Filed Pursuant to Rule 424(b)(2)
Registration Statement No. 333-178960
CALCULATION OF REGISTRATION FEE
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Title of Each Class of Securities Offered |
Maximum Offering Price |
Amount of Registration Fee (1) | ||
Airbag Autocallable Yield Optimization Notes linked to the common stock of MetLife, Inc. due October 21, 2013 |
$2,238,000.00 | $305.26 | ||
Airbag Autocallable Yield Optimization Notes linked to the common stock of United Rentals, Inc. due October 21, 2013 |
$10,739,000.00 | $1,464.80 | ||
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(1) | Calculated in accordance with Rule 457(r) of the Securities Act of 1933. |
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PRICING SUPPLEMENT (To Prospectus dated January 11, 2012 and Product Supplement dated October 9, 2012) |
UBS AG Airbag Autocallable Yield Optimization Notes
UBS AG $2,238,000 Notes Linked to common stock of MetLife, Inc. due October 21, 2013
UBS AG $10,739,000 Notes Linked to common stock of United Rentals, Inc. due October 21, 2013
Investment Description
UBS AG Airbag Autocallable Yield Optimization Notes (the Notes) are unsubordinated, unsecured debt obligations issued by UBS AG (UBS) linked to the common stock of a specific company (the underlying stock). The issue price of each Note will be $1,000. On a monthly basis, UBS will pay you a coupon regardless of the performance of the underlying stock unless the Notes are previously called. If the underlying stock closes at or above the initial price on any quarterly observation date, UBS will automatically call the Notes and pay you an amount equal to the principal amount per Note plus the corresponding coupon. If by maturity the Notes have not been called, UBS will either pay you the principal amount per Note or, if the closing price of the underlying stock on the final valuation date is below the specified conversion price, UBS will deliver to you a number of shares of the underlying stock per Note equal to (i) the principal amount per Note divided by (ii) the specified conversion price of the underlying stock (the share delivery amount) for each of your Notes (subject to adjustments in the case of certain corporate events described in the accompanying Airbag Autocallable Yield Optimization Notes product supplement under General Terms of the Notes Antidilution Adjustments). Investing in the Notes involves significant risks. You may lose some or all of your principal amount. In exchange for receiving a coupon on the Notes, you are accepting the risk of receiving shares of the underlying stock at maturity that are worth less than your principal amount and the credit risk of UBS for all payments under the Notes. Generally, the higher the coupon rate on a Note, the greater the risk of loss on that Note. The contingent repayment of principal only applies if you hold the Notes until maturity. Any payment on the Notes, including any repayment of principal, is subject to the creditworthiness of UBS. If UBS were to default on its payment obligations, you may not receive any amounts owed to you under the Notes and you could lose your entire investment.
NOTICE TO INVESTORS: THE NOTES ARE SIGNIFICANTLY RISKIER THAN CONVENTIONAL DEBT INSTRUMENTS. THE ISSUER IS NOT NECESSARILY OBLIGATED TO REPAY THE FULL PRINCIPAL AMOUNT OF THE NOTES AT MATURITY, AND THE NOTES CAN HAVE THE FULL DOWNSIDE MARKET RISK OF THE UNDERLYING STOCK. THIS MARKET RISK IS IN ADDITION TO THE CREDIT RISK INHERENT IN PURCHASING A DEBT OBLIGATION OF UBS. YOU SHOULD NOT PURCHASE THE NOTES IF YOU DO NOT UNDERSTAND OR ARE NOT COMFORTABLE WITH THE SIGNIFICANT RISKS INVOLVED IN INVESTING IN THE NOTES.
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED UNDER KEY RISKS BEGINNING ON PAGE 7 AND UNDER RISK FACTORS BEGINNING ON PAGE PS-15 OF THE AIRBAG AUTOCALLABLE YIELD OPTIMIZATION NOTES PRODUCT SUPPLEMENT BEFORE PURCHASING ANY NOTES. EVENTS RELATING TO ANY OF THOSE RISKS, OR OTHER RISKS AND UNCERTAINTIES, COULD ADVERSELY EFFECT THE MARKET VALUE OF, AND THE RETURN ON, YOUR NOTES. YOU MAY LOSE SOME OR ALL OF YOUR INITIAL INVESTMENT IN THE NOTES.
Note Offerings
These terms relate to the two separate Notes we are offering. The Notes are linked to the common stock of a different company, and each of the two Notes has a different coupon rate, initial price, conversion price and share delivery amount. Coupons will be paid monthly in arrears in 12 equal installments.
Underlying Stock | Stock Ticker |
Coupon Rate |
Total Coupon Payable |
Initial Price |
Conversion Price |
Share Delivery Amount* |
CUSIP | ISIN | ||||||||
Common stock of MetLife, Inc. | MET | 8.06% per annum |
8.06% | $35.00 | $29.75, which is 85% of Initial Price |
33.6134 shares per Note |
90269V629 | US90269V6294 | ||||||||
Common stock of United Rentals, Inc. | URI | 10.71% per annum |
10.71% | $32.08 | $19.25, which is 60% of Initial Price |
51.9481 shares per Note |
90269V637 | US90269V6377 |
* | Equal to $1,000 divided by the conversion price. If you receive the share delivery amount at maturity, we will pay cash in lieu of delivering any fractional shares of the underlying stock in an amount equal to that fraction multiplied by the final price of the underlying stock. The share delivery amount and conversion price are subject to adjustments in the case of certain corporate events described in the Airbag Autocallable Yield Optimization Notes product supplement under General Terms of the Notes Antidilution Adjustments. |
See Additional Information about UBS and the Notes on page 2. The Notes we are offering will have the terms set forth in the Airbag Autocallable Yield Optimization Notes product supplement relating to the Notes, the accompanying prospectus and this pricing supplement.
Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these Notes or passed upon the adequacy or accuracy of this pricing supplement, or the accompanying Airbag Autocallable Yield Optimization Notes product supplement or prospectus. Any representation to the contrary is a criminal offense. The Notes are not deposit liabilities of UBS AG and are not FDIC insured.
Offering of Notes | Issue Price to Public | Underwriting Discount | Proceeds to UBS AG | |||||||||
Total | Per Note | Total | Per Note | Total | Per Note | |||||||
MetLife, Inc. | $ 2,238,000.00 | $1,000 | $ 33,570.00 | 1.50% | $ 2,204,430.00 | 98.50% | ||||||
United Rentals, Inc. | $ 10,739,000.00 | $1,000 | $ 161,085.00 | 1.50% | $ 10,577,915.00 | 98.50% |
UBS Financial Services Inc. Pricing Supplement dated October 12, 2012 |
UBS Investment Bank |
Additional Information about UBS and the Notes
UBS has filed a registration statement (including a prospectus, as supplemented by a product supplement for the Notes) with the Securities and Exchange Commission, or SEC, for these offerings to which this pricing supplement relates. Before you invest, you should read these documents and any other documents relating to the Notes that UBS has filed with the SEC for more complete information about UBS and these offerings. You may obtain these documents for free from the SEC website at www.sec.gov. Our Central Index Key, or CIK, on the SEC website is 0001114446. Alternatively, UBS will arrange to send you these documents if you so request by calling toll-free 877-387-2275.
You may access these documents on the SEC website at www.sec.gov as follows:
¨ | Airbag Autocallable Yield Optimization Notes product supplement dated October 9, 2012: |
http://www.sec.gov/Archives/edgar/data/1114446/000119312512418233/d422148d424b2.htm
¨ | Prospectus dated January 11, 2012: |
http://www.sec.gov/Archives/edgar/data/1114446/000119312512008669/d279364d424b3.htm
References to UBS, we, our and us refer only to UBS AG and not to its consolidated subsidiaries. In this document, Airbag Autocallable Yield Optimization Notes or the Notes refer to the Notes that are offered hereby. Also, references to the Airbag Autocallable Yield Optimization Notes product supplement mean the UBS product supplement, dated October 9, 2012, relating to the Notes generally, and references to the accompanying prospectus mean the UBS prospectus titled, Debt Securities and Warrants, dated January 11, 2012.
This pricing supplement, together with the documents listed above, contains the terms of the Notes and supersedes all other prior or contemporaneous oral statements as well as any other written materials including pricing terms, correspondence, trade ideas, structures for implementation, sample structures, brochures or other educational materials of ours. You should carefully consider, among other things, the matters set forth in Key Risks beginning on page 7 and in Risk Factors in the accompanying product supplement, as the Notes involve risks not associated with conventional debt securities. We urge you to consult your investment, legal, tax, accounting and other advisers before deciding to invest in the Notes.
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INVESTING IN THE NOTES INVOLVES SIGNIFICANT RISKS. YOU MAY LOSE SOME OR ALL OF YOUR PRINCIPAL AMOUNT. YOU MAY RECEIVE SHARES AT MATURITY THAT ARE WORTH LESS THAN YOUR PRINCIPAL AMOUNT OR MAY HAVE NO VALUE AT ALL. ANY PAYMENT ON THE NOTES, INCLUDING ANY REPAYMENT OF PRINCIPAL, IS SUBJECT TO THE CREDITWORTHINESS OF UBS. IF UBS WERE TO DEFAULT ON ITS PAYMENT OBLIGATIONS, YOU MAY NOT RECEIVE ANY AMOUNTS OWED TO YOU UNDER THE NOTES AND YOU COULD LOSE YOUR ENTIRE INVESTMENT.
(1) | If you receive the share delivery amount at maturity, we will pay cash in lieu of delivering any fractional shares of the underlying stock in an amount equal to that fraction multiplied by the final price of the underlying stock. |
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Investor Suitability
The suitability considerations identified above are not exhaustive. Whether or not the Notes are a suitable investment for you will depend on your individual circumstances and you should reach an investment decision only after you and your investment, legal, tax, accounting and other advisors have carefully considered the suitability of an investment in the Notes in light of your particular circumstances. You should also review carefully the Key Risks beginning on page 7 of this pricing supplement for risks related to an investment in the Notes.
Coupon Payment Dates
Coupons will be paid in arrears in 12 equal installments on the coupon payment dates listed below (unless earlier called):
¨ November 19, 2012 |
¨ May 17, 2013 | |
¨ December 17, 2012 |
¨ June 17, 2013 | |
¨ January 17, 2013* |
¨ July 17, 2013* | |
¨ February 19, 2013 |
¨ August 19, 2013 | |
¨ March 18, 2013 |
¨ September 17, 2013 | |
¨ April 17, 2013* |
¨ October 21, 2013* |
* | Corresponding call settlement dates for the applicable quarterly observation dates |
Any payment required to be made on any coupon payment date that is not a business day will be made on the next succeeding business day, unless that day falls in the next calendar month, in which case it will be made on the first preceding business day, with the same effect as if paid on the original due date. The record date for coupon payments will be three business days preceding the coupon payment date except that the record date that corresponds to the coupon payable on the maturity date will be the final valuation date.
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What are the Tax Consequences of the Notes?
The United States federal income tax consequences of your investment in the Notes are uncertain. Some of these tax consequences are summarized below, but we urge you to read the more detailed discussion in Supplemental U.S. Tax Considerations beginning on page PS-47 of the Airbag Autocallable Yield Optimization Notes product supplement. The following discussion supplements the discussion in Supplemental U.S. Tax Considerations beginning on page PS-47 of the Airbag Autocallable Yield Optimization Notes product supplement.
The United States federal income tax consequences of your investment in the Notes are complex and uncertain. By purchasing a Note, you and UBS hereby agree (in the absence of an administrative determination or judicial ruling to the contrary) to characterize a Note for all tax purposes as an investment unit consisting of a non-contingent short-term debt instrument and a put option contract in respect of the underlying stock. The terms of the Notes require (in the absence of an administrative determination or judicial ruling to the contrary) that you treat your Notes for U.S. federal income tax purposes as consisting of two components:
Debt component Amounts treated as interest on the debt component would be subject to the general rules governing interest payments on short-term notes and would be required to be accrued by accrual-basis taxpayers (and cash-basis taxpayers who elect to accrue interest currently) on either the straight-line method, or, if elected, the constant yield method, compounded daily. Cash-basis taxpayers who do not elect to accrue interest currently would include interest into income upon receipt of such interest.
Put option component The put option component would generally not be taxed until sale or maturity of the Notes. At maturity, the put option component either would be taxed as a short-term capital gain if the principal amount is repaid in cash or would reduce the basis of any underlying stock if you receive the underlying stock.
With respect to coupon payments you receive, you agree to treat such payments as consisting of interest on the debt component and a payment with respect to the put option as follows:
Underlying Stock | Coupon Rate |
Interest on Debt Component |
Put Option Component | |||
Common stock of MetLife, Inc. | 8.06% per annum | 0.50% per annum | 7.56% per annum | |||
Common stock of United Rentals, Inc. | 10.71% per annum | 0.50% per annum | 10.21% per annum |
In the opinion of our counsel, Cadwalader, Wickersham & Taft LLP, based on certain factual representations received from us, it would be reasonable to treat your Notes as described above. However, in light of the uncertainty as to the United States federal income tax treatment, it is possible that your Notes could be treated as a single contingent short-term debt instrument, or pursuant to some other characterization, such that the timing and character of your income from the Notes could differ materially from the treatment described above. Because of this uncertainty, we urge you to consult your tax advisor as to the tax consequences of your investment in the Notes. Please read the discussion in Supplemental U.S. Tax Considerations on page PS-47 of the Airbag Autocallable Yield Optimization Notes product supplement for a more detailed description of the tax treatment of your Notes.
In 2007, the Internal Revenue Service released a Notice that may affect the taxation of holders of the Notes. According to the Notice, the Internal Revenue Service and the Treasury Department are actively considering the appropriate tax treatment of holders of certain types of structured notes. Legislation has also been proposed in Congress that would require the holders of certain prepaid forward contracts to accrue income during the term of the transaction. It is not clear whether the Notice applies to instruments such as the Notes. Furthermore, it is not possible to determine what guidance or legislation will ultimately result, if any, and whether such guidance or legislation will affect the tax treatment of the Notes. Except to the extent otherwise required by law, UBS intends to treat your Notes for United States federal income tax purposes in accordance with the treatment described above and under Supplemental U.S. Tax Considerations beginning on page PS-47 of the Airbag Autocallable Yield Optimization Notes product supplement unless and until such time as some other treatment is more appropriate.
Section 871(m) of the Code requires withholding (up to 30%, depending on the applicable treaty) on certain financial instruments to the extent that the payments or deemed payments on the financial instruments are contingent upon or determined by reference to U.S.-source dividends. Under proposed U.S. Treasury Department regulations, certain payments that are contingent upon or determined by reference to U.S. source dividends, including payments reflecting adjustments for extraordinary dividends, with respect to equity-linked instruments, including the Notes, may be treated as dividend equivalents. If enacted in their current form, the regulations may impose a withholding tax on payments made on the notes on or after January 1, 2014 that are treated as dividend equivalents. In that case, we (or the applicable paying agent) would be entitled to withhold taxes without being required to pay any additional amounts with respect to amounts so withheld. Further, Non-U.S. Holders may be required to provide certifications prior to, or upon the sale, redemption or maturity of the Notes in order to minimize or avoid U.S. withholding taxes.
Foreign Account Tax Compliance Act. The Foreign Account Tax Compliance Act (FATCA) was enacted on March 18, 2010, and imposes a 30% U.S. withholding tax on withholdable payments (i.e, certain U.S. source payments, including interest (and OID), dividends, other
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fixed or determinable annual or periodical gain, profits, and income, and on the gross proceeds from a disposition of property of a type which can produce U.S. source interest of dividends) and pass-thru payments (i.e., certain payments attributable to withholdable payments) made to certain foreign financial institutions (and certain of their affiliates) unless the payee foreign financial institution agrees, among other things, to disclose the identity of any U.S. individual with an account of the institution (or the relevant affiliate) and to annually report certain information about such account. FATCA also requires withholding agents making withholdable payments to certain foreign entities that do not disclose the name, address, and taxpayer identification number of any substantial U.S. owners (or certify that they do not have any substantial United States owners) to withhold tax at a rate of 30%.
Pursuant to proposed Treasury regulations, the withholding and reporting requirements will generally apply to certain withholdable payments made after December 31, 2013 (and pass-thru payments made after December 31, 2016). If the proposed Treasury Department regulations are finalized in their current from, this withholding tax would not be imposed on payments pursuant to obligations that are outstanding on January 1, 2013 (and are not materially modified after December 31, 2012). If, however, withholding is required as a result of future guidance, we (and any paying agent) will not be required to pay additional amounts with respect to the amounts so withhold.
UBS and other financial institutions through which payments on the Notes are made may be required to withhold at a rate of up to 30 per cent, on all, or a portion of, payments made after 31 December 2016 in respect of any Notes which are issued (or materially modified) after 31 December 2012 or that are treated as equity for U.S. federal tax purposes whenever issued, pursuant to FATCA.
UBS is a foreign financial institution (FFI) for the purposes of FATCA. If UBS agrees to provide certain information on its account holders pursuant to a FATCA agreement with the IRS (i.e., UBS is a Participating FFI) then withholding may be triggered if: (i) UBS has a positive pass-thru payment percentage (as determined under FATCA), (ii) (a) an investor does not provide information sufficient for the relevant Participating FFI to determine whether the investor is a U.S. person or should otherwise be treated as holding a United States Account of UBS, (b) an investor does not consent, where necessary, to have its information disclosed to the IRS or (c) any FFI that is an investor, or through which payment on the Notes is made, is not a Participating FFI.
An investor that is not a Participating FFI that is withheld upon generally will be able to obtain a refund only to the extent an applicable income tax treaty with the United States entitles the investor to a reduced rate of tax on the payment that was subject to withholding under FATCA, provided the required information is furnished in a timely manner to the IRS.
Significant aspects of the application of FATCA are not currently clear and the above description is based on proposed regulations and interim guidance. Investors should consult their own advisors about the application of FATCA, in particular if they may be classified as financial institutions under the FATCA rules.
Specified Foreign Financial Assets Under recently enacted legislation, individuals that own specified foreign financial assets in excess of an applicable threshold may be required to file information with respect to such assets with their tax returns, especially if such individuals hold such assets outside the custody of a U.S. financial institution. You are urged to consult your tax advisor as to the application of this legislation to your ownership of the Notes.
For a more complete discussion of the United States federal income tax consequences of your investment in the Notes, including the consequences of a sale or exchange of the Notes, please see the discussion under Supplemental U.S. Tax Considerations beginning on page PS-47 of the Airbag Autocallable Yield Optimization Notes product supplement and consult your tax advisor.
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Key Risks
An investment in the Notes involves significant risks. Some of the risks that apply to the Notes are summarized here, but we urge you to read the more detailed explanation of risks relating to the Notes generally in the Risk Factors section of the Airbag Autocallable Yield Optimization Notes product supplement. We also urge you to consult your investment, legal, tax, accounting and other advisors before you invest in the Notes.
¨ | Risk of loss at maturity The Notes differ from ordinary debt securities in that the issuer will not necessarily pay the full principal amount of the Notes at maturity. If the Notes are not called, UBS will only pay you the principal amount of your Notes in cash if the final price of the underlying stock is greater than or equal to the conversion price and only at maturity. If the Notes are not called and the final price of the underlying stock is below the conversion price, UBS will deliver to you a number of shares of the underlying stock equal to the share delivery amount at maturity for each Note that you own instead of the principal amount in cash. As a result, if the final price is below the conversion price, you will be exposed on a leveraged basis to any such decline below the conversion price. For example, if the conversion price is 80% of the initial price, the final price is less than the conversion price and the closing price of the underlying stock on the maturity date is 70% of the initial price, you will lose 12.50% of your principal amount at maturity, which is greater than the 10% additional decline from the conversion price. If you receive shares of the underlying stock at maturity, the value of the shares you receive are expected to be less than the principal amount of the Notes or may have no value at all. |
¨ | Higher coupon rates are generally associated with a greater risk of loss Greater expected volatility with respect to the Notes underlying stock reflects a higher expectation as of the trade date that the price of the underlying stock could close below its conversion price on the final valuation date of the Note. This greater expected risk will generally be reflected in a higher coupon payable on that Note. However, while the coupon rate is set on the trade date, the underlying stocks volatility can change significantly over the term of the Notes. The price of the underlying stock for your Note could fall sharply, which could result in a significant loss of principal. |
¨ | The contingent repayment of principal applies only at maturity You should be willing to hold your Notes to maturity. If you are able to sell your Notes prior to maturity in the secondary market, you may have to sell them at a loss relative to your initial investment even if the final price or secondary market sale price is above the conversion price. |
¨ | Your return potential on the Notes is expected to be limited to the coupons paid on the Notes If the Notes are called on any quarterly observation date, the return on the Notes will be limited to the principal amount plus the total of any coupons paid on the Notes up to and including the applicable call settlement date and you will not participate in any appreciation of the underlying stock, which may be significant. If the Notes are not called and the closing price of the underlying stock on the final valuation date is greater than or equal to the conversion price, UBS will pay you the principal amount of your Notes in cash at maturity and you will not participate in any potential appreciation in the price of the underlying stock even though you risked being subject to the decline in the price of the underlying stock. If the closing price of the underlying stock on the final valuation date is less than the conversion price, UBS will deliver to you shares of the underlying stock at maturity which are unlikely to be worth more than the principal amount as of the maturity date. Therefore, your return on the Notes as of an applicable call settlement date or the maturity date is expected to be limited to the coupons paid on the Notes and may be less than your return would be on a direct investment in the underlying stock. |
¨ | Reinvestment risk If your Notes are called early, the term of the Notes will be reduced and you will not receive any payment on the Notes after the applicable call settlement date. There is no guarantee that you would be able to reinvest the proceeds from an automatic call of the Notes at a comparable rate of return for a similar level of risk. To the extent you are able to reinvest such proceeds in an investment comparable to the Notes, you may incur transaction costs such as dealer discounts and hedging costs built into the price of the new securities. Because the Notes may be called as early as 3 months after issuance, you should be prepared in the event the Notes are called early. |
¨ | Credit risk of UBS The Notes are unsubordinated, unsecured debt obligations of the issuer, UBS, and are not, either directly or indirectly, an obligation of any third party. Any payment to be made on the Notes, including payments in respect of an automatic call or any repayment of principal, depends on the ability of UBS to satisfy its obligations as they come due. As a result, the actual and perceived creditworthiness of UBS may affect the market value of the Notes and, in the event UBS were to default on its obligations, you may not receive any amounts owed to you under the terms of the Notes and you could lose your entire investment. |
¨ | Single stock risk The price of the underlying stock can rise or fall sharply due to factors specific to that underlying stock and its issuer, such as stock price volatility, earnings, financial conditions, corporate, industry and regulatory developments, management changes and decisions and other events, as well as general market factors, such as general stock market volatility and levels, interest rates and economic and political conditions. You, as an investor in the Notes, should make your own investigation into the underlying stock issuer and the underlying stock for your Notes. For additional information regarding each underlying stock issuer, please see Information about the Underlying Stocks and MetLife, Inc. and United Rentals, Inc. in this pricing supplement and the respective underlying stock issuers SEC filings referred to in those sections. We urge you to review financial and other information filed periodically by the underlying stock issuer with the SEC. |
¨ | Owning the Notes is not the same as owning the underlying stock The return on your Notes may not reflect the return you would realize if you actually owned the underlying stock. For instance, you will not receive or be entitled to receive any dividend payments or other distributions on the underlying stock over the term of your Notes. Furthermore, the underlying stock may appreciate substantially during the term of your Notes and you will not participate in such appreciation. |
¨ | No assurance that the investment view implicit in the Notes will be successful It is impossible to predict whether and the extent to which the price of the underlying stock will rise or fall. There can be no assurance that the underlying stock price will not rise by more than the coupons paid or, if not called, that the Notes or will not close below the conversion price on the final valuation date. The |
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price of the underlying stock will be influenced by complex and interrelated political, economic, financial and other factors that affect the issuer of the underlying stock. You should be willing to accept the risks of owning equities in general and the underlying stock in particular, and the risk, if your Notes are not automatically called, of losing some or all of your initial investment. |
¨ | The calculation agent can make adjustments that affect the payment to you at maturity The calculation agent will adjust the amount payable at maturity by adjusting the conversion price and the share delivery amount for certain corporate events affecting the underlying stock, such as stock splits and stock dividends, and certain other actions involving the underlying stock. However, the calculation agent is not required to make an adjustment for every corporate event that can affect the underlying stock. If an event occurs that does not require the calculation agent to adjust the conversion price and the share delivery amount, the market value of your Notes and the payment at maturity may be materially and adversely affected. Following certain corporate events relating to the issuer of the underlying stock where the issuer is not the surviving entity, the amount of cash or stock you receive at maturity may be based on the common stock of a successor to the underlying stock issuer in combination with any cash or any other assets distributed to holders of the underlying stock in such corporate event. If the issuer of the underlying stock becomes subject to (i) a reorganization event whereby the underlying stock is exchanged solely for cash or (ii) a merger or combination with UBS or any of its affiliates, the amount you receive at maturity may be based on the common stock issued by another company. The occurrence of these corporate events and the consequent adjustments may materially and adversely affect the value of the Notes. For more information, see the section General Terms of the Notes Antidilution Adjustments beginning on page PS-34 of the Airbag Autocallable Yield Optimization Notes product supplement. Regardless of the occurrence of one or more dilution or reorganization events, you should note that at maturity UBS will pay an amount in cash equal to your principal amount unless the final price of the underlying stock is below the conversion price (as such conversion price may be adjusted by the calculation agent upon occurrence of one or more such events). Regardless of any of the events discussed above, any payment on the Notes is subject to the creditworthiness of UBS. |
¨ | There may be little or no secondary market for the Notes No offering of the Notes will be listed or displayed on any securities exchange or any electronic communications network. A secondary trading market for the Notes may not develop. UBS Securities LLC and other affiliates of UBS may make a market in the Notes, although they are not required to do so and may stop making a market at any time. The price, if any, at which you may be able to sell your Notes prior to maturity could be at a substantial discount from the initial price to public and to its intrinsic economic value; and as a result, you may suffer substantial losses. |
¨ | Price of Notes prior to maturity The market price of your Notes will be influenced by many unpredictable and interrelated factors, including the market price of the underlying stock and the expected price volatility of the underlying stock, the dividend rate on the underlying stock, the time remaining to the maturity of your Notes, interest rates, geopolitical conditions, economic, financial and political, regulatory or judicial events. |
¨ | Impact of fees on the secondary market price of Notes Generally, the market price of the Notes after issuance is expected to be lower than the issue price to public of the Notes, since the issue price included, and the secondary market prices are likely to exclude, commissions, hedging costs or other compensation paid with respect to the Notes. |
¨ | Potential UBS impact on the market price of the underlying stock Trading or transactions by UBS or its affiliates in the underlying stock and/or over-the-counter options, futures or other instruments with returns linked to the performance of the underlying stock may adversely affect the market price of the underlying stock and, therefore, the market value of your Notes. |
¨ | Potential conflict of interest UBS and its affiliates may engage in business with the issuer of the underlying stock, which may present a conflict between the obligations of UBS and you, as a holder of the Notes. The calculation agent, an affiliate of UBS, will determine whether the underlying stocks closing price is greater than its initial price on each observation date as well as whether the final price is below the conversion price and accordingly, whether there is an automatic call, and if not, the payment at maturity on your Notes. The calculation agent may postpone the determination of the closing prices and the final price and the maturity date if a market disruption event occurs and is continuing on the observation dates or final valuation date. |
¨ | Potentially inconsistent research, opinions or recommendations by UBS UBS and its affiliates publish research from time to time on financial markets and other matters that may influence the value of the Notes, or express opinions or provide recommendations that are inconsistent with purchasing or holding the Notes. Any research, opinions or recommendations expressed by UBS or its affiliates may not be consistent with each other and may be modified from time to time without notice. Investors should make their own independent investigation of the merits of investing in the Notes and the underlying stock to which the Notes are linked. |
¨ | Dealer incentives UBS and its affiliates act in various capacities with respect to the Notes. We and our affiliates may act as a principal, agent or dealer in connection with the sale of the Notes. Such affiliates, including the sales representatives, will derive compensation from the distribution of the Notes and such compensation may serve as an incentive to sell these Notes instead of other investments. We will pay total underwriting compensation of 1.50% per Note to any of our affiliates acting as agents or dealers in connection with the distribution of the Notes. |
¨ | Uncertain tax treatment Significant aspects of the tax treatment of the Notes are uncertain. You should read carefully the section above entitled What Are the Tax Consequences of the Notes? and the section entitled Supplemental U.S. Tax Considerations beginning on page PS-47 of the Airbag Autocallable Yield Optimization Notes product supplement and consult your tax advisor about your tax situation. |
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Hypothetical Examples and Return Table
Assumptions
The following examples and return table illustrate the payment at maturity or upon an automatic call on a hypothetical offering of the Notes assuming the following*:
Term: | Approximately 12 months (callable quarterly) | |
Principal amount: | $1,000 per Note | |
Coupon rate**: | 9.00% per annum (or $7.50 per monthly period) | |
Total coupon payable**: | 9.00% (or $90.00 per Note) | |
Initial price of the underlying stock: | $30.00 per share | |
Conversion price: | $21.00 (70% of the initial price) | |
Share delivery amount***: | 47.6190 shares per Note (principal amount per Note/conversion price) | |
Dividend yield on the underlying stock****: | 1.00% |
* | Amounts here have been rounded for ease of analysis. The actual terms for each Note are specified on the first page of this pricing supplement. |
** | Coupon payment will be paid in arrears in 12 equal installments during the term of the Notes on an unadjusted basis, unless earlier called. The coupon rate and total coupon payable may be greater or less than the amounts shown above in which case your potential return on the Notes may be greater or less than the returns shown in the examples below. |
*** | If you receive the share delivery amount at maturity, we will pay cash in lieu of delivering any fractional shares of the underlying stock in an amount equal to that fraction multiplied by the final price of the underlying stock. |
**** | Hypothetical dividend yield holders of the underlying stock might receive over the term of the Notes. The assumed dividend yield represents a hypothetical dividend return. The actual dividend yield for any underlying stock may vary from the assumed dividend yield used for purposes of the following examples. Regardless, investors in the Notes will not receive any dividends paid on the underlying stock. |
Example 1 Notes are called on the First Observation Date
Closing Price at First Observation Date: | $35.00 (at or above Initial Price, Notes are called) | |||
Payment at Call Date: | $1,007.50 | |||
Coupons Previously Paid: | $ 15.00 | |||
|
||||
Total: | $1,022.50 | |||
Total Return on the Notes: | 2.25% |
Since the Notes are called on the first observation date, UBS will pay on the call settlement date a cash payment equal to the principal amount plus the coupon for the corresponding coupon payment date. When added to the coupon payments of $15.00 received on previous coupon payment dates, UBS will have paid you a total of $1,022.50 per Note for a 2.25% total return on the Notes. You will not receive any further payments on the Notes.
Example 2 Notes are called on the final Observation Date
Closing Price at First Observation Date: | $26.00 (below Initial Price, Notes NOT called) | |||||||
Closing Price at Second Observation Date: | $25.00 (below Initial Price, Notes NOT called) | |||||||
Closing Price at Third Observation Date: | $27.00 (below Initial Price, Notes NOT called) | |||||||
Closing Price at Final Valuation Date: | $32.00 (above Initial Price, Notes are called) |
Payment at Call Date: | $1,007.50 | |||||||||
Coupons Previously Paid: | $ 82.50 | |||||||||
|
|
|||||||||
Total: | $1,090.00 | |||||||||
Total Return on the Notes: | 9.00 | % |
Since the Notes are called on the final observation date (which is the final valuation date), UBS will pay on the maturity date a cash payment equal to the principal amount plus the coupon for the corresponding coupon payment date. When added to the coupon payments of $82.50 received on previous coupon payment dates, UBS will have paid you a total of $1,090.00 per Note for a 9.00% total return on the Notes.
Example 3 Notes are NOT called and the Final Price is NOT below the Conversion Price of $21.00.
Closing Price at First Observation Date: | $25.00 (below Initial Price, Notes NOT called) | |||||
Closing Price at Second Observation Date: | $24.00 (below Initial Price, Notes NOT called) | |||||
Closing Price at Third Observation Date: | $26.00 (below Initial Price, Notes NOT called) | |||||
Closing Price at Final Valuation Date: | $23.00 (below Initial Price, Notes NOT called) |
Payment at Maturity: | $1,007.50 | |||||||
Coupons Previously Paid: | $ 82.50 | |||||||
|
|
|||||||
Total: | $1,090.00 | |||||||
Total Return on the Notes: | 9.00 | % |
9
Since the Notes are not called on any observation date and final price of the underlying stock is not below the conversion price of $21.00, your principal is repaid and UBS will pay at maturity a cash payment equal to the principal amount of the Notes plus the coupon for the corresponding coupon payment date. When added to the coupon payments of $82.50 received on previous coupon payment dates, UBS will have paid you a total of $1,090.00 per Note for a 9.00% total return on the Notes.
Example 4 Notes are NOT called and the Final Price is below the Conversion Price of $21.00.
Closing Price at First Observation Date: | $25.00 (below Initial Price, Notes NOT called) | |||||
Closing Price at Second Observation Date: | $23.00 (below Initial Price, Notes NOT called) | |||||
Closing Price at Third Observation Date: | $20.00 (below Initial Price, Notes NOT called) | |||||
Closing Price at Final Valuation Date and Maturity Date: | $ 8.40 (below Initial Price, Notes NOT called) |
Payment at Maturity (consisting of the share delivery amount): | $400.00 | |||||||||
Coupon Paid at Maturity | $ 7.50 | |||||||||
Coupons Previously Paid: | $ 82.50 | |||||||||
|
|
|
||||||||
Total: | $ 490.00 | |||||||||
Total Return on the Notes: | -51.00 | % |
Since the Notes are not called on any observation date and the final price of the underlying stock is below the conversion price of $21.00, UBS will deliver at maturity the share delivery amount with fractional shares included in the share delivery amount paid in cash at the final price. The value received at maturity and the total return on the Notes at that time depends on (i) the price of the underlying stock on the maturity date and (ii) the final price for any fractional shares of the share delivery amount. UBS will also pay the coupon for the corresponding coupon payment. When added to the coupon payments of $82.50 previously received, the value of the share delivery amount and coupons received from UBS would be worth a total of $490.00 per Note for a loss on the Notes of 51.00%.
Hypothetical Return at Maturity(1)
Underlying Stock |
The Hypothetical Final
Price is Greater Than or Equal to |
The Hypothetical Final Price is Less Than the
Hypothetical | ||||||||||
Hypothetical Final Price(4) |
Equity Price Return(5) |
Total Return on the Underlying Stock at Maturity(6) |
Total Payment at Maturity + Coupon Payments(7) |
Total Return on the Notes at Maturity(8) |
Total Payment at Maturity + Coupon Payments(9) |
Total Return on the Notes at Maturity(8) | ||||||
$45.00 | 50.00% | 51.00% | $1,090.00 | 9.00% | n/a | n/a | ||||||
$43.50 | 45.00% | 46.00% | $1,090.00 | 9.00% | n/a | n/a | ||||||
$42.00 | 40.00% | 41.00% | $1,090.00 | 9.00% | n/a | n/a | ||||||
$40.50 | 35.00% | 36.00% | $1,090.00 | 9.00% | n/a | n/a | ||||||
$39.00 | 30.00% | 31.00% | $1,090.00 | 9.00% | n/a | n/a | ||||||
$37.50 | 25.00% | 26.00% | $1,090.00 | 9.00% | n/a | n/a | ||||||
$36.00 | 20.00% | 21.00% | $1,090.00 | 9.00% | n/a | n/a | ||||||
$34.50 | 15.00% | 16.00% | $1,090.00 | 9.00% | n/a | n/a | ||||||
$33.00 | 10.00% | 11.00% | $1,090.00 | 9.00% | n/a | n/a | ||||||
$31.50 | 5.00% | 6.00% | $1,090.00 | 9.00% | n/a | n/a | ||||||
$30.00 | 0.00% | 1.00% | $1,090.00 | 9.00% | n/a | n/a | ||||||
$28.50 | -5.00% | -4.00% | $1,090.00 | 9.00% | n/a | n/a | ||||||
$27.00 | -10.00% | -9.00% | $1,090.00 | 9.00% | n/a | n/a | ||||||
$25.50 | -15.00% | -14.00% | $1,090.00 | 9.00% | n/a | n/a | ||||||
$24.00 | -20.00% | -19.00% | $1,090.00 | 9.00% | n/a | n/a | ||||||
$22.50 | -25.00% | -24.00% | $1,090.00 | 9.00% | n/a | n/a | ||||||
$21.00 | -30.00% | -29.00% | $1,090.00 | 9.00% | n/a | n/a | ||||||
$19.50 | -35.00% | -34.00% | n/a | n/a | $1,018.57 | 1.86% | ||||||
$18.00 | -40.00% | -39.00% | n/a | n/a | $947.14 | -5.29% | ||||||
$16.50 | -45.00% | -44.00% | n/a | n/a | $875.71 | -12.43% | ||||||
$15.00 | -50.00% | -49.00% | n/a | n/a | $804.29 | -19.57% | ||||||
$13.50 | -55.00% | -54.00% | n/a | n/a | $642.86 | -28.51% |
(1) | This table assumes that the Notes are not called at any time during the term of the Notes pursuant to the call feature. |
(2) | A conversion event does not occur if the hypothetical final price of the underlying stock is not below the hypothetical conversion price. |
10
(3) | A conversion event occurs if the hypothetical final price of the underlying stock is less than the hypothetical conversion price. |
(4) | If the hypothetical final price of the underlying stock is not below the hypothetical conversion price, this number represents the final price. If the hypothetical final price of the underlying stock is below the hypothetical conversion price, this number represents the final price as of the final valuation date and the closing price as of the maturity date. |
(5) | The hypothetical equity price return range is provided for illustrative purposes only. The actual equity price return may be below -55% and you therefore may lose up to 100% of your principal amount. |
(6) | The total return on the underlying stock at maturity includes a hypothetical 1.00% cash dividend payment. |
(7) | Payment consists of the principal amount plus coupon payments of 9.00% per annum. |
(8) | The Total Return on the Notes at maturity includes coupon payments of 9.00% per annum. |
(9) | Payment consists of the share delivery amount plus coupon payments of 9.00% per annum. If you receive the share delivery amount at maturity, we will pay cash in lieu of delivering any fractional shares of the underlying stock in an amount equal to that fraction multiplied by the final price of the underlying stock. |
11
Information about the Underlying Stocks
All disclosures contained in this pricing supplement regarding each underlying stock are derived from publicly available information. Notwithstanding anything stated in the product supplement, we do not disclaim liability or responsibility for any information disclosed herein regarding the underlying stock. However, UBS has not conducted any independent review or due diligence of any publicly available information with respect to the underlying stock. You should make your own investigation into each underlying stock.
Included on the following pages is a brief description of the issuer of the underlying stock. This information has been obtained from publicly available sources. Set forth below is a table that provides the quarterly high and low closing prices for the underlying stock. The information given below is for the four calendar quarters in each of 2008, 2009, 2010, 2011 and the first, second and third calendar quarters of 2012. Partial data is provided for the fourth calendar quarter of 2012. We obtained the closing price information set forth below from the Bloomberg Professional® service (Bloomberg) without independent verification. You should not take the historical prices of the underlying stock as an indication of future performance.
Each of the underlying stocks will be registered under the Securities Exchange Act of 1934, as amended (the Exchange Act). Companies with securities registered under the Exchange Act are required to file financial and other information specified by the SEC periodically. Information filed by the issuer of the underlying stock with the SEC can be reviewed electronically through a website maintained by the SEC. The address of the SECs website is http://www.sec.gov. Information filed with the SEC by the issuer of the underlying stock under the Exchange Act can be located by reference to its SEC file number provided below. In addition, information filed with the SEC can be inspected and copied at the Public Reference Section of the SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Copies of this material can also be obtained from the Public Reference Section, at prescribed rates.
12
MetLife, Inc.
According to publicly available information, MetLife, Inc. (MetLife) is a provider of insurance, annuities and employee benefit programs, with operations throughout the United States, Japan, Latin America, Asia Pacific, Europe and the Middle East. MetLife provides a variety of insurance and financial services products, including life, dental, disability and long-term care insurance, various annuity products, and auto and home insurance. Within the United States, it also provides a range of savings and mortgage banking products. MetLifes operates in six segments: Retail Products; Group, Voluntary and Worksite Benefits; Corporate Benefit Funding; and Latin America (collectively the Americas); Asia; and Europe, the Middle East, and Africa (AMEA). The Retail Products segment offers a range of protection products and services, including Individual Life services as well as a variety of variable and fixed annuities offerings that are primarily sold to individuals and employees of corporations as well as other institutions. The Group, Voluntary and Worksite Benefits segment includes Group Life and Non-Medical Health services, as well as personal lines property and casualty insurance offered directly to employees at their employers worksite. The Corporate Benefit Funding segment includes annuity and investment products, including, guaranteed interest products and other stable value products, income annuities, and separate account contracts for the investment management of defined benefit and defined contribution plan assets. Information filed by MetLife with the SEC under the Exchange Act can be located by reference to its SEC file number: 001-15787, or its CIK Code: 0001099219. MetLifes website is http://www.metlife.com. MetLifes common stock is listed on the New York Stock Exchange under the ticker symbol MET.
Information from outside sources is not incorporated by reference in, and should not be considered part of, this pricing supplement or any accompanying prospectus. Notwithstanding anything stated in the product supplement, we do not disclaim liability or responsibility for any information disclosed herein regarding the underlying stock. However, UBS has not conducted any independent review or due diligence of any publicly available information with respect to the underlying stock.
Historical Information
The following table sets forth the quarterly high and low closing prices for MetLifes common stock, based on daily closing prices on the primary exchange for MetLife, as reported by Bloomberg. We obtained the closing prices below from Bloomberg, without independent verification. The closing prices may be adjusted by Bloomberg for corporate actions such as stock splits, public offerings, mergers and acquisitions, spin-offs, extraordinary dividends, delistings and bankruptcy. UBS has not undertaken an independent review or due diligence of any publicly available information obtained from Bloomberg. MetLifes closing price on October 12, 2012 was $35.00. Past performance of the underlying stock is not indicative of the future performance of the underlying stock.
Quarter Begin | Quarter End | Quarterly High | Quarterly Low | Quarterly Close | ||||
1/2/2008 | 3/31/2008 | $61.47 | $54.62 | $60.26 | ||||
4/1/2008 | 6/30/2008 | $62.88 | $52.77 | $52.77 | ||||
7/1/2008 | 9/30/2008 | $63.00 | $43.75 | $56.00 | ||||
10/1/2008 | 12/31/2008 | $48.15 | $16.48 | $34.86 | ||||
1/2/2009 | 3/31/2009 | $35.97 | $12.10 | $22.77 | ||||
4/1/2009 | 6/30/2009 | $35.50 | $23.43 | $30.01 | ||||
7/1/2009 | 9/30/2009 | $40.83 | $26.90 | $38.07 | ||||
10/1/2009 | 12/31/2009 | $38.35 | $33.22 | $35.35 | ||||
1/4/2010 | 3/31/2010 | $43.34 | $33.64 | $43.34 | ||||
4/1/2010 | 6/30/2010 | $47.10 | $37.76 | $37.76 | ||||
7/1/2010 | 9/30/2010 | $42.73 | $36.49 | $38.45 | ||||
10/1/2010 | 12/31/2010 | $44.92 | $37.74 | $44.44 | ||||
1/3/2011 | 3/31/2011 | $48.64 | $42.28 | $44.73 | ||||
4/1/2011 | 6/30/2011 | $46.79 | $39.24 | $43.87 | ||||
7/1/2011 | 9/30/2011 | $44.38 | $26.82 | $28.01 | ||||
10/3/2011 | 12/30/2011 | $36.82 | $26.60 | $31.18 | ||||
1/3/2012 | 3/30/2012 | $39.46 | $32.04 | $37.35 | ||||
4/2/2012 | 6/30/2012 | $38.00 | $27.82 | $30.85 | ||||
7/2/2012 | 9/28/2012 | $36.25 | $28.64 | $34.46 | ||||
10/1/2012* | 10/12/2012* | $35.16 | $34.26 | $35.00 |
* | As of the date of this pricing supplement, available information for the fourth calendar quarter of 2012 includes data for the period from October 1, 2012 through October 12, 2012. Accordingly, the Quarterly High, Quarterly Low and Quarterly Close data indicated are for this shortened period only and do not reflect complete data for the fourth calendar quarter of 2012. |
13
The graph below illustrates the performance of MetLifes common stock from January 3, 2000 through October 12, 2012, based on information from Bloomberg. The dotted line represents the conversion price of $29.75, which is equal to 85% of the closing price on October 12, 2012. Past performance of the underlying stock is not indicative of the future performance of the underlying stock.
14
United Rentals, Inc.
According to publicly available information, United Rentals, Inc. (United Rentals) is a holding company. United Rentals conducts its operations through its wholly owned subsidiary, United Rentals (North America), Inc., and its subsidiaries. As an equipment rental company, its network consists of rental locations in the United States and Canada. United Rentals operates in two segments: general rentals and trench safety, power and HVAC. The general rentals segment includes the rental of construction, aerial, industrial and homeowner equipment and related services and activities. The general rentals segments customers include construction and industrial companies, manufacturers, utilities, municipalities and homeowners. The general rentals segment comprises seven geographic regions, the Southwest, Gulf, Northwest, Southeast, Midwest, East, and the Northeast Canada, and operates throughout the United States and Canada. The trench safety, power and HVAC segment includes the rental of specialty construction products and related services. The trench safety, power and HVAC segments customers include construction companies involved in infrastructure projects, municipalities and industrial companies. Information filed by United Rentals with the SEC under the Exchange Act can be located by reference to its SEC file number: 001-14387, or its CIK Code: 0001067701. United Rentals website is http://www.ur.com. United Rentals common stock is listed on the New York Stock Exchange under the ticker symbol URI.
Information from outside sources is not incorporated by reference in, and should not be considered part of, this pricing supplement or any accompanying prospectus. Notwithstanding anything stated in the product supplement, we do not disclaim liability or responsibility for any information disclosed herein regarding the underlying stock. However, UBS has not conducted any independent review or due diligence of any publicly available information with respect to the underlying stock.
Historical Information
The following table sets forth the quarterly high and low closing prices for United Rentals common stock, based on daily closing prices on the primary exchange for United Rentals, as reported by Bloomberg. We obtained the closing prices below from Bloomberg, without independent verification. The closing prices may be adjusted by Bloomberg for corporate actions such as stock splits, public offerings, mergers and acquisitions, spin-offs, extraordinary dividends, delistings and bankruptcy. UBS has not undertaken an independent review or due diligence of any publicly available information obtained from Bloomberg. United Rentals closing price on October 12, 2012 was $32.08. Past performance of the underlying stock is not indicative of the future performance of the underlying stock.
Quarter Begin | Quarter End | Quarterly High | Quarterly Low | Quarterly Close | ||||
1/2/2008 | 3/31/2008 | $20.10 | $15.54 | $18.84 | ||||
4/1/2008 | 6/30/2008 | $22.09 | $17.76 | $19.61 | ||||
7/1/2008 | 9/30/2008 | $20.04 | $14.77 | $15.24 | ||||
10/1/2008 | 12/31/2008 | $13.89 | $ 4.40 | $ 9.12 | ||||
1/2/2009 | 3/31/2009 | $ 9.47 | $ 3.03 | $ 4.21 | ||||
4/1/2009 | 6/30/2009 | $ 6.82 | $ 4.06 | $ 6.49 | ||||
7/1/2009 | 9/30/2009 | $11.02 | $ 5.34 | $10.30 | ||||
10/1/2009 | 12/31/2009 | $11.03 | $ 8.69 | $ 9.81 | ||||
1/4/2010 | 3/31/2010 | $10.04 | $ 7.02 | $ 9.38 | ||||
4/1/2010 | 6/30/2010 | $14.59 | $ 9.27 | $ 9.32 | ||||
7/1/2010 | 9/30/2010 | $14.84 | $ 8.29 | $14.84 | ||||
10/1/2010 | 12/31/2010 | $23.51 | $14.53 | $22.75 | ||||
1/3/2011 | 3/31/2011 | $33.28 | $22.87 | $33.28 | ||||
4/1/2011 | 6/30/2011 | $34.09 | $22.18 | $25.40 | ||||
7/1/2011 | 9/30/2011 | $26.69 | $13.11 | $16.84 | ||||
10/3/2011 | 12/30/2011 | $30.31 | $15.86 | $29.55 | ||||
1/3/2012 | 3/30/2012 | $43.30 | $28.96 | $42.89 | ||||
4/2/2012 | 6/30/2012 | $46.82 | $30.16 | $34.04 | ||||
7/2/2012 | 9/28/2012 | $37.92 | $27.23 | $32.71 | ||||
10/1/2012* | 10/12/2012* | $33.90 | $32.08 | $32.08 |
* | As of the date of this pricing supplement, available information for the fourth calendar quarter of 2012 includes data for the period from October 1, 2012 through October 12, 2012. Accordingly, the Quarterly High, Quarterly Low and Quarterly Close data indicated are for this shortened period only and do not reflect complete data for the fourth calendar quarter of 2012. |
15
The graph below illustrates the performance of United Rentals common stock from January 3, 2000 through October 12, 2012, based on information from Bloomberg. The dotted line represents the conversion price of $19.25, which is equal to 60% of the closing price on October 12, 2012. Past performance of the underlying stock is not indicative of the future performance of the underlying stock.
16
Supplemental Plan of Distribution (Conflicts of Interest)
We have agreed to sell to UBS Financial Services Inc. and certain of its affiliates, together the Agents, and the Agents have agreed to purchase, all of the Notes at the issue price less the underwriting discount indicated on the cover of this pricing supplement, the document filed pursuant to Rule 424(b) containing the final pricing terms of the Notes.
We or one of our affiliates may enter into swap agreements or related hedge transactions with one of our other affiliates or unaffiliated counterparties in connection with the sale of the Notes; and UBS or its affiliates may earn additional income as a result of payments pursuant to the swap or related hedge transactions.
Conflicts of Interest Each of UBS Securities LLC and UBS Financial Services Inc. is an affiliate of UBS and, as such, has a conflict of interest in this offering within the meaning of FINRA Rule 5121. In addition, UBS will receive the net proceeds (excluding the underwriting discount) from the initial public offering of the Notes and, thus creates an additional conflict of interest within the meaning of FINRA Rule 5121. Consequently, the offering is being conducted in compliance with the provisions of Rule 5121. Neither UBS Securities LLC nor UBS Financial Services Inc. is permitted to sell Notes in the offering to an account over which it exercises discretionary authority without the prior specific written approval of the account holder.
17
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