount food
superstores in the Cincinnati, Louisville and Denver markets. Prior to the
acquisition, SUPERVALU held a minority ownership interest in Hyper Shoppes and
was the principal supplier to the bigg's stores. The Company has also made
other smaller acquisitions from time to time to further the growth of its food
distribution, retailing and bakery operations.
 
  In December 1994, the Company announced a change in operating strategy which
included the decision to restructure certain of its operations and reassess
the recoverability of underlying assets. Restructuring and other charges
totaling $244.0 million were recorded in the third quarter of fiscal 1995 to
provide for the implementation of the plan formulated under the ADVANTAGE
project, and the sale, closure or restructuring of certain retail businesses.
The aggregate charges also included the recognition of certain asset
impairments based on the Company's established process of reviewing
intangibles on a periodic recurring basis. The restructuring plan, which was
approved by the Board of Directors, resulted from a comprehensive review of
industry trends and Company operations, and represents a new business vision
for the Company.
 
  Management's objective under the ADVANTAGE project is to fundamentally
change the Company's business processes by improving the effectiveness and
efficiency of the Company's food
 
                                       6

 
distribution system, thus lowering the cost of goods to the Company's
customers, and by enhancing the market driving support to retailer customers.
The ADVANTAGE project has three major initiatives: creation of a transformed
logistics network; development of enhanced market driving capabilities at
retail; and adoption of a new approach to pricing. Management's retail food
objective is to improve retail performance by eliminating certain operations
and assets that do not add shareholder value and focusing the Company's
corporate retail efforts on building retail formats which it believes will
produce the best results in the future.
 
  The aggregate charges include $204.8 million for activities under the
restructuring plan, covering $53.1 million for severance, pension and
outplacement; $20.0 million for loss on disposal of non-real estate assets and
leases in food distribution; $87.8 million for exiting properties and leases
at retail locations; and $43.9 million for impaired real estate. The aggregate
charges also include $39.2 million for asset impairment, covering intangibles
in businesses where future undiscounted cash flow is not sufficient to recover
the book value of the recorded intangible. Cash expenditures related to the
aggregate charges were $3.9 million during fiscal 1995, and are estimated to
be $29.2 million in fiscal 1996 and $22.8 million thereafter. These cash
expenditures cover severance, pension, outplacement and carrying costs of
impaired food distribution real estate. The Company announced that
approximately 4,300 positions, 1,700 of which are in retail food operations,
would be eliminated under the re-engineering efforts during an 18-month period
which began in the fourth quarter of fiscal 1995.
 
  The restructuring charges do not cover certain aspects of the plan,
including new information systems, anticipated operating losses on retail
business units to be exited, implementation costs associated with the
ADVANTAGE project, employee relocation and training. These costs are not
considered exit activities and will be recognized as incurred. The Company
incurred expenses of approximately $15 million in fiscal 1995 in connection
with the ADVANTAGE project, primarily studying the fundamentals of the
Company's business and the industry and developing a restructuring plan, and
the Company expects to incur additional expenses of approximately $20 to $24
million related to this initiative in fiscal 1996. It is the Company's intent
to make capital investments of about $175 million in implementing the
ADVANTAGE project, with approximately $100 million of such expenditures
occurring in fiscal 1996. The monies will be used primarily to fund regional
facilities, technology and various mechanization systems. The Company expects
that this investment in ADVANTAGE, together with the cash expenditures related
to the restructuring charges discussed above, will be funded through
internally generated cash, principally from inventory and property reductions,
and existing credit facilities.
 
FOOD DISTRIBUTION OPERATIONS
 
  SUPERVALU's food distribution divisions sell food and nonfood products at
wholesale and offer a variety of retail support services to independently
owned retail food stores. SUPERVALU's 25 food distribution divisions and four
general merchandise divisions are the principal suppliers to approximately
4,600 retail grocery and general merchandise stores. In connection with the
ADVANTAGE project, the Company recently established seven marketing regions to
provide purchasing and marketing support for its retail food and general
merchandise customers throughout the country. A regional logistics network
anchored by three regional distribution facilities is also being established
to align food distribution companies geographically by region.
 
  Retail food stores served by the Company range in size from small
convenience stores to 200,000 square foot supercenters. The Company's
wholesale customer base includes single and multiple store independent
operators, affiliated stores, regional chains and Company owned stores,
operating in a variety of formats including limited assortment stores,
discount food stores, conventional and upscale supermarkets and combination
stores.
 
  In addition to supplying food and other merchandise, SUPERVALU offers such
retail support services as store management assistance, computerized inventory
control and ordering services, accounting and payroll services, financial and
budget planning, building design and construction services, assistance in
selection and purchasing or leasing of store sites, advertising, promotional
and
 
                                       7

 
merchandising assistance, consumer and market research, financing and others.
Certain Company subsidiaries operate as insurance agencies and provide
comprehensive insurance programs to the Company's affiliated retailers.
Separate charges are made for most, but not all, of these services. The
Company is currently in the process of analyzing the services to be supplied
and the fees to be charged to independent retailers in connection with the
ADVANTAGE project and its new pricing structure.
 
  SUPERVALU may provide financial assistance to retail stores served or to be
served by it, including the acquisition and subleasing of store properties,
the making of direct loans and the providing of guarantees or other forms of
financing. In general, loans made by the Company to independent retailers are
secured by liens on inventory and/or equipment, by personal guarantees and by
other security. When the Company subleases store properties to retailers, the
rentals are generally as high or higher than those paid by the Company.
 
  Hazelwood Farms Bakeries, Inc., a subsidiary, manufactures frozen dough and
bakery products primarily for the in-store bakery market, and has customers in
all 50 states as well as Canada and Mexico. Its customer base consists of
wholesale food distributors, supermarket chains (including company-owned,
affiliated and non-affiliated stores), fast food chains and institutional food
service companies.
 
RETAIL FOOD OPERATIONS
 
  The Company's retail businesses operate approximately 300 retail stores
under several formats, including supermarkets, discount food superstores,
supercenters, combination stores, limited assortment and other stores. These
diverse formats enable the Company to operate in a variety of markets under
widely differing competitive circumstances.
 
  The Company's retail stores operated under the following principal formats
as of September 9, 1995:
 
    Cub Foods consists of 115 discount food superstores, 59 of which are
  franchised to independent retailers and 56 of which are corporately
  operated. During the remainder of fiscal 1996 two new corporate stores are
  scheduled to open.
 
    Shop 'n Save consists of 27 discount food stores located in Eastern
  Missouri and Southern Illinois.
 
    bigg's consists of five supercenters and two discount food superstores
  that operate in the Cincinnati, Louisville and Denver markets. One new
  discount food superstore is planned for fiscal 1996.
 
    Save-A-Lot is the Company's combined wholesale and retail limited
  assortment operation. There are 499 Save-A-Lot limited assortment stores of
  which 109 are corporately operated. Save-A-Lot projects adding 41 stores
  during the remainder of fiscal 1996 including seven corporately owned
  stores.
 
    Scott's Foods is a 18-store group located in the Fort Wayne, Indiana
  area. One new store and two remodels are planned for fiscal 1996.
 
    The Company's Laneco division operates a diverse mix of 39 retail outlets
  comprised predominantly of supermarkets, supercenters and discount food
  stores. These stores operate mainly under the Laneco, Ultra IGA and Price
  Slasher names and formats. The Laneco division is in the process of a
  substantial restructuring. Four stores were closed in the fourth quarter of
  fiscal 1995 and five stores were closed in the first half of fiscal 1996.
  No new stores are planned for fiscal 1996.
 
    Hornbacher's is a five-store group located in the Fargo, North Dakota
  marketplace, with no new stores planned for fiscal 1996.
 
   Other formats operated by the Company include County Market, SUPERVALU,
IGA, Foodland, Rite Choice and Twin Valu Foods.
 
                                       8

 
  As part of the restructuring plan, the Company is selling or closing
approximately 30 retail stores, of which 16 stores were closed prior to
September 9, 1995.
 
                        DESCRIPTION OF DEBT SECURITIES
 
  The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Debt Securities
offered by any Prospectus Supplement (the "Offered Debt Securities") and the
extent, if any, to which such general provisions may apply to the Debt
Securities so offered will be described in the Prospectus Supplement relating
to such Offered Debt Securities.
 
  The Debt Securities are to be issued under an Indenture dated as of July 1,
1987, as supplemented by the First Supplemental Indenture dated as of August
1, 1990, the Second Supplemental Indenture dated as of October 1, 1992 and the
Third Supplemental Indenture dated as of September 1, 1995 (as so
supplemented, the "Indenture"), between SUPERVALU and Bankers Trust Company,
as Trustee (the "Trustee"), which Indenture is an exhibit to the Registration
Statement. The following summaries of certain provisions of the Indenture do
not purport to be complete and are subject to, and are qualified in their
entirety by reference to, all the provisions of the Indenture, including the
definitions therein of certain terms. Wherever particular provisions or
defined terms of the Indenture are referred to, such provisions or defined
terms are incorporated herein by reference. Capitalized terms not otherwise
defined herein shall have the meaning given to them in the Indenture.
 
GENERAL
 
  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.
 
  The Indenture does not limit the aggregate principal amount of Debt
Securities which may be issued thereunder and provides that Debt Securities
may be issued thereunder from time to time in one or more series.
 
  Reference is made to the Prospectus Supplement relating to the particular
series of Debt Securities offered thereby for the following terms, when
applicable, of the Offered Debt Securities: (a) the designation of the Offered
Debt Securities; (b) any limit on the aggregate principal amount of the
Offered Debt Securities; (c) the date or dates on which the Offered Debt
Securities will mature; (d) whether the Offered Debt Securities are to be
issued as Registered Debt Securities or Bearer Debt Securities (with or
without coupons) or both, and restrictions applicable to the exchange of one
form for another and to the offer, sale and delivery of Bearer Debt
Securities; (e) whether the Offered Debt Securities are to be issued in whole
or in part in the form of one or more Global Securities and, if so, the
identity of the Depositary for such Global Security or Securities and the
circumstances under which any such Global Security may be exchanged for
Securities registered in the name of, and any transfer of such Global Security
may be registered to, a Person other than such Depositary or its nominee; (f)
the rate or rates (which may be fixed or variable) per annum at which the
Offered Debt Securities will bear interest, if any, and the date from which
such interest will accrue; (g) the dates on which such interest, if any, will
be payable and the Regular Record Dates for such Interest Payment Dates; (h)
any mandatory or optional sinking fund or purchase fund or analogous
provisions; (i) if applicable, the date after which and the price or prices at
which the Offered Debt Securities may, pursuant to any optional or mandatory
redemption provisions, be redeemed at the option of the Company or the Holder
thereof and the other detailed terms and provisions of such optional or
mandatory redemption; (j) if other than the principal amount thereof, the
portion of the principal amount of such Offered Debt Securities which shall be
payable upon declaration of acceleration of the maturity thereof; (k) the
 
                                       9

 
denominations in which any Offered Debt Securities which are Registered Debt
Securities will be issuable, if other than denominations of $1,000 and any
integral multiple thereof, and the denomination in which any Offered Debt
Securities which are Bearer Debt Securities will be issuable, if other than
denominations of $5,000; (l) the currency or currencies of denomination and
payment of principal of and any premium and interest on the Offered Debt
Securities; (m) any index used to determine the amount of payments of
principal of and any premium and interest on the Offered Debt Securities; (n)
if principal of or interest on the Offered Debt Securities is denominated or
payable in a currency or currencies other than the United States dollar,
whether and under what terms and conditions the Company may defease the
Offered Debt Securities; and (o) any other terms of the Offered Debt
Securities. (Section 301)
 
  Unless otherwise indicated in the Prospectus Supplement relating thereto,
principal of and premium, if any, and interest, if any, on the Offered Debt
Securities will be payable at the office of the Trustee at Four Albany Street,
New York, New York 10006. At the option of the Company, payment of interest on
Registered Debt Securities may be made by check mailed to the address of the
Person entitled thereto as it appears in the Security Register. (Sections 301
and 1002)
 
  Debt Securities may be presented for exchange, and Registered Debt
Securities may be presented for transfer in the manner, at the places and
subject to the restrictions set forth in the Debt Securities and the
Prospectus Supplement. Such services will be provided without charge, other
than any tax or other governmental charge payable in connection therewith, but
subject to the limitations provided in the Indenture. Bearer Debt Securities
and the coupons, if any, appertaining thereto will be transferable by
delivery.
 
  Debt Securities may be issued under the Indenture as Original Issue Discount
Securities to be offered and sold at a substantial discount from the principal
amount thereof. If the Offered Debt Securities are Original Issue Discount
Securities, the special Federal income tax, accounting and other
considerations applicable thereto will be described in the Prospectus
Supplement relating thereto. "Original Issue Discount Security" means any
security which provides for an amount less than the principal amount thereof
to be due and payable upon the declaration of acceleration of the maturity
thereof upon the occurrence of an Event of Default and the continuation
thereof.
 
GLOBAL SECURITIES
 
  The Offered Debt Securities may be issued in whole or in part in the form of
one or more Global Securities that will be deposited with, or on behalf of, a
Depositary identified in the applicable Prospectus Supplement or Prospectus
Supplements. Unless otherwise indicated in the applicable Prospectus
Supplement or Prospectus Supplements, Global Securities will be issued in
registered form. (Section 305) The specific terms of the depositary
arrangement with respect to any Offered Debt Securities will be described in
the applicable Prospectus Supplement or Prospectus Supplements.
 
OPTIONAL REDEMPTION
 
  Reference is made to the Prospectus Supplement relating to each series of
Offered Debt Securities for any optional redemption provisions relating to
such Offered Debt Securities.
 
SINKING FUND
 
  Reference is made to the Prospectus Supplement relating to each series of
Offered Debt Securities for any sinking fund provisions relating to such
Offered Debt Securities.
 
CERTAIN COVENANTS OF THE COMPANY
 
  RESTRICTIONS ON LIENS. The Indenture provides that the Company will not, and
will not permit any Domestic Subsidiary (as defined) to, issue, assume or
guarantee any indebtedness for money borrowed (herein referred to as "Debt")
if such Debt is secured by any mortgage, security interest, pledge, lien or
other encumbrance (herein referred to as a "mortgage") upon any Operating
Property
 
                                      10

 
(as defined) of the Company or any Domestic Subsidiary or any shares of stock
or indebtedness of any Domestic Subsidiary, whether owned at the date of the
Indenture or thereafter acquired, without effectively securing the Debt
Securities equally and ratably with such Debt. The foregoing restriction does
not apply to (i) mortgages on any property acquired, constructed or improved
after July 1, 1987, which are created or assumed within 180 days after such
acquisition, construction or improvement (or within six months thereafter
pursuant to a firm commitment for financing arrangements entered into within
such 180-day period) to secure or provide for the payment of the purchase
price or cost thereof incurred after July 1, 1987, or mortgages existing on
property at the time of its acquisition (including acquisition through merger
or consolidation); (ii) mortgages on property of any corporation existing at
the time it becomes a Domestic Subsidiary; (iii) mortgages to secure Debt of a
Domestic Subsidiary to the Company or to another Domestic Subsidiary; (iv)
mortgages in favor of governmental bodies to secure partial progress, advance
or other payments pursuant to any contract or statute or to secure
indebtedness incurred to finance the purchase price or cost of constructing or
improving the property subject to such mortgages; or (v) mortgages for
extending, renewing or replacing Debt secured by any mortgage referred to in
the foregoing clauses (i) to (iv), inclusive, or in this clause (v) or any
mortgages existing on the date of the Indenture. Such restriction does not
apply to the issuance, assumption or guarantee by the Company or any Domestic
Subsidiary of Debt secured by a mortgage which would otherwise be subject to
the foregoing restrictions up to an aggregate amount which, together with all
other secured Debt of the Company and its Domestic Subsidiaries (not including
secured Debt permitted under the foregoing exceptions) and the Value (as
defined) of Sale and Lease-back Transactions existing at such time (other than
Sale and Lease-back Transactions the proceeds of which have been applied to
the retirement of Debt Securities or of certain long-term indebtedness or to
the purchase of other Operating Property, and other than Sale and Lease-back
Transactions in which the property involved would have been permitted to be
mortgaged under clause (i) above), does not exceed the greater of $200,000,000
or 10% of Consolidated Net Tangible Assets (as defined). (Section 1007)
 
  RESTRICTIONS ON SALE AND LEASE-BACK TRANSACTIONS. Sale and Lease-back
Transactions by the Company or any Domestic Subsidiary of any Operating
Property are prohibited (except for temporary leases for a term, including
renewals, of not more than 36 months and except for leases between the Company
and a Domestic Subsidiary or between Domestic Subsidiaries) unless the net
proceeds of such Sale and Lease-back Transactions are at least equal to the
fair value (as determined by the Board of Directors or the President or any
Vice President of the Company) of the Operating Property to be leased and
either (a) the Company or such Domestic Subsidiary would be entitled to incur
Debt secured by a mortgage on the property to be leased without securing the
Debt Securities, pursuant to clause (i) under "Restrictions on Liens" or (b)
the Value thereof would be an amount permitted under the last sentence under
"Restrictions on Liens" or (c) the Company applies an amount equal to the fair
value (as so determined) of such property (i) to the redemption or repurchase
of Debt Securities, (ii) to the payment or other retirement of certain long-
term indebtedness of the Company or a Domestic Subsidiary or (iii) to the
purchase of Operating Property (other than that involved in such Sale and
Lease-back Transaction). (Section 1008)
 
  DEFINITIONS. The term "Consolidated Net Tangible Assets" is defined to mean
the total of all the assets appearing on the Consolidated Balance Sheets of
the Company and its majority or wholly-owned subsidiaries less the following:
(1) current liabilities; (2) reserves for depreciation and other asset
valuation reserves; (3) intangible assets such as goodwill, trademarks, trade
names, patents, and unamortized debt discount and expense; and (4) appropriate
adjustments on account of minority interests of other persons holding stock in
any majority-owned subsidiary of the Company. (Section 101)
 
  The term "Domestic Subsidiary" is defined to mean any majority or wholly-
owned subsidiary which owns an Operating Property. (Section 101)
 
  The term "Operating Property" is defined to mean any manufacturing or
processing plant, office facility, retail store, warehouse, distribution
center or equipment located within the United States of America or its
territories or possessions and owned and operated now or hereafter by the
Company or
 
                                      11

 
any Domestic Subsidiary and having a book value on the date as of which the
determination is being made of more than 0.65% of Consolidated Net Tangible
Assets. (Section 101)
 
  The term "Value" is defined to mean, with respect to a Sale and Lease-back
Transaction, as of any particular time, the amount equal to the greater of (1)
the net proceeds from the sale or transfer of the property leased pursuant to
such Sale and Lease-back Transaction or (2) the fair value in the opinion of
the Board of Directors or the President or any Vice President of the Company
of such property at the time of entering into such Sale and Lease-back
Transaction, in either case multiplied by a fraction, the numerator of which
shall be equal to the number of full years of the term of the lease remaining
at the time of determination and the denominator of which shall be equal to
the number of full years of such term, without regard to any renewal or
extension options contained in the lease. (Section 101)
 
  Other than the above-described covenants, there are no covenants or
provisions contained in the Indenture which may afford Holders of the Debt
Securities protection in the event of a highly leveraged transaction involving
the Company. Any such covenant or provision relating to a particular series of
Debt Securities will be described in the Prospectus Supplement relating
thereto.
 
  Reference is made to the Prospectus Supplement relating to each series of
Offered Debt Securities for any particular provisions relating to such Offered
Debt Securities, including any additional restrictive covenants that may be
included in the terms thereof.
 
EVENTS OF DEFAULT
 
  The following are Events of Default under the Indenture with respect to Debt
Securities of any series: (a) failure to pay principal of or premium, if any,
on any Debt Security of that series when due; (b) failure to pay any interest
on any Debt Security of that series when due, continued for 30 days; (c)
failure to deposit any sinking fund payment, when due, in respect of any Debt
Security of that series; (d) failure to perform any other covenant of the
Company in the Indenture (other than a covenant included in the Indenture
solely for the benefit of series of Debt Securities other than that series),
continued for 60 days after written notice as provided in the Indenture; (e)
certain events of bankruptcy, insolvency or reorganization; and (f) any other
Event of Default provided with respect to Debt Securities of that series
described in the Prospectus Supplement relating thereto. (Section 501)
 
  If an Event of Default with respect to Outstanding Debt Securities of any
series shall occur and be continuing, either the Trustee or the Holders of at
least 25% in principal amount of the Outstanding Debt Securities of that
series may declare the principal amount (or, if the Debt Securities of that
series are Original Issue Discount Securities, such portion of the principal
amount as may be specified in the terms of that series) of all Debt Securities
of that series to be due and payable immediately. However, at any time after a
declaration of acceleration with respect to Debt Securities of any series has
been made, but before a judgment or decree based on such acceleration has been
obtained, the Holders of a majority in principal amount of Outstanding Debt
Securities of that series may, under certain circumstances, rescind and annul
such acceleration. (Section 502) For information as to waiver of defaults, see
"Modification and Waiver". Reference is made to the Prospectus Supplement
relating to each series of Offered Debt Securities which are Original Issue
Discount Securities for the particular provisions relating to acceleration of
the Maturity of a portion of the principal amount of such Original Issue
Discount Securities upon the occurrence of an Event of Default and the
continuation thereof.
 
  The Indenture provides that, subject to the duty of the Trustee during
default to act with the required standard of care, the Trustee will be under
no obligation to exercise any of its rights or powers under the Indenture at
the request or direction of any of the Holders, unless such Holders shall have
offered to the Trustee reasonable indemnity. (Section 603) Subject to such
provisions for indemnification of the Trustee, the Holders of a majority in
principal amount of the Outstanding Debt Securities of any series will have
the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred on the Trustee, with respect to the Debt Securities of that series.
(Section 512)
 
                                      12

 
  The Company will be required to furnish to the Trustee annually a statement
as to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance. (Section 704)
 
MODIFICATION AND WAIVER
 
  Modifications and amendments of the Indenture may be made by the Company and
the Trustee with the consent of the Holders of a majority in principal amount
of the Outstanding Debt Securities of each series affected thereby; provided,
however, that no such modification or amendment may, without the consent of
the Holder of each Outstanding Debt Security affected thereby, (a) change the
stated maturity date of the principal of, or any instalment of principal of or
interest on, any Debt Security, (b) reduce the principal amount of, or the
premium, if any, or interest, if any, on, any Debt Security, (c) reduce the
amount of principal of any Original Issue Discount Security payable upon
acceleration of the Maturity thereof, (d) change the place or currency of
payment of principal of, or premium, if any, or interest, if any, on, any Debt
Security, (e) impair the right to institute suit for the enforcement of any
payment on or with respect to any Debt Security, or (f) reduce the percentage
in principal amount of Outstanding Debt Securities of any series, the consent
of the Holders of which is required for modification for amendment of the
Indenture or for waiver of compliance with certain provisions of the Indenture
or for waiver of certain defaults. (Section 902)
 
  The Holders of a majority in principal amount of the Outstanding Debt
Securities of any series may on behalf of the Holders of all Debt Securities
of that series waive, insofar as that series is concerned, compliance by the
Company with certain restrictive provisions of the Indenture. (Section 1012)
The Holders of a majority in principal amount of the Outstanding Debt
Securities of any series may on behalf of the Holders of all Debt Securities
of that series waive any past default under the Indenture with respect to Debt
Securities of that series, except a default in the payment of the principal
of, or premium, if any, or interest, if any, on any Debt Security of that
series or in respect of any provision which under the Indenture cannot be
modified or amended without the consent of the Holder of each Outstanding Debt
Security of that series affected. (Section 513)
 
CONSOLIDATION, MERGER AND SALE OF ASSETS
 
  The Company, without the consent of any Holders of Outstanding Debt
Securities, may consolidate or merge with or into, or transfer or lease its
assets substantially as an entirety to, any Person, and any other Person may
consolidate or merge with or into, or transfer or lease its assets
substantially as an entirety to, the Company, provided, however, that, (a) the
Person (if other than the Company) formed by such consolidation or into which
the Company is merged or which acquires or leases the assets of the Company
substantially as an entirety is organized and existing under the laws of any
United States jurisdiction and assumes the Company's obligations on the Debt
Securities and under the Indenture; (b) 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 (provided, however, that a transaction will only be deemed to be in
violation of this condition (b) as to any series of Debt Securities as to
which such Event of Default or such event shall have occurred and be
continuing); and (c) certain other conditions are met. (Article Eight)
 
DEFEASANCE PROVISIONS
 
  DEFEASANCE AND DISCHARGE. The Indenture provides that, if principal of and
any interest on the Offered Debt Securities are denominated and payable in
United States dollars, the Company will be discharged from any and all
obligations in respect of the Debt Securities (except for certain obligations
to register the transfer or exchange of Debt Securities, to replace stolen,
lost or mutilated Debt Securities, to maintain paying agencies and to hold
moneys for payment in trust) upon the deposit with the Trustee, in trust, of
money, Government Obligations (as defined) or a combination thereof, which
through the payment of interest and principal thereof in accordance with their
terms will provide money in an amount sufficient to pay any instalment of
principal of (and premium, if any) and interest on and any mandatory sinking
fund payments in respect of the Debt Securities on the Stated Maturity of such
 
                                      13

 
payments in accordance with the terms of the Indenture and such Debt
Securities. Such discharge may only occur if there has been a change in
applicable Federal law or the Company has received from, or there has been
published by, the United States Internal Revenue Service a ruling to the
effect that such a discharge will not be deemed, or result in, a taxable event
with respect to holders of the Debt Securities; and such discharge will not be
applicable to any Debt Securities then listed on the New York Stock Exchange
if the provision would cause said Debt Securities to be de-listed as a result
thereof. (Section 403) The term "Government Obligations" is defined to mean
securities of the government which issued the currency in which the Debt
Securities of such series are denominated or in which interest is payable or
of government agencies backed by the full faith and credit of such government.
(Section 101)
 
  DEFEASANCE OF CERTAIN COVENANTS. The terms of the Debt Securities also
provide, if principal of and any interest on the Offered Debt Securities are
denominated and payable in United States dollars, the Company with the option
to omit to comply with certain restrictive covenants described in Sections
1007 and 1008 of the Indenture. The Company, in order to exercise such option,
will be required to deposit with the Trustee money, Government Obligations or
a combination thereof, which through the payment of interest and principal
thereof in accordance with their terms will provide money in an amount
sufficient to pay any instalment of principal of (and premium, if any) and
interest on and any mandatory sinking fund payments in respect of the Debt
Securities on the Stated Maturity of such payments in accordance with the
terms of the Indenture and such Debt Securities. The Company will also be
required to deliver to the Trustee an opinion of counsel to the effect that
the deposit and related covenant defeasance will not cause the holders of the
Debt Securities to recognize income, gain or loss for Federal income tax
purposes. (Section 1011)
 
  If principal of or interest on the Offered Debt Securities is denominated or
payable in a currency or currencies other than the United States dollar, the
terms of the Offered Debt Securities will provide whether and under what terms
and conditions the Company may be discharged from all obligations or omit to
comply with certain restrictive covenants in respect of the Offered Debt
Securities.
 
  DEFEASANCE AND EVENTS OF DEFAULT. In the event the Company exercises its
option to omit compliance with certain covenants of the Indenture and the Debt
Securities are declared due and payable because of the occurrence of any Event
of Default, the amount of money and Government Obligations on deposit with the
Trustee will be sufficient to pay amounts due on the Debt Securities at the
time of their Stated Maturity but may not be sufficient to pay amounts due on
the Debt Securities at the time of the acceleration resulting from such Event
of Default. However, the Company shall remain liable for such payments.
 
REGARDING THE TRUSTEE
 
  Bankers Trust Company ("Bankers Trust") is trustee under the Indenture,
pursuant to which certain debt securities of the Company are outstanding and
pursuant to which the Debt Securities are to be issued. Bankers Trust is also
trustee under the Company's Indenture dated as of July 1, 1985, pursuant to
which certain debt securities of the Company are outstanding, and trustee of
the Company's Master Investment Trust which, together with its component
separate trusts, serves as the investment vehicle for several different
defined benefit and defined contribution tax-qualified retirement plans
maintained by the Company and its subsidiaries. Bankers Trust is a co-agent
for the Company's revolving line of credit, acts as an agent for the issuance
of the Company's commercial paper and provides cash management and other
services for the Company in the normal course of its business. In addition,
Bankers Trust has issued letters of credit, extended a line of credit and
performs investment management services for a subsidiary of the Company.
 
                                      14

 
                             PLAN OF DISTRIBUTION
 
  The Company may sell Debt Securities to or through underwriters, and also
may sell Debt Securities directly to other purchasers or through agents. The
Company may also issue Debt Securities directly to other parties as evidence
of the Company's debt obligations to such parties.
 
  The distribution of the Debt Securities may be effected from time to time in
one or more transactions at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
 
  In connection with the sale of Debt Securities, underwriters may receive
compensation from the Company or from purchasers of Debt Securities for whom
they may act as agents, in the form of discounts, concessions or commissions.
Underwriters and agents that participate in the distribution of Debt
Securities may be deemed to be underwriters, and any discounts or commissions
received by them from the Company and any profit on the resale of Debt
Securities by them may be deemed to be underwriting discounts and commissions,
under the Act. Any such underwriter or agent will be identified, and any such
compensation received from the Company will be described, in the Prospectus
Supplement. Underwriters may sell Debt Securities to or through dealers, and
such dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agent. The Company may also offer and sell Debt
Securities in exchange for securities of one or more of its outstanding issues
of debt securities.
 
  Under agreements which may be entered into by the Company, underwriters and
agents who participate in the distribution of Debt Securities may be entitled
to indemnification by the Company against certain liabilities, including
liabilities under the Act.
 
  It has not been determined whether any series of the Debt Securities will be
listed on a securities exchange. Underwriters may, but will not be obligated
to, make a market in any series of Debt Securities. The Company cannot predict
the activity of trading in, or liquidity of, any series of the Debt
Securities.
 
                          VALIDITY OF DEBT SECURITIES
 
  Unless otherwise indicated in the Prospectus Supplement relating to the
Offered Debt Securities, the validity of the Offered Debt Securities will be
passed upon for the Company by Dorsey & Whitney P.L.L.P., 220 South Sixth
Street, Minneapolis, Minnesota 55402, and for the underwriters or agents, as
the case may be, by Sullivan & Cromwell, 250 Park Avenue, New York, New York
10177.
 
                                    EXPERTS
 
  The consolidated financial statements and the related financial statement
schedules incorporated in this Prospectus by reference from SUPERVALU's Annual
Report on Form 10-K have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their reports which are incorporated herein by
reference, and have been so incorporated in reliance upon the reports of such
firm, given upon their authority as experts in auditing and accounting.
 
  With respect to the unaudited interim financial information which is
incorporated herein by reference, Deloitte & Touche LLP has applied limited
procedures in accordance with professional standards for a review of such
information. However, as stated in their reports included in the Company's
Quarterly Reports on Form 10-Q for such interim periods and incorporated by
reference herein, they did not audit and they do not express an opinion on
that interim financial information. Accordingly, the degree of reliance on
their reports on such information should be restricted in light of the limited
nature of the review procedures applied. Deloitte & Touche LLP is not subject
to the liability provisions of Section 11 of the Act for their reports on the
unaudited interim financial information because those reports are not
"reports" or a "part" of the registration statement prepared or certified by
an accountant within the meaning of Sections 7 and 11 of the Act.
 
                                      15

 
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 NO PERSON IS AUTHORIZED BY THE COMPANY TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS
SUPPLEMENT, ANY PRICING SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AU-
THORIZED. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUP-
PLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL
UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS NOT BEEN ANY
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF. THIS
PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT AND THE PROSPECTUS DO NOT CON-
STITUTE AN OFFER TO SELL OR A SOLICITATION BY ANYONE IN ANY STATE IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING
SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT
IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
 
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                               TABLE OF CONTENTS
 
                             PROSPECTUS SUPPLEMENT
 


                                                                            PAGE
                                                                            ----
                                                                         
Description of Notes.......................................................  S-2
United States Taxation..................................................... S-19
Foreign Currency Risks..................................................... S-26
Supplemental Plan of Distribution.......................................... S-27
Validity of Notes.......................................................... S-28
 
                                  PROSPECTUS
Available Information......................................................    2
Incorporation of Certain Documents by Reference............................    2
The Company................................................................    3
Use of Proceeds............................................................    3
Capitalization.............................................................    4
Selected Consolidated Financial Information................................    5
Business...................................................................    6
Description of Debt Securities.............................................    9
Plan of Distribution.......................................................   15
Validity of Debt Securities................................................   15
Experts....................................................................   15

 
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                                 $400,000,000
 
                       [LOGO OF SUPERVALU APPEARS HERE]
 
                          MEDIUM-TERM NOTES, SERIES B
 
                              DUE FROM 9 MONTHS 
                                 TO 30 YEARS 
                                    FROM 
                                DATE OF ISSUE
 
 
 
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                             PROSPECTUS SUPPLEMENT
 
                                  -----------
 

                             GOLDMAN, SACHS & CO.
 
                           BT SECURITIES CORPORATION
 
                           CITICORP SECURITIES, INC.
 
                          J.P. MORGAN SECURITIES INC.
 
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