THE EXCHANGE OFFER
Pursuant to the exchange offer, holders are entitled to exchange the
original notes for new notes that will be substantially identical in all
material respects to the original notes, except that the new notes will be
registered with the Securities and Exchange Commission and therefore will not be
subject to transfer restrictions. The exchange pursuant to the exchange offer as
described above will not result in a taxable event. Accordingly,
(1) no gain or loss will be realized by a U.S. holder upon receipt of a new
(2) the holding period of the new note will include the holding period of
the original note exchanged therefor and
(3) the adjusted tax basis of the new notes will be the same as the
adjusted tax basis of the original notes exchanged at the time of such exchange.
UNITED STATES FEDERAL INCOME TAXATION OF U.S. HOLDERS
PAYMENTS OF INTEREST ON THE 8.250% NOTES AND THE 8.625% NOTES.
Interest on the 8.250% notes and the 8.625% notes, as the case may be, will
be taxable to a U.S. holder as ordinary income from domestic sources at the time
it is paid or accrued in accordance with the U.S. holder's regular method of
accounting for tax purposes.
ORIGINAL ISSUE DISCOUNT ON THE 9.920% NOTES
The 9.920% notes will be issued with original issue discount. Such notes
will be issued with original issue discount because they will be issued at an
issue price which is substantially less than their stated principal amount at
maturity, and because interest on such notes will not be payable until October
1, 2004. Each U.S. holder will be required to include in income in each year, in
advance of receipt of cash payments on such notes to which such income is
attributable, original issue discount income as described below.
The amount of original issue discount with respect to the 9.920% notes will
be equal to the excess of
(1) the note's "stated redemption price at maturity," over
(2) its "issue price."
The issue price of the 9.920% notes will be equal to the price to the
public at which a substantial amount of such notes is initially sold for money,
excluding any sales to a bond house, broker or similar person or organization
acting in the capacity of an underwriter, placement agent or wholesaler. The
stated redemption price at maturity of such a note is the total of all payments
provided by the 9.920% notes, including stated interest payments.
A U.S. holder of such a note is required to include in gross income for
U.S. federal income tax purposes an amount equal to the sum of the "daily
portions" of such original issue discount for all days during the taxable year
on which the holder holds such note. The daily portions of original issue
discount required to be included in such holder's gross income in a taxable year
will be determined on a constant yield basis. A pro rata portion of the original
issue discount on such note which is attributable to the "accrual period" in
which such day is included will be allocated to each day during the taxable year
in which the holder holds the 9.920% notes. Accrual periods with respect to such
a note may be of any length and may vary in length over the term of the 9.920%
notes as long as
(1) no accrual period is longer than one year, and
(2) each scheduled payment of interest or principal on such note occurs on
either the first or final day of an accrual period.