FORM 424B2
CALCULATION
OF REGISTRATION FEE
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Maximum Aggregate
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Amount of Aggregate
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Title of Each Class of Securities to be Registered
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Offering Price
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Registration Fee(1)
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7.250% Senior Notes due 2019 (debt securities)
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$
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300,000,000
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$
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16,740
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(1) |
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The aggregate filing fee of $16,740 calculated in accordance
with Rule 457(r) has been transmitted to the SEC in
connection with the offer and sale of debt securities described
in this prospectus supplement and accompanying prospectus from
the registration statement filed on April 12, 2007 (File
No. 333-142058). |
Filed Pursuant to Rule 424(b)(2)
Registration No. 333-142058
PROSPECTUS
SUPPLEMENT
(To Prospectus dated April 12, 2007)
$300,000,000
THE VALSPAR
CORPORATION
7.250% Senior Notes due
2019
The notes will mature on June 15, 2019 and will bear
interest at the rate of 7.250% per year. Interest on the notes
is payable semi-annually on June 15 and December 15 of
each year, beginning on December 15, 2009. We may redeem
the notes in whole or in part at any time at the applicable
redemption price set forth under Description of the
Notes Optional Redemption. If we experience a
change of control repurchase event, we may be required to offer
to purchase the notes from holders.
The notes will rank equally with all of our other unsecured and
unsubordinated indebtedness outstanding from time to time.
Investing in the notes involves risks that are described
under Risk Factors beginning on page S-6.
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Per Senior
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Note
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Total
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Public offering price(1)
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99.574
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%
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$
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298,722,000
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Underwriting discount
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.650
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%
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$
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1,950,000
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Proceeds, before expenses, to Valspar
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98.924
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%
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$
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296,772,000
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(1) |
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Plus accrued interest, if any, from June 19, 2009. |
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of the notes
or determined that this prospectus supplement or any of the
accompanying prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
The notes will be ready for delivery in book-entry form only
through The Depository Trust Company on or about
June 19, 2009.
Joint Book-Running Managers
Banc of America Securities
LLC
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Co-Managers
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Mitsubishi UFJ
Securities
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U.S. Bancorp Investments,
Inc.
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The date of this prospectus supplement is June 16, 2009
TABLE OF
CONTENTS
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Page
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Prospectus Supplement
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S-iii
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S-iv
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S-1
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S-6
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S-10
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S-11
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S-13
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S-21
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S-27
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S-30
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Prospectus
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About This Prospectus
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1
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Where You Can Find More Information
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1
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Cautionary Note Regarding Forward-Looking Statements
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3
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Ratio of Earnings to Fixed Charges
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4
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Description of Common Stock
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4
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Description of Debt Securities
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6
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Description of Securities Warrants
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10
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Plan of Distribution
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12
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Legal Matters
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13
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Experts
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13
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You should rely on the information contained in this prospectus
supplement and the accompanying prospectus to which we have
referred you. We have not authorized anyone to provide you with
information that is different. This prospectus supplement and
the accompanying prospectus may only be used where it is legal
to sell these securities. The information in this prospectus
supplement and the accompanying prospectus may only be accurate
on the date of this prospectus supplement.
S-ii
ABOUT
THIS PROSPECTUS SUPPLEMENT
This document is in two parts. The first part is this prospectus
supplement, which contains the terms of this offering of notes.
The second part is the prospectus dated April 12, 2007,
which is part of our Registration Statement on
Form S-3
(Registration
No. 333-142058).
This prospectus supplement may add to, update or change the
information in the accompanying prospectus. If information in
this prospectus supplement is inconsistent with information in
the accompanying prospectus, this prospectus supplement will
apply and will supersede that information in the accompanying
prospectus.
It is important for you to read and consider all information
contained or incorporated by reference in this prospectus
supplement and the accompanying prospectus in making your
investment decision. You should also read and consider the
information in the documents to which we have referred you in
Where You Can Find More Information in the
accompanying prospectus.
No person is authorized to give any information or to make any
representations other than those contained or incorporated by
reference in this prospectus supplement or the accompanying
prospectus and, if given or made, such information or
representations must not be relied upon as having been
authorized. This prospectus supplement and the accompanying
prospectus do not constitute an offer to sell or the
solicitation of an offer to buy any securities other than the
securities described in this prospectus supplement or an offer
to sell or the solicitation of an offer to buy such securities
in any circumstances in which such offer or solicitation is
unlawful. Neither the delivery of this prospectus supplement and
the accompanying prospectus, nor any sale made hereunder, shall
under any circumstances create any implication that there has
been no change in our affairs since the date of this prospectus
supplement, or that the information contained or incorporated by
reference in this prospectus supplement or the accompanying
prospectus is correct as of any time after the date of such
information.
The distribution of this prospectus supplement and the
accompanying prospectus and the offering of the notes in certain
jurisdictions may be restricted by law. This prospectus
supplement and the accompanying prospectus do not constitute an
offer, or an invitation on our behalf or the underwriters or any
of them, to subscribe to or purchase any of the notes, and may
not be used for or in connection with an offer or solicitation
by anyone, in any jurisdiction in which such an offer or
solicitation is not authorized or to any person to whom it is
unlawful to make such an offer or solicitation. See
Underwriting.
In this prospectus supplement and the accompanying prospectus,
unless otherwise stated, references to Valspar,
the Company, we, us and
our refer to The Valspar Corporation and its
subsidiaries.
S-iii
FORWARD-LOOKING
STATEMENTS
Some statements in this prospectus supplement, the accompanying
prospectus and the documents incorporated by reference herein
constitute forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as
amended, or the Securities Act, and Section 21E of the
Securities Exchange Act of 1934, as amended, or the Exchange
Act. Statements in this prospectus supplement, the accompanying
prospectus and documents incorporated by reference that are not
of historical fact may be deemed to be forward-looking
statements. In some cases, you can identify forward-looking
statements by terminology such as may,
will, could, would,
should, expect(s), plan(s),
anticipate(s), intend(s),
believe(s), estimate(s),
predict(s), seek(s),
potential, or continue(s) or the
negative of those terms or other comparable terminology. These
forward-looking statements are based on managements
expectations and beliefs concerning future events and are
necessarily subject to risks, uncertainties and other factors,
many of which are outside of our control, that could cause
actual results to differ materially from such statements. These
uncertainties and other factors include, but are not limited to,
changes in general economic conditions both domestic and
international, including recessions and other external economic
and political factors, which may adversely affect our business,
the value of our investments, the financial stability of our
customers and suppliers and our ability to obtain financing;
dependence of internal earnings growth on economic conditions
and growth in the domestic and international coatings industry;
competitive factors including pricing pressure and product
competition; risks related to any future acquisitions, including
risks of adverse changes in the results of acquired businesses
and the assumption of unforeseen liabilities; risks of
disruptions in business resulting from the integration process
and higher interest costs resulting from further borrowing for
any such acquisitions; our reliance on the efforts of vendors,
government agencies, utilities and other third parties to
achieve adequate regulatory compliance and avoid disruption of
our business; risks of disruptions in business resulting from
strains in or the loss of relationships with our material
customers and suppliers; risks and uncertainties associated with
operations and achievement of growth in developing markets,
including China and Central and South America; unusual weather
conditions adversely affecting sales; changes in raw materials
pricing and availability; delays in passing along cost increases
to customers; changes in governmental regulation, including more
stringent environmental, health and safety regulations; changes
in accounting policies and standards and taxation requirements
such as new tax laws or revised tax law interpretations; the
nature, cost and outcome of pending and future litigation and
other legal proceedings; civil unrest and the outbreak of war
and other significant national and international events; and
other risks and uncertainties, including those discussed in this
prospectus supplement under the caption Risk Factors.
We do not, nor does any other person, assume responsibility for
the accuracy and completeness of these statements. We disclaim
any intention or obligation to publicly update or revise any of
the forward-looking statements after the date of this prospectus
supplement to conform them to actual results, whether as a
result of new information, future events, or otherwise. All of
the forward-looking statements contained in this prospectus
supplement, the accompanying prospectus and documents
incorporated by reference herein are qualified in their entirety
by reference to the factors discussed under the captions
Risk Factors in this prospectus supplement and
Managements Discussion and Analysis of Financial
Condition and Results of Operations in our most recent
Form 10-K
(incorporated by reference in the accompanying prospectus) and
similar sections in our future filings that may be incorporated
by reference in the accompanying prospectus.
The above list of uncertainties and other risk factors that may
affect results addressed in the forward-looking statements may
not be exhaustive. Other sections of this prospectus supplement,
the accompanying prospectus and documents incorporated by
reference may describe additional uncertainties or risk factors
that could adversely impact our business and financial
performance. We operate in a continually changing business
environment, and new risk factors emerge from time to time.
Management cannot predict these new risk factors, nor can it
assess the impact, if any, of these new risk factors on our
businesses or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from
those projected in any forward-looking statements. Accordingly,
forward-looking statements should not be relied upon as a
prediction of actual results.
S-iv
PROSPECTUS
SUPPLEMENT SUMMARY
This summary highlights selected information about Valspar
and this offering. It does not contain all of the information
that may be important to you in deciding whether to purchase
notes. We encourage you to read the entire prospectus
supplement, the accompanying prospectus and the documents that
we have filed with the SEC that are incorporated by reference
before deciding whether to purchase notes.
The
Valspar Corporation
The Valspar Corporation is a leading global coatings and paints
manufacturer and distributor, based on revenues and trade
publication rankings. We manufacture and distribute a broad
portfolio of coatings, paints and related products. We operate
our business in two reportable segments: Coatings and Paints.
Our net sales in 2008 from our Coatings and Paints segments were
$2,053.7 million and $1,127.1 million, respectively.
Our total net sales in 2008 were $3,482.4 million.
Our Coatings segment includes a broad range of decorative and
protective coatings for metal, wood, plastic and glass,
primarily for sale to original equipment manufacturing (OEM)
customers. Products within our Coatings segment include primers,
top coats, varnishes, inks, sprays, stains, fillers and other
coatings used by customers in a wide range of manufacturing
industries, including building products, appliances, furniture,
transportation, agricultural and construction equipment, metal
packaging and metal fabrication. We utilize a wide variety of
coatings technologies to meet our customers coatings
requirements, including electrodeposition, powder,
solvent-based, waterborne and UV light-cured coatings. This
segment includes our packaging product line and our three
industrial product lines: coil, general industrial and wood.
Our packaging product line includes coatings for the interior
and exterior of metal packaging containers, principally food
containers and beverage cans. We also produce coatings for
aerosol and paint cans, crowns for glass bottles, plastic
packaging and bottle closures. We believe we are the
worlds largest supplier of metal packaging coatings.
Consolidation and globalization of our customers has occurred in
this product line, and we have responded by offering a wide
variety of packaging coatings products throughout the world.
Our coil coatings are applied to metal coils that are used to
manufacture pre-engineered buildings and building components,
other metal building and architectural products and appliances.
We believe we are the largest supplier of coil coatings in North
America. With our broad technology portfolio, we believe we are
poised for growth in Asia, South America and Northern and
Eastern Europe. The joint venture we established in January 2007
with Tekno S.A. in Brazil strengthened our position in South
America, and in the fourth quarter of 2008, we acquired the
remaining shares of this business. Our August 2007 acquisition
of Teknos Nova Coil TNC Oy in Finland strengthens our position
in Northern and Eastern Europe. In December 2007, we acquired
control of Aries Coil Coatings S.A. de C.V. (Aries), a privately
owned manufacturer of high-performance coil and packaging
coatings based in Monterrey, Mexico, which strengthened our
North American operations. In the second quarter of 2008, we
acquired the remaining shares of this business.
Our general industrial product line provides customers in a wide
variety of industries with a single source for powder, liquid
and electrodeposition coatings technologies. With our wide range
of products and technologies, we are able to supply customers
around the world. We have expanded our infrastructure to support
customers in Europe, Central and South America and Asia. In
2006, we opened a powder coatings facility in Shanghai, and
through the H.B. Fuller powder coatings business acquisition, we
added a new powder coatings facility in the United Kingdom.
Our wood product line within the Coatings segment includes
decorative and protective coatings for wood furniture, building
products, cabinets and floors. With the acquisition of a
controlling interest in Huarun Paints in 2006, we believe we are
one of the worlds largest suppliers of wood coatings.
Portions of the wood furniture industry have moved to Asia, and
we have color design, manufacturing and technical service
capabilities in the region to support this business.
Our architectural product line comprises the largest part of our
Paints segment. We offer a broad portfolio of interior and
exterior paints, stains, primers, varnishes, high performance
floor paints and specialty decorative
S-1
products. We sell these products primarily into the
do-it-yourself and professional markets through home centers,
mass merchants, hardware wholesalers and independent dealers. We
develop customized merchandising and marketing support programs
for our architectural paints customers, enabling them to
differentiate their paint departments through point-of-purchase
materials, labeling and product and color selection assistance.
We offer our own branded products and private label brands for
customers. At key customers, we also offer additional marketing
and customer support by providing Valspar personnel to train
paint department employees and to answer coatings questions in
stores. In China, we sell our Huarun brand of architectural
coatings through about 600 distributors and more than 2,000
retail outlets.
In 2007, we began to build consumer awareness of the Valspar
brand through an integrated marketing campaign. In 2008, we
continued to invest in the Valspar brand, along with other
significant brands such as Cabot stains and Huarun paints.
Within the Paints segment, we also offer automotive refinish
paints and aerosol spray paints that are sold through automotive
refinish distributors, body shops, automotive supply
distributors and automotive supply retailers. Our Valspar
Refinish, De Beer and House of Kolor brands are offered in many
countries around the world.
In addition to the main product lines within our two segments,
we manufacture and sell specialty polymers, colorants and
gelcoats, and we sell furniture protection plans. The specialty
polymers and colorants are manufactured for internal use and for
external sale to other coatings manufacturers. Our gelcoats and
related products are sold to boat manufacturers, shower and tub
manufacturers and others.
The Valspar Corporation is a Delaware corporation and was
founded in 1806. Our principal executive offices are located at
901 3rd Avenue South, Minneapolis, Minnesota
55402, and our telephone number at that address is
(612) 851-7000.
Our corporate website address is www.valsparglobal.com. The
information on our website is not part of this prospectus
supplement.
S-2
The
Offering
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Issuer |
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The Valspar Corporation. |
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Securities Offered |
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$300,000,000 aggregate principal amount of 7.250% Senior
Notes due 2019. |
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Maturity |
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The notes will mature on June 15, 2019. |
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Interest |
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Interest on the notes will accrue from June 19, 2009 and
will be payable semi-annually on June 15 and
December 15 of each year, beginning December 15, 2009. |
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Ranking |
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The notes are our unsecured and unsubordinated obligations and
will rank equally with all of our other unsecured and
unsubordinated debt outstanding from time to time. Holders of
the notes will generally have a position junior to the claims of
the creditors, including trade creditors, of our subsidiaries.
Also, the notes will be effectively subordinated to any secured
indebtedness to the extent of the value of the assets securing
such indebtedness. As of May 1, 2009, without giving effect
to the issuance of the notes and the use of the net proceeds of
the notes: |
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we had approximately $981.4 million of
outstanding indebtedness on a consolidated basis;
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of such amount, our subsidiaries had an aggregate of
approximately $20.3 million of outstanding indebtedness; and
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we had no secured indebtedness.
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Use of Proceeds |
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We intend to use the net proceeds to repay a portion of our
commercial paper borrowings and borrowings under our existing
bank credit facilities. |
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Optional Redemption |
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We may redeem the notes at our option, at any time in whole or
from time to time in part at a redemption price equal to the
greater of: |
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100% of the principal amount of the notes being
redeemed; and
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the Make-Whole Amount (as defined in
Description of the Notes Optional
Redemption);
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plus, in each case, accrued and unpaid interest to, but not
including, the redemption date. |
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Repurchase at the Option of Holders Upon a Change of Control |
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If we experience a change of control repurchase
event (which is defined in this prospectus supplement and
involves a change in control and related rating of the notes
below investment grade), we may be required to offer to purchase
the notes at a purchase price equal to 101% of the principal
amount, plus accrued and unpaid interest. |
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Covenants |
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The indenture relating to the notes will contain certain
covenants for your benefit. These covenants will restrict our
ability to: |
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incur debt secured by liens; or
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engage in certain sale-leaseback transactions.
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S-3
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These covenants will, however, be subject to significant
exceptions. In addition, neither the indenture nor the notes
will limit the amount of indebtedness that we may incur or the
amount of assets that we may distribute or invest. We will also
be subject to a covenant concerning consolidations, mergers and
transfers of substantially all of our property and assets. See
Description of the Notes Covenants. |
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Further Issues |
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We may from time to time, without notice to or the consent of
the holders of the notes, create and issue additional debt
securities having the same terms as and ranking equally and
ratably with the notes in all respects, as described under
Description of the Notes Further Issues. |
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Book-Entry |
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The notes will be issued in book-entry form and will be
represented by a permanent global certificate deposited with, or
on behalf of, The Depository Trust Company
(DTC) and registered in the name of Cede &
Co., DTCs nominee. Beneficial interests in the notes will
be shown on, and transfers will be effected only through,
records maintained by DTC or its nominee; and these interests
may not be exchanged for certificated notes except in limited
circumstances. See Description of the Notes
Book-Entry; Delivery and Form; Global Notes. |
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Risk Factors |
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Investing in the notes involves risks. See Risk
Factors for a description of certain risks you should
particularly consider before investing in the notes. |
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Trustee |
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U.S. Bank National Association. |
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Governing Law |
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New York. |
S-4
Summary
Financial Information
The following table sets forth our summary consolidated
financial information. The summary operating results data for
fiscal years 2008, 2007 and 2006 and the summary financial
position data as of October 31, 2008 and October 26,
2007 are derived from our audited consolidated financial
statements incorporated by reference in this prospectus
supplement. The summary operating results data for fiscal years
2005 and 2004 and the summary financial position data as of
October 27, 2006, October 28, 2005 and
October 29, 2004 are derived from our audited consolidated
financial statements for the years indicated and are not
included or incorporated by reference in this prospectus
supplement. We have a 4-4-5 week accounting cycle with the
fiscal year ending on the Friday on or immediately preceding
October 31. Fiscal years 2007, 2006, 2005 and 2004 each
included 52 weeks. Fiscal year 2008 included 53 weeks.
The summary financial data for the six months ended May 1,
2009 and April 25, 2008 are derived from our unaudited
consolidated financial statements for the respective periods. In
the opinion of our management, the unaudited financial
statements reflect all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair
presentation of the results of operations and financial position
of our company as of the date of and for the periods presented.
Historical results are not necessarily indicative of the results
to be expected in the future.
The summary consolidated financial information should be read in
conjunction with, and is qualified by reference to, our
consolidated financial statements and the related notes and the
Managements Discussion and Analysis of Financial
Condition and Results of Operations sections included in
our Annual Report on
Form 10-K
for the year ended October 31, 2008, and our Quarterly
Report on
Form 10-Q
for the quarter ended May 1, 2009, which we have filed with
the SEC and which are incorporated by reference into this
prospectus supplement.
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Six Months Ended
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Fiscal Year Ended
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May 1,
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April 25,
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October 31,
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October 26,
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October 27,
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October 28,
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October 29,
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2009
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2008
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2008
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2007
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2006
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2005
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2004
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(Unaudited)
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(In thousands)
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Operating Results:
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Net Sales
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$
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1,307,881
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1,601,503
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$
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3,482,378
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$
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3,249,287
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$
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2,978,062
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$
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2,713,950
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$
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2,440,692
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Costs and Expenses:
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Cost of Sales
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897,401
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1,146,777
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2,504,947
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2,277,490
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2,072,157
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1,928,352
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1,697,176
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Operating Expenses
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319,143
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322,641
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684,056
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662,224
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598,468
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514,735
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473,719
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Income from Operations
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91,337
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132,085
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293,375
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309,573
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307,437
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270,863
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269,797
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Other (Income) Expense Net
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640
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3,943
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6,933
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(11,860
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)
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3,799
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621
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(139
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Interest Expense
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22,507
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29,597
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57,745
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61,662
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46,206
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44,522
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|
|
|
41,399
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before Income Taxes
|
|
|
68,190
|
|
|
|
98,545
|
|
|
|
228,697
|
|
|
|
259,771
|
|
|
|
257,432
|
|
|
|
225,720
|
|
|
|
228,537
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
45,298
|
|
|
$
|
64,862
|
|
|
$
|
150,766
|
|
|
$
|
172,115
|
|
|
$
|
175,252
|
|
|
$
|
147,618
|
|
|
$
|
142,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Position (at end of period):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
3,332,444
|
|
|
$
|
3,611,535
|
|
|
$
|
3,520,042
|
|
|
$
|
3,452,281
|
|
|
$
|
3,191,535
|
|
|
$
|
2,732,383
|
|
|
$
|
2,634,258
|
|
Working Capital*
|
|
|
477,539
|
|
|
|
513,320
|
|
|
|
435,897
|
|
|
|
458,141
|
|
|
|
389,394
|
|
|
|
432,966
|
|
|
|
387,743
|
|
Property, Plant and Equipment, Net
|
|
|
459,361
|
|
|
|
516,717
|
|
|
|
489,716
|
|
|
|
514,396
|
|
|
|
459,605
|
|
|
|
427,822
|
|
|
|
428,431
|
|
Long-Term Debt, Excluding Current Portion
|
|
|
695,392
|
|
|
|
807,900
|
|
|
|
763,129
|
|
|
|
648,988
|
|
|
|
350,267
|
|
|
|
706,415
|
|
|
|
549,073
|
|
Stockholders Equity
|
|
|
1,414,114
|
|
|
|
1,424,778
|
|
|
|
1,452,868
|
|
|
|
1,380,797
|
|
|
|
1,240,063
|
|
|
|
1,061,092
|
|
|
|
1,000,363
|
|
Other Statistics:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, Plant and Equipment Expenditures
|
|
$
|
23,316
|
|
|
$
|
17,833
|
|
|
$
|
43,045
|
|
|
$
|
76,940
|
|
|
$
|
75,417
|
|
|
$
|
62,731
|
|
|
$
|
61,375
|
|
Depreciation and Amortization Expense
|
|
|
42,641
|
|
|
|
39,388
|
|
|
|
80,831
|
|
|
|
71,811
|
|
|
|
68,716
|
|
|
|
68,395
|
|
|
|
60,537
|
|
Research and Development Expense
|
|
|
45,612
|
|
|
|
47,350
|
|
|
|
96,552
|
|
|
|
90,322
|
|
|
|
82,608
|
|
|
|
79,286
|
|
|
|
75,880
|
|
|
|
|
* |
|
Defined as accounts receivable plus inventory less accounts
payable. |
S-5
RISK
FACTORS
You should carefully consider the following risk factors and
the information under the heading Risk Factors in
our Annual Report on
Form 10-K
for the year ended October 31, 2008 which is incorporated
by reference into this prospectus supplement and the
accompanying prospectus, as well as the other information
included or incorporated by reference into this prospectus
supplement and the accompanying prospectus, before making an
investment decision. The following is not intended as, and
should not be construed as, an exhaustive list of relevant risk
factors. There may be other risks that a prospective investor
should consider that are relevant to its own particular
circumstances or generally.
Risks
Related to Our Business
Deterioration
of economic conditions could harm our business.
Our business may be adversely affected by changes in national or
global economic conditions, including inflation, interest rates,
the availability of capital markets, consumer spending rates,
energy availability and costs (including fuel surcharges), and
the effects of governmental initiatives to manage economic
conditions. The recent volatility in financial markets and the
deterioration of national and global economic conditions could
impact our operations as follows:
|
|
|
|
|
the value of our investments in debt and equity securities may
decline, including our assets held in pension plans;
|
|
|
|
financial stability of our customers and suppliers may be
compromised, which could result in additional bad debts for us
or non-performance by suppliers; and
|
|
|
|
it may become more costly or difficult to obtain financing to
fund operations or investment opportunities, or to refinance our
debt in the future.
|
Additionally, we utilize hedges and other derivative financial
instruments to reduce our exposure to various interest rate
risks, which qualify for hedge accounting for financial
reporting purposes. Volatile fluctuations in market conditions
could cause these instruments to become ineffective, which could
require any gains or losses associated with these instruments to
be reported in our earnings each period.
Fluctuations
in the supply and prices of raw materials could negatively
impact our financial results.
We purchase the raw and intermediate materials needed to
manufacture our products from a number of suppliers. The
majority of our raw materials are petroleum-based derivatives
and minerals and metals. Under normal market conditions, these
materials are generally available on the open market. From time
to time, however, the prices and availability of these raw
materials may fluctuate significantly, which could impair our
ability to procure necessary materials, or increase the cost of
manufacturing our products. During the past three to four years,
our raw material costs have increased significantly. When raw
material costs increase, our profit margins are reduced unless
and until we are able to pass along the increases to our
customers through higher prices. If raw material costs continue
to increase, and if we are unable to pass along, or are delayed
in passing along, raw material cost increases to our customers,
we will experience profit margin reductions.
Many
of our customers are in cyclical industries, which may affect
the demand for our products.
Many of our customers, especially for our industrial products,
are in businesses and industries that are cyclical in nature and
sensitive to changes in general economic conditions. As a
result, the demand for our products by these customers depends,
in part, upon general economic conditions. In 2007 and 2008, the
downward trend in the U.S. housing market negatively
affected sales of our architectural paints and industrial
coatings applied to new and existing homes and to consumer
products for home use. Downward economic cycles affecting the
industries of our customers will reduce sales of our products.
When general economic conditions deteriorate, we may suffer
reductions in our sales and profitability.
S-6
The
industries in which we operate are highly competitive and some
of our competitors may be larger and may have greater financial
resources than we do.
All aspects of the coatings and paints business are highly
competitive. We face strong competitors in all areas of our
business. Any increase in competition may cause us to lose
market share or compel us to reduce prices to remain
competitive, which could result in reduced margins for our
products. Competitive pressures may not only impair our margins
but may also impact our revenues and our growth. A number of our
competitors are larger than us and may have greater financial
resources than we do. Increased competition with these companies
could curtail price increases or could require price reductions
or increased spending on marketing and sales, any of which could
adversely affect our results of operations.
Industry sources estimate that the top ten largest coatings
manufacturers represent more than half of the worlds
coatings sales. Our larger competitors may have more resources
to finance acquisitions or internal growth in this competitive
environment. Also, we buy our raw materials from large
suppliers, primarily chemical companies. In many of our product
lines, we then sell our finished goods to large customers, such
as do-it-yourself home centers, large equipment manufacturers
and can makers. Our larger competitors may have more resources
or capabilities to conduct business with these large suppliers
and large customers. Finally, many of our larger competitors
operate businesses other than paints and coatings. These
competitors may be better able to compete during industry
downturns.
We
have a significant amount of indebtedness.
Our total debt, including notes payable, was $981.4 million
at May 1, 2009. Our level of indebtedness may have
important consequences. For example, it:
|
|
|
|
|
may require us to dedicate a material portion of our cash flow
from operations to make payments on our indebtedness, thereby
reducing the availability of our cash flow to fund working
capital, capital expenditures, acquisitions or other general
corporate purposes;
|
|
|
|
could make us less attractive to prospective or existing
customers or less able to fund potential acquisitions; and
|
|
|
|
may limit our flexibility to adjust to changing business and
market conditions and make us more vulnerable to a downturn in
general economic conditions as compared to a competitor that may
have lower indebtedness.
|
Our
strategy of growth through acquisitions may not be
successful.
Acquisitions have historically contributed significantly to the
growth of our company. As part of our growth strategy, we intend
to continue pursuing acquisitions of complementary businesses or
products and joint ventures. If we are successful in completing
such acquisitions, we may experience:
|
|
|
|
|
difficulties in assimilating acquired companies and products
into our existing business;
|
|
|
|
delays in realizing the benefits from the acquired companies or
products;
|
|
|
|
diversion of our managements time and attention from other
business concerns;
|
|
|
|
lack of or limited prior experience in any new markets we may
enter;
|
|
|
|
unforeseen claims and liabilities, including unexpected
environmental exposures or product liability;
|
|
|
|
unforeseen adjustments, charges and write-offs;
|
|
|
|
problems enforcing the indemnification obligations of sellers of
businesses or joint venture partners for claims and liabilities;
|
|
|
|
unexpected losses of customers of, or suppliers to, the acquired
business;
|
|
|
|
difficulty in conforming the acquired business standards,
processes, procedures and controls with our operations;
|
S-7
|
|
|
|
|
variability in financial information arising from the
implementation of purchase price accounting;
|
|
|
|
difficulties in retaining key employees of the acquired
businesses; and
|
|
|
|
challenges arising from the increased scope, geographic
diversity and complexity of our operations.
|
In addition, an acquisition could materially impair our
operating results by causing us to incur debt or requiring us to
amortize acquisition expenses or the cost of acquired assets.
Any of these factors may make it more difficult to repay our
debt. We can give no assurance that we will continue to be able
to identify, acquire and integrate successful strategic
acquisitions in the future or be able to implement successfully
our operating and growth strategies within our existing markets
or with respect to any future product or geographic
diversification efforts.
We
derive a substantial portion of our revenues from foreign
markets, which subjects us to additional business
risks.
We conduct a substantial portion of our business outside of the
United States. We and our joint ventures currently have
production facilities, research and development facilities, and
administrative and sales offices located outside the United
States, including facilities and offices located in Australia,
Brazil, Canada, China, Finland, France, Germany, Ireland,
Malaysia, Mexico, The Netherlands, Singapore, South Africa,
Switzerland, Thailand, the United Kingdom and Vietnam. In 2008,
revenues from products sold outside the United States accounted
for approximately 41% of our net sales.
We expect sales from international markets to continue to
represent a significant portion of our net sales.
Notwithstanding the benefits of geographic diversification, our
business is subject to risks related to the differing legal,
political, social and regulatory requirements and economic
conditions of many jurisdictions. Risks inherent in
international operations include the following:
|
|
|
|
|
agreements may be difficult to enforce and receivables difficult
to collect;
|
|
|
|
foreign customers may have longer payment cycles;
|
|
|
|
foreign countries may impose additional withholding taxes or
otherwise tax our foreign income, or adopt other restrictions on
foreign trade or investment, including currency exchange
controls;
|
|
|
|
foreign operations may experience staffing difficulties and
labor disputes;
|
|
|
|
transportation and other shipping costs may increase;
|
|
|
|
foreign governments may nationalize private enterprises;
|
|
|
|
unexpected adverse changes in export duties, quotas and tariffs
and difficulties in obtaining export licenses;
|
|
|
|
intellectual property rights may be more difficult to enforce;
|
|
|
|
fluctuations in exchange rates may affect product demand and may
adversely affect the profitability in U.S. dollars of
products and services we provide in international markets where
payment for our products and services is made in the local
currency;
|
|
|
|
general economic conditions in the countries in which we operate
could have an adverse effect on our earnings from operations in
those countries;
|
|
|
|
our business and profitability in a particular country could be
affected by political or economic repercussions on a domestic,
country specific or global level from terrorist activities and
the response to such activities;
|
|
|
|
unexpected adverse changes in foreign laws or regulatory
requirements may occur; and
|
|
|
|
compliance with a variety of foreign laws and regulations may be
burdensome.
|
S-8
We
have certain key customers.
Our relationships with certain key customers are important to
us. From 2006 through 2008, sales to our largest customer,
Lowes Companies, Inc., have ranged from 16.0% to 17.6% of
our total net sales. In 2008, our ten largest customers
accounted for approximately 32% of our total net sales. Although
we sell various types of products through various channels of
distribution, we believe that the loss of a substantial portion
of our sales to Lowes Companies, Inc. could have a
material adverse impact on us.
Environmental
laws and regulations affect our business.
We are subject to numerous environmental laws and regulations
that impose various environmental controls on us, including
among other things, the discharge of pollutants into the air and
water, the handling, use, treatment, storage and
clean-up of
hazardous and non-hazardous wastes, the investigation and
remediation of soil and groundwater affected by hazardous
substances, or otherwise relating to environmental protection
and various health and safety matters. These laws and
regulations govern actions that may have adverse environmental
effects and also require compliance with certain practices when
handling and disposing of hazardous wastes. These laws and
regulations also impose strict, retroactive and joint and
several liability for the costs of, and damages resulting from,
cleaning up current sites, past spills, disposals and other
releases of hazardous substances and violations of these laws
and regulations can also result in fines and penalties. We are
currently undertaking remedial activities at a number of our
facilities and properties, and have received notices under the
Comprehensive Environmental Response, Compensation and Liability
Act, or CERCLA, or analogous state laws of liability or
potential liability in connection with the disposal of material
from our operations or former operations.
We are also subject to the risk that new environmental laws or
regulations, or changes in existing laws or regulations or their
interpretation, could expand our potential liability by
regulating additional substances or increasing our obligations
with respect to the handling, disposal or remediation of
regulated substances.
In addition, our customers or consumers perceptions
about the acceptability or potential environmental or health
effects of certain substances could require us to invest
additional amounts to develop products that exclude those
substances. If we are unable to develop products that exclude
those substances when and if required by our customers, we may
experience reduced sales and profitability.
Risks
Related to the Notes
The
notes are effectively junior to the existing and future
liabilities of our subsidiaries.
The notes are our unsecured obligations and will rank equally in
right of payment with all of our other existing and future
unsecured, unsubordinated obligations. The notes are not secured
by any of our assets. Any future claims of secured lenders with
respect to assets securing their loans will be prior to any
claim of the holders of the notes with respect to those assets.
Our subsidiaries are separate and distinct legal entities from
us. Our subsidiaries have no obligation to pay any amounts due
on the notes or to provide us with funds to meet our payment
obligations on the notes, whether in the form of dividends,
distributions, loans or other payments. In addition, any payment
of dividends, loans or advances by our subsidiaries could be
subject to statutory or contractual restrictions. Payments to us
by our subsidiaries will also be contingent upon the
subsidiaries earnings and business considerations. Our
right to receive any assets of any of our subsidiaries upon
their bankruptcy, liquidation or reorganization, and therefore
the right of the holders of the notes to participate in those
assets, will be effectively subordinated to the claims of that
subsidiarys creditors, including trade creditors. In
addition, even if we are a creditor of any of our subsidiaries,
our rights as a creditor would be subordinate to any security
interest in the assets of its subsidiaries and any indebtedness
of its subsidiaries senior to that held by us. As of May 1,
2009, we had approximately $981.4 million of indebtedness
on a consolidated basis, none of which was secured, with
approximately $20.3 million of such indebtedness at our
subsidiaries.
S-9
Our
credit ratings may not reflect all risks of your investments in
the notes.
Our credit ratings are an assessment by rating agencies of our
ability to pay our debts when due. Consequently, real or
anticipated changes in our credit ratings will generally affect
the market value of the notes. These credit ratings may not
reflect the potential impact of risks relating to structure or
marketing of the notes. Agency ratings are not a recommendation
to buy, sell or hold any security, and may be revised or
withdrawn at any time by the issuing organization. Each
agencys rating should be evaluated independently of any
other agencys rating.
If an
active trading market does not develop for the notes, you may be
unable to sell your notes or to sell your notes at a price that
you deem sufficient.
The notes are a new issue of securities for which there
currently is no established trading market. We do not intend to
list the notes on a national securities exchange. While the
underwriters of the notes have advised us that they intend to
make a market in the notes, the underwriters will not be
obligated to do so and may stop their market making at any time.
No assurance can be given:
|
|
|
|
|
that a market for the notes will develop or continue;
|
|
|
|
as to the liquidity of any market that does develop; or
|
|
|
|
as to your ability to sell any notes you may own or the price at
which you may be able to sell your notes.
|
We may
not be able to repurchase the notes upon a change of control and
a related change in the rating of the notes to below investment
grade.
Upon the occurrence of specific kinds of change of control
events and a related change in the rating of the notes to below
investment grade, each holder of notes will have the right to
require us to repurchase all or any part of such holders
notes at a price equal to 101% of their principal amount, plus
accrued and unpaid interest, if any, to the date of purchase. If
we experience a change of control, there can be no assurance
that we would have sufficient financial resources available to
satisfy our obligations to repurchase the notes. Our failure to
purchase the notes as required under the indenture governing the
notes would result in a default under the indenture, which could
have material adverse consequences for us and the holders of the
notes. See Description of the Notes Repurchase
at the Option of Holders Upon a Change of Control.
USE OF
PROCEEDS
The net proceeds to us from the sale of the notes will be
approximately $296,272,000 (after underwriting discounts and
commissions and our estimated offering expenses). We intend to
use the net proceeds to repay a portion of our commercial paper
and bank borrowings. Any remaining proceeds will be used for
general corporate purposes. At May 1, 2009, the weighted
average interest rate of our outstanding indebtedness was
approximately 3.4% and the weighted average maturity was
approximately 3.3 years; the weighted average interest rate
of our commercial paper program was approximately 0.84%.
Borrowings under our commercial paper program and short term
bank borrowings were used for working capital, acquisitions and
general corporate purposes.
S-10
CAPITALIZATION
The following table sets forth, as of May 1, 2009, our
consolidated short-term debt and total long-term debt, Huarun
redeemable stock, and stockholders equity on an actual
basis and as adjusted to give effect to the sale of the
notes and the application of the net proceeds to repay a
portion of our commercial paper program and bank borrowings. You
should read this table in conjunction with our consolidated
financial statements and the notes thereto which are
incorporated by reference.
|
|
|
|
|
|
|
|
|
|
|
At May 1, 2009
|
|
|
|
|
|
|
As
|
|
|
|
Actual
|
|
|
Adjusted
|
|
|
|
(Dollars in thousands, except per share amounts)
(Unaudited)
|
|
|
Short-term debt:
|
|
|
|
|
|
|
|
|
Commercial paper
|
|
$
|
123,934
|
|
|
$
|
|
|
Short-term borrowings
|
|
|
162,043
|
|
|
|
12,043
|
|
Current portion of long-term debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total short-term debt
|
|
$
|
285,977
|
|
|
$
|
12,043
|
|
|
|
|
|
|
|
|
|
|
Long-term debt:
|
|
|
|
|
|
|
|
|
5.625% Senior Notes due 2012
|
|
$
|
200,000
|
|
|
$
|
200,000
|
|
5.100% Senior Notes due 2015
|
|
|
150,000
|
|
|
|
150,000
|
|
6.050% Senior Notes due 2017
|
|
|
150,000
|
|
|
|
150,000
|
|
Notes offered hereby
|
|
|
|
|
|
|
300,000
|
|
Notes to banks (0.835% - 3.528)%
|
|
|
182,890
|
|
|
|
156,824
|
|
Industrial development bonds (0.77% payable in 2015)
|
|
|
12,502
|
|
|
|
12,502
|
|
Obligation under capital lease
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of long-term debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term debt, net of current portion
|
|
|
695,392
|
|
|
|
969,326
|
|
|
|
|
|
|
|
|
|
|
Huarun Redeemable Stock
|
|
|
40,213
|
|
|
|
40,213
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity
|
|
|
|
|
|
|
|
|
Common stock (par value $0.50 per share; shares authorized
250,000,000, shares issued, including shares in treasury,
118,442,624)
|
|
|
59,220
|
|
|
|
59,220
|
|
Additional paid-in capital
|
|
|
335,523
|
|
|
|
335,523
|
|
Retained earnings
|
|
|
1,188,631
|
|
|
|
1,188,631
|
|
Other
|
|
|
32,975
|
|
|
|
32,975
|
|
Less cost of common stock in treasury (18,322,477 shares)
|
|
|
(202,235
|
)
|
|
|
(202,235
|
)
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
1,414,114
|
|
|
|
1,414,114
|
|
|
|
|
|
|
|
|
|
|
Total long-term debt, Huarun Redeemable Stock and
stockholders equity
|
|
$
|
2,149,719
|
|
|
$
|
2,423,653
|
|
|
|
|
|
|
|
|
|
|
S-11
RATIO OF
EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of our earnings to our
fixed charges for the periods indicated:
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Six Months
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Fiscal Year Ended
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Ended
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October 31,
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October 26,
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October 27,
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October 28,
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October 29,
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May 1, 2009
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2008
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2007
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2006
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2005
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2004
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Ratio of Earnings to Fixed Charges
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3.7
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x
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4.5
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x
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4.7
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x
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5.8
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x
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5.4
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x
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5.8
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x
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For purposes of computing the ratios of earnings to fixed
charges:
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Earnings represent income from continuing operations
before taxes and cumulative effect of changes in accounting
principles plus fixed charges; and
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Fixed Charges for continuing operations consist of
interest on indebtedness and amortization of debt expense and
the interest component of such rental expense, which has been
calculated based on an implied asset value and the weighted
average interest rate on our debt for the relevant period.
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S-12
DESCRIPTION
OF THE NOTES
The following description of the particular terms of the notes
supplements the description of the general terms and provisions
of the debt securities set forth in the accompanying
prospectus, to which reference is made. References to
Valspar, the Company, we,
us and our in this section are only to
The Valspar Corporation and not to its subsidiaries.
General
The notes will be issued under an indenture dated as of
April 24, 2002 (the Base Indenture). Certain
terms of the notes are contained in a supplemental indenture
(the Supplemental Indenture and together with the
Base Indenture, the indenture between us and
U.S. Bank National Association (the Trustee)).
The terms of the indenture are more fully described in the
accompanying prospectus. The notes will be a separate series of
Valspars debt securities (as that term is used
in the accompanying prospectus) and will be unsecured
obligations of Valspar and will rank on a parity with all other
unsecured and unsubordinated indebtedness of Valspar. The
indenture does not limit the aggregate principal amount of debt
securities that may be issued thereunder and provides that debt
securities may be issued thereunder from time to time in one or
more additional series. The following summary of certain
provisions of the notes and the indenture does not purport to be
complete and is qualified in its entirety by reference to the
actual provisions of the notes and the indenture. Certain terms
used but not defined in this prospectus supplement shall have
the meanings given to them in the accompanying prospectus, the
notes or the indenture, as the case may be.
The notes will be available for purchase in denominations of
$2,000 and integral multiples of $1,000 in book-entry form only.
We will issue a total of $300,000,000 aggregate principal amount
of notes that will mature on June 15, 2019 (the
notes). We may, without the consent of the holders,
reopen the notes and issue more notes having the
same terms as the notes being offered by this prospectus
supplement (except as to issue price, issue date and first
interest payment date). These additional notes, together with
the notes offered by this prospectus supplement, will constitute
a single series of debt securities under the indenture.
The notes will bear interest at an annual rate of 7.250% per
year, from June 19, 2009. The first interest payment date
on the notes will be December 15, 2009. Interest is payable
semi-annually on June 15 and December 15 to holders of
record at the close of business on the June 1 and
December 1 (whether or not that date is a business day), as
the case may be, immediately preceding such interest payment
date, and on the maturity date. If any interest payment date
would otherwise be a day that is not a business day, that
interest payment date will be postponed to the next date that is
a business day. If the maturity date of a series of notes falls
on a day that is not a business day, the related payment of
principal and interest of that series will be made on the next
business day as if it were made on the date such payment was
due, and no interest will accrue on the amounts so payable for
the period from and after such date to the next business day.
Optional
Redemption
The notes will be redeemable, in whole at any time or in part
from time to time, at our option at a redemption price equal to
the greater of:
(i) 100% of the principal amount of the notes to be
redeemed; and
(ii) an amount (the Make-Whole Amount) equal to
the sum of the present values of the remaining scheduled
payments of principal and interest thereon (not including any
portion of such payments of interest accrued as of the date of
redemption), discounted to the date of redemption on a
semi-annual basis (assuming a
360-day year
consisting of twelve
30-day
months) at the Treasury Rate (as defined below), plus
50 basis points,
plus accrued interest thereon to the date of redemption.
Notwithstanding the foregoing, installments of interest on notes
that are due and payable on interest payment dates falling on or
prior to a redemption date will be
S-13
payable on the interest payment date to the registered holders
as of the close of business on the relevant record date
according to the notes and the indenture.
Comparable Treasury Issue means the United States
Treasury security selected by the Quotation Agent as having a
maturity comparable to the remaining term of the notes to be
redeemed that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to
the remaining term of such notes.
Comparable Treasury Price means, with respect to any
redemption date, (i) the average of four Reference Treasury
Dealer Quotations for such redemption date, after excluding the
highest and lowest such Reference Treasury Dealer Quotations, or
(ii) if the Trustee obtains fewer than four such Reference
Treasury Dealer Quotations, the average of all such quotations,
or (iii) if only one Reference Treasury Dealer Quotation is
received, such quotation.
Quotation Agent means the Reference Treasury Dealer
appointed by us.
Reference Treasury Dealer means (i) each of
Banc of America Securities LLC, Goldman, Sachs & Co.
and a Primary Treasury Dealer (as defined below) selected by
Wachovia Capital Markets, LLC and its successors; provided,
however, that if any of the foregoing shall cease to be a
primary U.S. Government securities dealer in New York City
(a Primary Treasury Dealer), we will substitute
therefor another Primary Treasury Dealer, and (ii) any
other Primary Treasury Dealer selected by us.
Reference Treasury Dealer Quotations means, with
respect to each Reference Treasury Dealer and any redemption
date, the average, as determined by the Trustee, of the bid and
asked prices for the Comparable Treasury Issue (expressed in
each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at
5:00 p.m., New York City time, on the third business day
preceding such redemption date.
Treasury Rate means, with respect to any redemption
date, the rate per annum equal to the semi-annual equivalent
yield to maturity of the Comparable Treasury Issue, assuming a
price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date.
Notice of any redemption will be mailed at least 30 days
but not more than 60 days before the redemption date to
each holder of the notes to be redeemed. Unless we default in
payment of the redemption price, on and after the redemption
date, interest will cease to accrue on the notes or portions
thereof called for redemption. If less than all of the notes are
to be redeemed, the notes to be redeemed shall be selected by
lot by The Depository Trust Company, in the case of notes
represented by a global security, or by the Trustee by a method
the Trustee deems to be fair and appropriate, in the case of
notes that are not represented by a global security.
Sinking
Fund
The notes will not be entitled to any sinking fund.
Repurchase
at the Option of Holders Upon a Change of Control
If a change of control repurchase event occurs,
unless we have exercised our right to redeem the notes as
described above, we will make an offer to each holder of notes
to repurchase all or any part (in integral multiples of $1,000)
of that holders notes at a repurchase price in cash equal
to 101% of the aggregate principal amount of notes repurchased
plus any accrued and unpaid interest on the notes repurchased to
the date of purchase. Within 30 days following any change
of control repurchase event or, at our option, prior to any
change of control, but after the public announcement of the
change of control, we will mail a notice to each holder, with a
copy to the Trustee, describing the transaction or transactions
that constitute or may constitute the change of control
repurchase event and offering to repurchase notes on the payment
date specified in the notice, which date will be no earlier than
30 days and no later than 60 days from the date such
notice is mailed. The notice shall, if mailed prior to the date
of consummation of the change of control,
S-14
state that the offer to purchase is conditioned on the change of
control repurchase event occurring on or prior to the payment
date specified in the notice. We will comply with the
requirements of
Rule 14e-1
under the Exchange Act and any other securities laws and
regulations under the Exchange Act to the extent those laws and
regulations are applicable in connection with the repurchase of
the notes as a result of a change of control repurchase event.
To the extent that the provisions of any securities laws or
regulations conflict with the change of control repurchase event
provisions of the notes, we will comply with the applicable
securities laws and regulations and will not be deemed to have
breached our obligations under the change of control repurchase
event provisions of the notes by virtue of such conflict.
On the change of control repurchase event payment date, we will,
to the extent lawful:
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accept for payment all notes or portions of notes properly
tendered pursuant to our offer;
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deposit with the paying agent an amount equal to the aggregate
purchase price in respect of all notes or portions of notes
properly tendered; and
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deliver or cause to be delivered to the Trustee the notes
properly accepted, together with an officers certificate
stating the aggregate principal amount of notes being purchased
by us.
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The paying agent will promptly mail to each holder of notes
properly tendered the purchase price for the notes, and the
trustee will promptly authenticate and mail (or cause to be
transferred by book-entry) to each holder a new note equal in
principal amount to any unpurchased portion of any notes
surrendered; provided that each new note will be in a principal
amount of $2,000 and integral multiples of $1,000.
We will not be required to make an offer to repurchase the notes
upon a change of control repurchase event if a third party makes
such an offer in the manner, at the times and otherwise in
compliance with the requirements for an offer made by us and
such third party purchases all notes properly tendered and not
withdrawn under its offer.
The term below investment grade rating event means
the notes are rated below investment grade (defined below) by
both rating agencies on any date from the date of the public
notice of an arrangement that could result in a change of
control until the end of the
60-day
period following public notice of the occurrence of a change of
control (which period shall be extended so long as the rating of
the notes is under publicly announced consideration for possible
downgrade by either of the rating agencies); provided that a
below investment grade rating event otherwise arising by virtue
of a particular reduction in rating shall not be deemed to have
occurred in respect of a particular change of control (and thus
shall not be deemed a below investment grade rating event for
purposes of the definition of change of control repurchase
event) if the rating agencies making the reduction in rating to
which this definition would otherwise apply do not announce or
publicly confirm or inform the Trustee in writing at our request
that the reduction was the result, in whole or in part, of any
event or circumstance comprised of or arising as a result of, or
in respect of, the applicable change of control (whether or not
the applicable change of control shall have occurred at the time
of the below investment grade rating event).
The term change of control means the consummation of
any transaction (including, without limitation, any merger or
consolidation) the result of which is that any
person (as that term is used in
Section 13(d)(3) of the Exchange Act) becomes the
beneficial owner, directly or indirectly, of more than 50% of
our voting stock (defined below), measured by voting power
rather than number of shares. Notwithstanding the foregoing, a
transaction will not be deemed to involve a change of control if
(1) we become a wholly owned subsidiary of a holding
company and (2) the holders of the voting stock of such
holding company immediately following that transaction are
substantially the same as the holders of our voting stock
immediately prior to that transaction.
The term change of control repurchase event means
the occurrence of both a change of control and a below
investment grade rating event.
The term investment grade means a rating of Baa3 or
better by Moodys (or its equivalent under any successor
rating categories of Moodys; a rating of BBB- or better by
S&P (or its equivalent under any
S-15
successor rating categories of S&P); or the equivalent
investment grade credit rating from any additional rating agency
(defined below) or rating agencies selected by us.
The term Moodys means Moodys Investors
Service, Inc.
The term rating agency means (1) each of
Moodys and S&P; and (2) if either of
Moodys or S&P ceases to rate the notes or fails to
make a rating of the notes publicly available for reasons
outside of our control, a nationally recognized
statistical rating organization within the meaning of
Rule 15c3-1(c)(2)(vi)(F)
under the Exchange Act, selected by us (as certified by a
resolution of our board of directors) as a replacement agency
for Moodys or S&P, or both, as the case may be.
The term S&P means Standard &
Poors Ratings Services, a division of McGraw-Hill, Inc.
The term voting stock of any specified
person (as that term is used in
Section 13(d)(3) of the Exchange Act) as of any date means
the capital stock or other equity interest of such person that
is at the time entitled to vote generally in the election of the
board of directors or equivalent body of such person.
Certain
Covenants
The Supplemental Indenture contains certain restrictive
covenants that are set forth below. Additional covenants
relating to the notes, including a covenant concerning
consolidations and mergers by Valspar and transfers of
substantially all of our property and assets, are contained in
the Base Indenture and are described under Description of
Debt Securities in the accompanying prospectus. You can
find the definitions of certain terms used in this section under
Certain Covenant Definitions.
Limitation
on Liens
Valspar will not, and will not permit any Restricted Subsidiary
to, incur a Lien on a Principal Property to secure a Debt unless
one or more of the following exceptions apply:
1. The Lien equally and ratably secures the notes and the
Debt. The Lien may equally and ratably secure the notes and any
other obligation of Valspar or a Subsidiary. The Lien may not
secure an obligation of Valspar that is subordinated to the
notes;
2. The Lien secures Debt incurred to finance all or some of
the purchase price or the cost of construction or improvement of
property of Valspar or a Restricted Subsidiary. The Lien may not
extend to any other Principal Property owned by Valspar or a
Restricted Subsidiary at the time the Lien is incurred. However,
in the case of any construction or improvement, the Lien may
extend to unimproved real property used for the construction or
improvement. The Debt secured by the Lien may not be incurred
more than 18 months after the later of the
(a) acquisition, (b) completion of construction or
improvement or (c) commencement of full operation, of the
property subject to the Lien;
3. The Lien is on property of an entity at the time the
entity merges into or consolidates with Valspar or a Restricted
Subsidiary;
4. The Lien is on property at the time Valspar or a
Restricted Subsidiary acquires the property;
5. The Lien is on property of a Person at the time such
Person becomes a Restricted Subsidiary;
6. The Lien secures Debt of a Restricted Subsidiary owing
to Valspar or another Restricted Subsidiary;
7. The Lien is in favor of a government or governmental
entity and secures (a) payments pursuant to a contract or
statute or (b) Debt incurred to finance all or some of the
purchase price or cost of construction or improvement of the
property subject to the Lien;
8. The Lien extends, renews or replaces in whole or in part
a Lien (existing Lien) permitted by any of
clauses (1) through (7). The Lien may not extend beyond
(a) the property subject to the existing Lien and
(b) improvements and construction on such property.
However, the Lien may extend to property that at the time is not
a Principal Property. The amount of the Debt secured by the Lien
may not exceed
S-16
the amount of the Debt secured at the time by the existing Lien
unless the existing Lien or a predecessor Lien was incurred
under clause (1) or (6); or
9. The Debt plus all other Debt secured by Liens on
Principal Property at the time does not exceed 10% of
Consolidated Total Assets. However, the following Debt shall be
excluded from all other Debt in the determination: (a) Debt
secured by a Lien permitted by any of clauses (1) through
(8); and (b) Debt secured by a Lien incurred prior to the
date of the Base Indenture that would have been permitted by any
of those clauses if the Base Indenture had been in effect at the
time the Lien was incurred. Attributable Debt for any lease
permitted by clause (4) of the Limitation on Sale and
Leaseback Transactions covenant of the indenture must be
included in the determination and treated as Debt secured by a
Lien on Principal Property not otherwise permitted by any of
clauses (1) through (8).
In general, clause (9) above, sometimes called a
basket clause, permits Liens to be incurred that are
not permitted by any of the exceptions enumerated in
clauses (1) through (8) above if the Debt secured by
all such additional Liens does not exceed 10% of Consolidated
Total Assets at the time. At May 1, 2009, Consolidated
Total Assets were approximately $3,332 million.
Limitation
on Sale and Leaseback Transactions
Valspar will not, and will not permit any Restricted Subsidiary
to, enter into a Sale-Leaseback Transaction for a Principal
Property unless one or more of the following exceptions apply:
1. The lease has a term of three years or less;
2. The lease is between Valspar and a Restricted Subsidiary
or between Restricted Subsidiaries;
3. Valspar or a Restricted Subsidiary under
clauses (2) through (8) of the Limitation on
Liens covenant could create a Lien on the property to
secure Debt at least equal in amount to the Attributable Debt
for the lease;
4. Valspar or a Restricted Subsidiary under clause (9)
of the Limitation on Liens covenant could create a
Lien on the property to secure Debt at least equal in amount to
the Attributable Debt for the lease; or
5. Valspar or a Restricted Subsidiary within 180 days
of the effective date of the lease retires Long-Term Debt of
Valspar or a Restricted Subsidiary at least equal in amount to
the Attributable Debt for the lease. A Debt is retired when it
is paid or cancelled. However, Valspar or a Restricted
Subsidiary may not receive credit for retirement of Debt of
Valspar that is subordinated to the notes; or Debt, if paid in
cash, that is owned by Valspar or a Restricted Subsidiary.
In clauses (3) and (4) above, Sale-Leaseback
Transactions and Liens are treated as equivalents. Thus, if
Valspar or a Restricted Subsidiary could create a Lien on a
property, it may enter into a Sale-Leaseback Transaction to the
same extent.
Certain
Covenant Definitions
Attributable Debt for a lease means, as of the date
of determination, the present value of net rent for the
remaining term of the lease. Rent shall be discounted to present
value at a discount rate that is compounded semi-annually. The
discount rate shall be 10% per annum or, if Valspar elects, the
discount rate shall be equal to the weighted average Yield to
Maturity of the notes under the Base Indenture. Such average
shall be weighted by the principal amount of the notes then
outstanding. Rent is the lesser of (a) rent for the
remaining term of the lease assuming it is not terminated or
(b) rent from the date of determination until the first
possible termination date plus the termination payment then due,
if any. The remaining term of a lease includes any period for
which the lease has been extended. Rent does not include
(1) amounts due for maintenance, repairs, utilities,
insurance, taxes, assessments and similar charges or
(2) contingent rent, such as that based on sales. Rent may
be reduced by the discounted present value of the rent that any
sublessee must pay from the date of determination for all or
part of the same property. If the net rent on a lease is not
definitely determinable, Valspar may estimate it in any
reasonable manner.
S-17
Consolidated Total Assets means total consolidated
assets as reflected in Valspars most recent consolidated
balance sheet preceding the date of a determination under
clause (9) of the Limitation on Liens covenant
of the indenture.
Debt means any debt for borrowed money or any
guarantee of such a debt.
Lien means any mortgage, pledge, security interest
or lien to secure or assure payment of Debt.
Long-Term Debt means Debt that by its terms matures
on a date more than 12 months after the date it was created
or Debt that the obligor may extend or renew without the
obligees consent to a date more than 12 months after
the date the Debt was created.
Principal Property means (i) any manufacturing
facility that is now or hereafter owned by Valspar or a
Restricted Subsidiary and which is located in the United States
(excluding territories and possessions other than Puerto Rico),
except any such facility that in the opinion of the board of
directors of Valspar or any authorized committee of the board is
not of material importance to the total business conducted by
Valspar and its consolidated Subsidiaries, and (ii) any
shares of stock of a Restricted Subsidiary. At May 1, 2009,
our Principal Properties consisted of 30 manufacturing
facilities at various locations around the United States.
Restricted Subsidiary means a Wholly-Owned
Subsidiary that has substantially all of its assets located in
the United States (excluding territories or possessions other
than Puerto Rico) and owns a Principal Property.
Sale-Leaseback Transaction means an arrangement
pursuant to which Valspar or a Restricted Subsidiary now owns or
hereafter acquires a Principal Property, transfers it to a
person, and leases it back from the person.
Subsidiary means a corporation a majority of whose
Voting Stock is owned by Valspar or a Subsidiary.
Voting Stock means capital stock or other equity
interest having voting power under ordinary circumstances to
vote in the election of the board of directors or the equivalent
body.
Wholly-Owned Subsidiary means a corporation all of
whose Voting Stock is owned by Valspar or a Wholly-Owned
Subsidiary, the accounts of which are consolidated with those of
Valspar in its consolidated financial statements.
Yield to Maturity means the yield to maturity on a
security at the time of its issuance or at the most recent
determination of interest on the security.
Events of
Default
An Event of Default with respect to the notes, means
any of the following:
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failure to pay any interest on any of the notes for 30 days
after the payment is due;
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failure to pay the principal of or any premium on any of the
notes when due;
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failure to perform any other covenant in the indenture that
applies to the notes for 30 days after we have received
written notice of the failure to perform in the manner specified
in the indenture;
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default in payment of principal amount of $10 million or
more under any indebtedness, as defined in the Base Indenture,
for borrowed money (including other series of debt securities,
as defined in the Base Indenture), or default under any
mortgage, lien or other similar encumbrance, indenture or
instrument (including the indenture) which secures any
indebtedness for borrowed money, and which results in
acceleration of the maturity of an outstanding principal amount
of indebtedness greater than $10 million, unless such
default is cured or such acceleration is rescinded;
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the entry by a court or agency or supervisory authority having
competent jurisdiction of:
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a decree or order for relief in respect of Valspar or any
Restricted Subsidiary (as defined below) in an involuntary
proceeding under any applicable bankruptcy, insolvency,
reorganization or other
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S-18
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similar law, which decree or order remains unstayed and in
effect for a period of 60 consecutive days;
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a decree or order adjudging Valspar or any Restricted Subsidiary
to be insolvent, or approving a petition seeking reorganization,
arrangement, adjustment or composition of Valspar or any
Restricted Subsidiary, which decree or order remains unstayed
and in effect for a period of 60 consecutive days; or
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a decree or order appointing any Person to act as a custodian,
receiver, liquidator, assignee, trustee or other similar
official of Valspar or any Restricted Subsidiary or of any
substantial part of the property of Valspar or any Restricted
Subsidiary, as the case may be, or ordering the winding up or
liquidation of the affairs of Valspar or any Restricted
Subsidiary, and such decree or order remains unstayed and in
effect for a period of 60 consecutive days;
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our commencement, or the commencement by any Restricted
Subsidiary, of a voluntary proceeding under any applicable
bankruptcy, insolvency, reorganization or other similar law, or
certain similar actions specified in the Supplemental
Indenture; or
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a final judgment for payment of money in excess of
$10 million is entered against us and the judgment is
unsatisfied for 60 days without a stay of execution.
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The term Restricted Subsidiary is defined above on
page S-18.
The remedies available to the Trustee upon any Event of Default
are set forth in the indenture and described in the prospectus
accompanying this prospectus supplement.
Book-Entry
System
The notes will be issued in the form of one or more fully
registered global notes which will be deposited with, or on
behalf of, The Depository Trust Company (DTC),
New York, New York, and registered in the name of
Cede & Co., as nominee of DTC. Unless and until
exchanged, in whole or in part, for notes in definitive
registered form, a global note may not be transferred except as
a whole by the depositary for such global note to a nominee of
such depositary, by a nominee of such depositary to such
depositary or another nominee of such depositary or by such
depositary or any such nominee to a successor of such depositary
or a nominee of such successor.
DTC is a limited-purpose trust company organized under the New
York Banking Law, a banking organization within the
meaning of the New York Banking Law, a member of the Federal
Reserve System, a clearing corporation within the
meaning of the New York Uniform Commercial Code and a
clearing agency registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was
created to hold 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. DTCs participants
include securities brokers and dealers (including the
underwriters), banks, trust companies, clearing corporations and
certain other organizations, some of whom own DTC. Access to
DTCs 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. The rules applicable to DTC and
its participants are on file with the Securities and Exchange
Commission.
Purchases of the notes within the DTC system must be made by or
through direct participants, which will receive a credit for the
notes on DTCs records. The ownership interest of each
beneficial owner of the notes will be recorded on the direct and
indirect participants records. Beneficial owners will not
receive written confirmation from DTC of their purchases, but
beneficial owners are expected to receive written confirmations
providing details of the transactions, as well as periodic
statements of their holdings, from the direct or indirect
participants through which the beneficial owners entered into
the transaction. Transfers of ownership interests in the notes
are to be accomplished by entries made on the books of
participants acting on behalf of beneficial owners.
S-19
To facilitate subsequent transfers, all notes deposited by
participants with DTC are registered in the name of DTCs
nominee, Cede & Co. The deposit of the notes with DTC
and their registration in the name of Cede & Co.
effect no change in beneficial ownership. DTC has no knowledge
of the actual beneficial owners of the notes. DTCs records
reflect only the identity of the direct participants to whose
accounts such notes are credited, which may or may not be the
beneficial owners. The participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants
and by direct and indirect participants to beneficial owners
will be governed by arrangements among them, subject to any
statutory or regulatory requirements as may be in effect from
time to time.
We will make payments due on the notes to Cede & Co.,
as nominee of DTC, in immediately available funds. DTCs
practice is to credit direct participants accounts, upon
DTCs receipt of funds and corresponding detailed
information, on the relevant payment date in accordance with
their respective holdings shown on DTCs records. Payments
by participants to beneficial owners will be governed by
standing instructions and customary practices, as is the case
with securities held for the account of customers in bearer form
or registered in street name, and will be the
responsibility of such participant and not our responsibility or
DTC, subject to any statutory or regulatory requirements as may
be in effect from time to time. Payment to Cede & Co.
is our responsibility. Disbursement of such payments to direct
participants is the responsibility of Cede & Co.
Disbursement of such payments to the beneficial owners is the
responsibility of direct and indirect participants.
Except as provided herein, a beneficial owner of an interest in
a global note will not be entitled to receive physical delivery
of the notes. Accordingly, each beneficial owner must rely on
the procedures of DTC to exercise any rights under the notes.
The laws of some jurisdictions require that certain purchasers
of securities take physical delivery of securities in definitive
form. Such laws may impair the ability to transfer beneficial
interests in a global note.
As long as the depositary, or its nominee, is the registered
holder of a global note, the depositary or such nominee will be
considered the sole owner and holder of the notes represented
thereby for all purposes under the notes and the indenture.
Except in the limited circumstances referred to below, owners of
beneficial interests in a global note will not be entitled to
have such global note or any notes represented thereby
registered in their names, will not receive or be entitled to
receive physical delivery of certificated notes in exchange for
the global note and will not be considered to be the owners or
holders of such global note or any notes represented thereby for
any purpose under the notes or the indenture. Accordingly, each
person owning a beneficial interest in such global note 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.
If the depositary for a global note representing notes is at any
time unwilling or unable to continue as depositary and a
successor depositary is not appointed by us within 90 days,
we will issue notes in definitive form in exchange for such
global note. In addition, we may at any time and in our sole
discretion determine not to have the notes represented by one or
more global notes and, in such event, we will issue the notes in
definitive form in exchange for all of the global notes
representing the notes. Finally, if an event of default, or an
event which with the giving of notice or lapse of time or both
would constitute an event of default, with respect to the notes
represented by a global note has occurred and is continuing,
then we will issue notes in definitive form in exchange for all
of the global notes representing the notes.
Although DTC has agreed to the procedures provided above in
order to facilitate transfers, it is under no obligation to
perform these procedures, and these procedures may be modified
or discontinued at any time.
S-20
MATERIAL
U.S. FEDERAL INCOME TAX CONSIDERATIONS
THIS SUMMARY IS OF A GENERAL NATURE AND IS INCLUDED HEREIN
SOLELY FOR INFORMATION PURPOSES. THIS SUMMARY IS NOT INTENDED TO
BE, AND SHOULD NOT BE, CONSTRUED TO BE LEGAL OR TAX ADVICE. NO
REPRESENTATION IS MADE WITH RESPECT TO THE CONSEQUENCES TO ANY
PARTICULAR PURCHASER OF THE NOTES. PROSPECTIVE PURCHASERS SHOULD
CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THEIR PARTICULAR
CIRCUMSTANCES.
The following is a summary of certain United States federal
income tax considerations relevant to U.S. Holders and
Non-U.S. Holders
(both as defined below) relating to the purchase, ownership and
disposition of the notes. This summary is based upon current
provisions of the Internal Revenue Code of 1986, as amended (the
Internal Revenue Code), existing and proposed
Treasury Regulations promulgated thereunder, rulings,
pronouncements, judicial decisions and administrative
interpretations of the Internal Revenue Service, all of which
are subject to change, possibly on a retroactive basis, at any
time by legislative, judicial or administrative action. We
cannot assure you that the Internal Revenue Service will not
challenge the conclusions stated below, and no ruling from the
Internal Revenue Service or an opinion of counsel has been (or
will be) sought on any of the matters discussed below.
The following summary does not purport to be a complete analysis
of all the potential U.S. federal income tax considerations
relating to the purchase, ownership, and disposition of the
notes. Without limiting the generality of the foregoing, this
summary does not address the effect of any special rules
applicable to certain types of beneficial owners, including,
without limitation, dealers and certain traders in securities or
currencies, insurance companies, financial institutions,
thrifts, regulated investment companies, tax-exempt entities,
U.S. Holders whose functional currency is not the
U.S. dollar, former citizens or residents of the United
States, persons who hold notes as part of a straddle, hedge,
conversion transaction, restructure sale or other risk reduction
or integrated investment transaction, investors in securities
that elect to use a mark-to-market method of accounting for
their securities holdings, individual retirement accounts or
qualified retirement plans, controlled foreign corporations,
passive foreign investment companies, or investors in pass
through entities, including Subchapter S corporations,
partnerships and other entities classified as partnerships for
U.S. federal income tax purposes. If a partnership holds
notes, the tax treatment of a partner will generally depend upon
the status of the partner and the activities of the partnership.
As a result, persons who are partners of a partnership holding
notes should consult their own tax advisors. In addition, this
summary is limited to holders who are the initial purchasers of
the notes at their original issue price and hold the notes as
capital assets within the meaning of Section 1221 of the
Internal Revenue Code. This summary does not address the effect
of any U.S. state or local income or other tax laws, any
U.S. federal estate and gift tax laws, or any foreign tax
laws.
Treasury Department Circular 230. To ensure
compliance with Treasury Department Circular 230, each holder
and/or
purchaser of a note is hereby notified that: (a) any
discussion of tax issues in this prospectus supplement is not
intended or written to be relied upon, and cannot be relied
upon, by a holder
and/or
purchaser for the purpose of avoiding penalties that may be
imposed on such holder
and/or
purchaser under applicable tax law; (b) such discussion is
included herein in connection with the promotion or marketing
(within the meaning of Circular 230) of the offer to sell
notes by the company; and (c) a holder
and/or
purchaser of a note should seek advice based on its particular
circumstances from an independent tax advisor.
Tax
Consequences to U.S. Holders
The term U.S. Holder means a beneficial owner
of a note who is for U.S. federal income tax purposes:
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an individual who is a citizen or resident of the United States;
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a corporation (or other entity taxable as a corporation) created
or organized in or under the laws of the United States, any
state thereof or the District of Columbia;
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a deceased individuals estate, the income of which is
subject to U.S. federal income taxation regardless of its
source; or
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S-21
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a trust if (a) a court within the United States is able to
exercise primary supervision over the administration of the
trust and one or more United States persons have the authority
to control all substantial decisions of the trust, or (b) a
valid election is in effect under applicable Treasury
Regulations to treat the trust as a United States person.
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Taxation
of Interest to U.S. Holders
All of the notes bear interest at a fixed rate under the rules
regarding original issue discount. Moreover, we do not intend to
issue the notes at a discount that will exceed a de minimis
amount of original issue discount. Accordingly, interest on
a note will generally be includable in income of a
U.S. Holder as ordinary income at the time a
U.S. Holder receives the interest or the interest accrues,
in accordance with the U.S. Holders regular method of
accounting for U.S. federal income tax purposes. A
U.S. Holder using the accrual method of accounting for
federal income tax purposes must include interest on the notes
in ordinary income as interest accrues. A U.S. Holder using
the cash receipts and disbursements method of accounting for
U.S. federal income tax purposes must include interest in
ordinary income when payments are received, or made available
for receipt, by the U.S. Holder.
Possible
Effect of Contingent Note Payments to U.S. Holders
If the amount or timing of any payments on a note is contingent,
the note could be subject to special rules that apply to
contingent payment debt instruments. These rules generally
require a U.S. Holder to accrue interest income at a rate
higher than the stated interest rate on the note; and to treat
as ordinary income (rather than capital gain) any gain
recognized on a sale, exchange, repurchase or retirement of the
note before the resolution of the contingencies.
For example, if we redeem the notes as described above in
Description of the Notes Optional
Redemption, each note holder could be entitled to receive
a payment equal to the greater of (a) 100% of the principal
amount of the notes to be redeemed; and (b) the sum of the
present value of the remaining scheduled payments of principal
and interest thereon. Notwithstanding the possibility of such
contingent payments, under applicable Treasury regulations, a
right to contingent payments on a note may be ignored if the
contingency is either remote or incidental. We believe that the
possibility of the foregoing contingent payments should be
considered as remote
and/or
incidental, so that the right to those payments should be
ignored.
Therefore, for purposes of filing tax or informational returns
with the Internal Revenue Service, we will not treat the notes
as contingent payment debt instruments. Our determination that
the notes are not contingent payment debt instruments is binding
on each holder unless the holder explicitly discloses, in the
manner required by applicable Treasury regulations, that its
determination is different from ours. However, our determination
is not binding on the Internal Revenue Service. It is possible
that the Internal Revenue Service may make a different
determination, in which case the timing and amount of income
inclusions by a holder may be affected. This summary assumes
that the notes are not subject to the contingent payment debt
instrument rules.
If we pay any additional interest on the notes,
U.S. Holders will generally be required to recognize
additional interest income under the rules described above under
Tax Consequences to U.S. Holders Taxation
of Interest. If we make a redemption payment of a present
value amount that exceeds 100% of the principal amount of the
notes being redeemed, the excess amount will generally be
treated as capital gain under the rules described below under
Tax Consequences to U.S. Holders Sale,
Exchange or Other Disposition of Notes.
S-22
Sale,
Exchange, or Retirement of a Note Held by a U.S.
Holder
A U.S. Holder will generally recognize capital gain or loss
on a sale, exchange, redemption, retirement or other taxable
disposition of a note measured by the difference, if any,
between:
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the amount of cash and the fair market value of any property
received by the U.S. Holder, except to the extent that the
cash or other property received in respect of a note is
attributable to accrued interest on the note not previously
included in income, which amount will be taxable as ordinary
income; and
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the U.S. Holders adjusted tax basis in the note.
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Such capital gain or loss will be treated as a long-term capital
gain or loss if, at the time of the sale or exchange, the note
has been held by the U.S. Holder for more than one year;
otherwise, the capital gain or loss will be short-term.
Non-corporate taxpayers may be subject to a lower federal income
tax rate on their net long-term capital gains than the rate
applicable to ordinary income. U.S. Holders are subject to
certain limitations on the deductibility of their capital losses.
In addition, a U.S. Holder will generally recognize capital
gain or loss on the defeasance of a note, except for any payment
that is attributable to accrued interest on the note not
previously included in income, which amount will be taxable as
ordinary income.
Information
Reporting and Backup Withholding for U.S. Holders
U.S. Holders of notes may be subject, under certain
circumstances, to information reporting and backup withholding
(currently at a rate of 28%) on payments of interest, principal,
gross proceeds from disposition of notes, and redemption
premium, if any. Backup withholding generally applies only if
the U.S. Holder:
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fails to furnish its social security or other taxpayer
identification number within a reasonable time after a request
for such information;
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furnishes an incorrect taxpayer identification number;
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fails to report interest properly to the Internal Revenue
Service; or
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fails, under certain circumstances, to provide a certified
statement, signed under penalty of perjury, that the taxpayer
identification number provided is its correct number and that
the U.S. Holder is not subject to backup withholding.
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Backup withholding is not an additional tax. Any amount withheld
from a payment to a U.S. Holder under the backup
withholding rules is allowable as a credit against such
U.S. Holders U.S. federal income tax liability
and may entitle such U.S. Holder to a refund provided such
U.S. Holder timely furnishes the required information to
the Internal Revenue Service. Certain persons are exempt from
backup withholding, including corporations and financial
institutions. U.S. Holders of notes should consult their
tax advisors as to their qualification for exemption from backup
withholding and the procedure for obtaining such exemption. We
cannot refund any such amounts once withheld.
We will furnish annually to the Internal Revenue Service, and to
record holders of the notes to whom we are required to furnish
such information, information relating to the amount of interest
and the amount of backup withholding, if any, with respect to
the notes.
Tax
Consequences to
Non-U.S.
Holders
The following summary is limited to the U.S. federal income
tax consequences relevant to a beneficial owner of a note who is
not classified for U.S. federal income tax purposes as a
partnership or as a disregarded entity and who is
not a U.S. Holder (a
Non-U.S. Holder).
S-23
Generally, a
Non-U.S. Holder
is, for U.S. federal income tax purposes:
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a foreign corporation;
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a foreign estate or trust, the income of which is not subject to
U.S. federal income taxation regardless of its
source; or
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an individual who is classified as a nonresident alien.
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In the case of a
Non-U.S. Holder
who is an individual, the following summary assumes that this
individual was not formerly a United States citizen, and was not
formerly a resident of the United States for U.S. federal
income tax purposes.
Taxation
of Interest to
Non-U.S.
Holders
Subject to the summary of backup withholding rules below in
Information Reporting and Backup Withholding for
Non-U.S. Holders,
accrual or, payments of interest on a note to any
Non-U.S. Holder
will not generally be subject to U.S. federal income or
withholding tax; provided that we (or the person otherwise
responsible for withholding U.S. federal income tax from
payments on the notes) receives a required certification from
the
Non-U.S. Holder
(as discussed in the following paragraph) and the
Non-U.S. Holder
is not:
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an actual or constructive owner of 10% or more of the total
combined voting power of all our voting stock;
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a controlled foreign corporation related, directly or
indirectly, to us through stock ownership;
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a bank receiving interest described in Section 881(c)(3)(A)
of the Internal Revenue Code; or
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receiving such interest payments as income effectively connected
with the conduct by the
Non-U.S. Holder
of a trade or business within the United States.
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In order to satisfy the certification requirement, the
Non-U.S. Holder
must provide a properly completed Treasury
Form W-8BEN
(or substitute
Form W-8BEN
or the appropriate successor form) that is signed under
penalties of perjury, provides the
Non-U.S. Holders
name and address and certifies that the
Non-U.S. Holder
is not a U.S. person. Alternatively, in a case where a
security clearing organization, bank or other financial
institution holds the notes in the ordinary course of its trade
or business on behalf of the
Non-U.S. Holder,
certification requires that we or the person who otherwise would
be required to withhold U.S. federal income tax receive
from the financial institution a certification, signed under
penalties of perjury, that a properly completed
Form W-8BEN
(or substitute
Form W-8BEN
or the appropriate successor form) has been received by it, or
by another such financial institution, from the
Non-U.S. Holder,
and a copy of such a form is furnished to the payor. Special
rules apply to foreign partnerships, estates and trusts, and in
certain circumstances, certifications as to foreign status of
partners, trust owners, or beneficiaries may be required to be
provided to our paying agent or to us. In addition, special
rules apply to payments made through a qualified intermediary.
A
Non-U.S. Holder
that does not qualify for exemption from withholding under the
preceding paragraphs generally will be subject to withholding of
U.S. federal income tax at the rate of 30%, or any lower
applicable treaty rate, on payments of interest on the notes,
unless such interest is effectively connected with the conduct
by the
Non-U.S. Holder
of a trade or business in the United States (as described below
in Effectively Connected Income).
If the payments of interest on a note are effectively connected
with the conduct by a
Non-U.S. Holder
of a trade or business in the United States (or, in the event
that an income tax treaty is applicable, if the payments of
interest are attributable to a U.S. permanent establishment
maintained by the
Non-U.S. Holder),
such payments will be subject to U.S. federal income tax on
a net basis at the rates applicable to U.S. persons
generally. If the
Non-U.S. Holder
is a corporation for U.S. federal income purposes, such
payments also may be subject to a branch profits tax at the rate
of 30%, or any lower applicable treaty rate. If payments are
subject to U.S. federal income tax on a net basis in
accordance with the rules described in the preceding two
S-24
sentences, such payments will not be subject to
U.S. withholding tax so long as the holder provides us, or
the person who otherwise would be required to withhold
U.S. federal income tax, with the appropriate certification.
Non-U.S. Holders
should consult their tax advisors regarding any applicable
income tax treaties, which may provide for a lower rate of
withholding tax, exemption from or reduction of branch profits
tax, or other rules different from those described above.
Effectively
Connected Income of
Non-U.S.
Holders
If a
Non-U.S. Holder
of a note is engaged in a trade or business in the United
States, and if interest income and other payments received with
respect to the note (including proceeds from the disposition of
the note) are effectively connected with the conduct of the
trade or business, the
Non-U.S. Holder,
although exempt from U.S. withholding tax, will generally
be taxed in the same manner as a U.S. Holder (see
Taxation of Interest above), except that the
Non-U.S. Holder
will be required to provide a properly executed Treasury
Form W-8ECI
in order to claim an exemption from withholding tax on interest
income. If a
Non-U.S. Holder
is eligible for the benefits of a tax treaty, any effectively
connected income or gain will generally be subject to
U.S. federal income tax only if it is also attributable to
a permanent establishment maintained by the holder in the United
States.
Non-U.S. Holders
for whom income or gain attributable to the notes will
constitute effectively connected income should consult their own
tax advisors with respect to other tax consequences of the
ownership of a note, including the possible imposition of a 30%
branch profits tax with respect to corporate
Non-U.S. Holders.
Sale,
Exchange or Other Disposition of Notes Held by
Non-U.S.
Holders
Subject to the summary of backup withholding rules below, any
gain realized by a
Non-U.S. Holder
on the sale, exchange, retirement or other disposition of a note
generally will not be subject to U.S. federal income tax,
unless:
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such gain is effectively connected with the conduct by such
Non-U.S. Holder
of a trade or business within the United States (as described
above in Effectively Connected Income) or, in the
event that an income tax treaty is applicable, such gain is
attributable to a U.S. permanent establishment maintained
by the
Non-U.S. Holder; or
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the
Non-U.S. Holder
is an individual who is present in the United States for
183 days or more in the taxable year of the disposition and
certain other conditions are satisfied.
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Proceeds from the disposition of a note that are attributable to
accrued but unpaid interest generally will be subject to, or
exempt from, tax to the same extent as described above with
respect to interest paid on a note, although such proceeds
generally are not subject to withholding tax. A
Non-U.S. Holder
should treat any amount received on redemption of a note in the
same manner as the
Non-U.S. Holder
treats proceeds received on a sale.
Information
Reporting and Backup Withholding for
Non-U.S.
Holders
Any payments of interest on the notes to a
Non-U.S. Holder
will generally be reported to the Internal Revenue Service and
to the
Non-U.S. Holder.
Copies of these information returns also may be made available
under the provisions of a specific treaty or other agreement to
the tax authorities of the country in which the
Non-U.S. Holder
resides.
Backup withholding tax and certain additional information
reporting (as described above in Information Reporting and
Backup Withholding for U.S. Holders) generally will
not apply to payments of interest with respect to which either
(a) the required certification, described above in
Taxation of Interest to
Non-U.S. Holders,
has been received or (b) an exemption otherwise has been
established; provided that neither we nor the person who
otherwise would be required to withhold U.S. federal income
tax has actual knowledge or reason to know that the holder is,
in fact, a United States person or that the conditions of any
other exemption are not, in fact, satisfied
S-25
The payment of the proceeds from the disposition of the notes by
or through the United States office of any broker, U.S. or
foreign, will be subject to information reporting and backup
withholding unless the
Non-U.S. Holder
certifies as to its
non-U.S. status
under penalties of perjury or otherwise establishes an
exemption, provided that the broker does not have actual
knowledge or reason to know that the holder is a
U.S. person or that the conditions of any other exemption
are not, in fact, satisfied. The payment of the proceeds from
the disposition of the notes by or through a
non-U.S. office
of a
non-U.S. broker
will not be subject to information reporting or backup
withholding unless the
non-U.S. broker
has certain types of relationships with the United States (a
U.S. related person). In the case of the
payment of the proceeds from the disposition of the notes by or
through a
non-U.S. office
of a broker that is either a United States person or a
U.S. related person, the Treasury Regulations require
information reporting, but not backup withholding, on the
payment unless the broker has documentary evidence in its files
that the beneficial owner is a
Non-U.S. Holder
and the broker has no knowledge or reason to know to the
contrary.
Backup withholding is not an additional tax. Any amounts
withheld under the backup withholding rules may be refunded or
credited against the
Non-U.S. Holders
U.S. federal income tax liability provided such
Non-U.S. Holder
timely furnishes the required information to the Internal
Revenue Service. We cannot refund amounts once withheld.
THE PRECEDING SUMMARY OF CERTAIN U.S. FEDERAL INCOME TAX
CONSEQUENCES IS FOR GENERAL INFORMATION ONLY AND IS NOT LEGAL OR
TAX ADVICE. ACCORDINGLY, PROSPECTIVE PURCHASERS SHOULD CONSULT
THEIR OWN ADVISORS ON THE U.S. FEDERAL, STATE AND LOCAL,
AND FOREIGN TAX CONSEQUENCES OF THEIR PURCHASE, OWNERSHIP, AND
DISPOSITION OF THE NOTES, AND ON THE CONSEQUENCES OF ANY CHANGES
IN APPLICABLE LAW.
S-26
UNDERWRITING
Banc of America Securities LLC, Goldman, Sachs & Co.
and Wachovia Capital Markets, LLC are acting as joint
book-running managers of the offering and as representatives of
the underwriters named below.
Subject to the terms and conditions stated in the underwriting
agreement dated the date of this prospectus supplement, each
underwriter named below has severally agreed to purchase, and we
have agreed to sell to that underwriter, the principal amount of
notes set forth opposite the underwriters name.
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Principal
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Amount of
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Notes
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Banc of America Securities LLC
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$
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63,000,000
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Goldman, Sachs & Co.
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63,000,000
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Wachovia Capital Markets, LLC
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63,000,000
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Deutsche Bank Securities Inc.
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30,000,000
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Mitsubishi UFJ Securities (USA), Inc.
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30,000,000
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PNC Capital Markets LLC
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22,500,000
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U.S. Bancorp Investments, Inc.
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22,500,000
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Comerica Securities, Inc.
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6,000,000
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Total
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$
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300,000,000
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The underwriting agreement provides that the obligations of the
underwriters to purchase the notes included in this offering are
subject to approval of legal matters by counsel and to other
conditions. The underwriters are obligated to purchase all the
notes if they purchase any of the notes.
The underwriters propose to offer some of the notes directly to
the public at the public offering prices set forth on the cover
page of this prospectus supplement and some of the notes to
dealers at the public offering prices less a concession not to
exceed .400% of the principal amount of the notes. The
underwriters may allow, and dealers may reallow a concession not
to exceed .250% of the principal amount of the notes on sales to
other dealers. After the initial offering of the notes to the
public, the representatives may change the public offering
prices and concessions. The offering of the notes by the
underwriters is subject to receipt and acceptance and subject to
the underwriters right to reject any order in whole or in
part.
The following table shows the underwriting discounts and
commissions that we are to pay to the underwriters in connection
with this offering (expressed as a percentage of the principal
amount of the notes).
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Paid by
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Valspar
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Per note
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.650
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%
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In connection with the offering, the representatives, on behalf
of the underwriters, may purchase and sell notes in the open
market. These transactions may include over-allotment, syndicate
covering transactions and stabilizing transactions.
Over-allotment involves syndicate sales of notes in excess of
the principal amount of notes to be purchased by the
underwriters in the offering, which creates a syndicate short
position. Syndicate covering transactions involve purchases of
the notes in the open market after the distribution has been
completed in order to cover syndicate short positions.
Stabilizing transactions consist of certain bids or purchases of
notes made for the purpose of preventing or retarding a decline
in the market price of the notes while the offering is in
progress.
The underwriters also may impose a penalty bid. Penalty bids
permit the underwriters to reclaim a selling concession from a
syndicate member when the representatives, in covering syndicate
short positions or making stabilizing purchases, repurchases
notes originally sold by that syndicate member.
The notes are a new issue of securities with no established
trading market. The notes will not be listed on any securities
exchange or on any automated dealer quotation system. The
underwriters may make a market in the notes after completion of
the offering, but will not be obligated to do so and may
discontinue any market-
S-27
making activities at any time without notice. No assurance can
be given as to the liquidity of the trading market for the notes
or that an active public market for the notes will develop. If
an active public trading market for the notes does not develop,
the market price and liquidity of the notes may be adversely
affected.
Any of these activities, as well as other purchases by the
underwriters for their own accounts, may have the effect
of preventing or retarding a decline in the market price of the
notes. They may also cause the price of the notes to be higher
than the price that otherwise would exist in the open market in
the absence of these transactions. The underwriters may conduct
these transactions in the over-the-counter market or otherwise.
If the underwriters commence any of these transactions, they may
discontinue them at any time.
We estimate that the total expenses for this offering will be
$500,000, excluding underwriters discounts and commissions.
The underwriters and their affiliates have provided various
investment and commercial banking services for us from time to
time for which they have received customary fees and expenses,
including participating as lenders under our revolving credit
facilities. The underwriters and their affiliates may, from time
to time, engage in transactions with and perform services for us
in the ordinary course of their business.
Because more than 10% of the net proceeds of this offering is
being paid to affiliates of the underwriters to repay borrowings
under our senior unsecured revolving credit facility, this
offering will be made in compliance with Rule 2710(h) of
the FINRA Conduct Rules.
We have agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act of
1933, or to contribute to payments the underwriters may be
required to make because of any of those liabilities.
Selling
Restrictions
Each of the underwriters, severally and not jointly, has
represented and agreed that it has not and will not offer, sell,
or deliver any of the notes, directly or indirectly, or
distribute this prospectus supplement or the attached prospectus
or any other offering material relating to the notes, in any
jurisdiction except under circumstances that will result in
compliance with applicable laws and regulations and that will
not impose any obligations on us except as set forth in the
underwriting agreement.
European
Economic Area
In relation to each Member State of the European Economic Area,
the EU plus Iceland, Norway and Liechtenstein, which has
implemented the Prospectus Directive (each, a Relevant
Member State), from and including the date on which the
European Union Prospectus Directive (the EU Prospective
Directive) is implemented in that Relevant Member State
(the Relevant Implementation Date) an offer of notes
described in this prospectus supplement may not be made to the
public in that Relevant Member State prior to the publication of
a prospectus in relation to the notes which has been approved by
the competent authority in that Relevant Member State or, where
appropriate, approved in another Relevant Member State and
notified to the competent authority in that Relevant Member
State, all in accordance with the EU Prospectus Directive,
except that it may, with effect from and including the Relevant
Implementation Date, make an offer of shares to the public in
that Relevant Member State at any time:
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to legal entities which are authorised or regulated to operate
in the financial markets or, if not so authorised or regulated,
whose corporate purpose is solely to invest in securities;
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to any legal entity which has two or more of (1) an average
of at least 250 employees during the last financial year;
(2) a total balance sheet of more than 43,000,000 and
(3) an annual net turnover of more than 50,000,000,
as shown in its last annual or consolidated accounts;
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to fewer than 100 natural or legal persons (other than qualified
investors as defined in the Prospectus Directive) subject to
obtaining the prior consent of the representatives for any such
offer; or
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in any other circumstances which do not require the publication
by the Issuer of a prospectus pursuant to Article 3 of the
Prospectus Directive.
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For the purposes of this provision, the expression an
offer of notes to the public in relation to any
notes in any Relevant Member State means the communication in
any form and by any means of sufficient information on the terms
of the offer and the notes to be offered so as to enable an
investor to decide to purchase or subscribe for the notes, as
the same may be varied in that Relevant Member State by any
measure implementing the EU Prospectus Directive in that
Relevant Member State and the expression EU Prospectus Directive
means Directive 2003/71/EC and includes any relevant
implementing measure in each Relevant Member State.
United
Kingdom
Each underwriter has represented and agreed that:
(a) it has only communicated or caused to be communicated
and will only communicate or cause to be communicated an
invitation or inducement to engage in investment activity
(within the meaning of Section 21 (financial promotion) of
the Financial Service and Markets Act 2000 (the
FSMA) received by it in connection with the issue or
sale of the notes in circumstances in which Section 21(1)
of the FSMA does not apply to such underwriter or us; and
(b) it has complied and will comply with all applicable
provisions of the FSMA with respect to anything done by it in
relation to the notes in, from or otherwise involving the United
Kingdom.
Hong
Kong
The notes may not be offered or sold by means of any document
other than (i) in circumstances which do not constitute an
offer to the public within the meaning of the Companies
Ordinance (Cap.32, Laws of Hong Kong), or (ii) to
professional investors within the meaning of the
Securities and Futures Ordinance (Cap.571, Laws of Hong Kong)
and any rules made thereunder, or (iii) in other
circumstances which do not result in the document being a
prospectus within the meaning of the Companies
Ordinance (Cap.32, Laws of Hong Kong), and no advertisement,
invitation or document relating to the shares may be issued or
may be in the possession of any person for the purpose of issue
(in each case whether in Hong Kong or elsewhere), which is
directed at, or the contents of which are likely to be accessed
or read by, the public in Hong Kong (except if permitted to do
so under the laws of Hong Kong) other than with respect to
shares which are or are intended to be disposed of only to
persons outside Hong Kong or only to professional
investors within the meaning of the Securities and Futures
Ordinance (Cap. 571, Laws of Hong Kong) and any rules made
thereunder.
Singapore
Neither this prospectus supplement nor the accompanying
prospectus has been registered as a prospectus with the Monetary
Authority of Singapore. Accordingly, this prospectus supplement
and any other document or material in connection with the offer
or sale, or invitation for subscription or purchase, of the
notes may not be circulated or distributed, nor may the notes be
offered or sold, or be made the subject of an invitation for
subscription or purchase, whether directly or indirectly, to
persons in Singapore other than (i) to an institutional
investor under Section 274 of the Securities and Futures
Act, Chapter 289 of Singapore (the SFA),
(ii) to a relevant person, or any person pursuant to
Section 275(1A), and in accordance with the conditions,
specified in Section 275 of the SFA or (iii) otherwise
pursuant to, and in accordance with the conditions of, any other
applicable provision of the SFA.
Where the notes are subscribed or purchased under
Section 275 by a relevant person which is: (a) a
corporation (which is not an accredited investor) the sole
business of which is to hold investments and the entire share
capital of which is owned by one or more individuals, each of
whom is an accredited investor; or (b) a trust (where the
trustee is not an accredited investor) whose sole purpose is to
hold investments and each beneficiary is an accredited investor,
shares, debentures and units of shares and debentures of that
corporation
S-29
or the beneficiaries rights and interest in that trust
shall not be transferable for 6 months after that
corporation or that trust has acquired the notes under
Section 275 except: (1) to an institutional investor
under Section 274 of the SFA or to a relevant person, or
any person pursuant to Section 275(1A), and in accordance
with the conditions, specified in Section 275 of the SFA;
(2) where no consideration is given for the transfer; or
(3) by operation of law.
Japan
The notes have not been and will not be registered under the
Financial Instruments and Exchange Law of Japan (the Financial
Instruments and Exchange Law) and each underwriter has agreed
that it will not offer or sell any notes, directly or
indirectly, in Japan or to, or for the benefit of, any resident
of Japan (which term as used herein means any person resident in
Japan, including any corporation or other entity organized under
the laws of Japan), or to others for re-offering or resale,
directly or indirectly, in Japan or to a resident of Japan,
except pursuant to an exemption from the registration
requirements of, and otherwise in compliance with, the Financial
Instruments and Exchange Law and any other applicable laws,
regulations and ministerial guidelines of Japan
LEGAL
MATTERS
Maslon Edelman Borman & Brand, LLP, Minneapolis,
Minnesota will pass upon certain legal matters for us in
connection with the notes offered by this prospectus supplement.
Mayer Brown LLP, Chicago, Illinois, will pass upon certain legal
matters for the underwriters in connection with this offering.
S-30
PROSPECTUS
THE VALSPAR
CORPORATION
Common Stock
Debt Securities
Securities Warrants
We will provide the specific terms of these securities in
supplements to this prospectus. You should read this prospectus
and the applicable supplement carefully before you invest.
Our common stock is traded on the New York Stock Exchange
under the symbol VAL.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
The date of this prospectus is April 12, 2007
TABLE OF
CONTENTS
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ABOUT
THIS PROSPECTUS
This prospectus is part of a registration statement that we
filed with the Securities and Exchange Commission
(SEC) using a shelf registration
procedure. Pursuant to that procedure and under this prospectus,
we may offer and sell:
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Common stock;
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Debt securities; and
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Securities warrants.
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The securities described above may be offered and sold in one or
more offerings. Each time we offer and sell securities under the
registration statement of which this prospectus is a part, we
will file with the SEC a prospectus supplement that will contain
specific information about the terms of that offering. The
prospectus supplement may also add, update, or change
information contained in this prospectus. You should read this
prospectus, and the applicable prospectus supplement, together
with the additional information described under the heading
Where You Can Find More Information.
The registration statement that contains this prospectus
contains additional information about our company and the
securities offered under this prospectus. That registration
statement can be read at the SEC website or at the SEC offices
mentioned under the heading Where You Can Find More
Information.
WHERE YOU
CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements
and other information with the SEC. The reports, proxy
statements and other information that we file electronically
with the SEC are available to the public free of charge at the
SECs website at www.sec.gov. You may also read and
copy any document we file with the SEC, at prescribed rates, at
the SECs Public Reference Room at 100 F Street, N.E.,
Room 1580, Washington, D.C. 20549. Please call the SEC
at
1-800-SEC-0330
for further information on the operation of its Public Reference
Room. You can also inspect our reports, proxy statements and
other information at the offices of the New York Stock Exchange,
20 Broad Street, New York, New York 10005. Our most current
SEC filings, such as our annual, quarterly and current reports,
proxy statements and press releases are available to the public
free of charge on our website at www.valsparglobal.com.
Our website is not intended to be, and is not, a part of this
prospectus.
We incorporate by reference into this prospectus the
information we file with the SEC, which means that we can
disclose important information to you by referring you to those
documents. The information incorporated by reference is an
important part of this prospectus. Some information contained in
this prospectus updates the information incorporated by
reference into this prospectus, and information that we
subsequently file with the SEC will automatically update
information in this prospectus, as well as our other filings
with the SEC. In other words, in the case of a conflict or
inconsistency between information set forth in this prospectus
and/or
information incorporated by reference into this prospectus, you
should rely on the information contained in the document that
was filed later. We incorporate by reference the documents
listed below and any filings we make with the SEC under
Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934, as amended (the Exchange Act),
after the initial filing of the registration statement that
contains this prospectus and prior to the time that we sell all
the securities offered under this prospectus:
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Annual report on
Form 10-K
for the year ended October 27, 2006 (including information
specifically incorporated by reference into our
Form 10-K),
as filed on January 10, 2007;
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Quarterly report on
Form 10-Q
for the quarter ended January 26, 2007;
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Current reports on Form 8-K filed on March 23, 2007
and April 11, 2007;
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The description of our capital stock as set forth in the
Registration Statement on
Form S-2
(File
No. 2-82000),
declared effective March 9, 1983; and
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The description of our common share purchase rights as set forth
in
Form 8-A
filed on May 3, 2000.
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You may request a copy of these filings (other than an exhibit
to a filing unless that exhibit is specifically incorporated by
reference into that filing) at no cost, by writing to or
telephoning us at the following address:
The Valspar
Corporation
Attention: Investor Relations
1101 Third Street South
Minneapolis, Minnesota 55415
(612) 332-7371
You should rely only on the information incorporated by
reference or set forth in this prospectus or the applicable
prospectus supplement. We have not authorized anyone else to
provide you with additional or different information. We may
only use this prospectus to sell securities if it is accompanied
by a prospectus supplement. We are only offering these
securities in states where the offer is permitted. You should
not assume that the information in this prospectus or the
applicable prospectus supplement is accurate as of any date
other than the dates on the front of those documents.
2
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some statements in this prospectus and documents incorporated by
reference herein constitute forward-looking
statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act.
Statements in this prospectus and documents incorporated by
reference that are not of historical fact may be deemed to be
forward-looking statements. In some cases, you can identify
forward-looking statements by terminology such as
may, will, could,
would, should, expect(s),
plan(s), anticipate(s),
intend(s), believe(s),
estimate(s), predict(s),
seek(s), potential, or
continue(s) or the negative of those terms or other
comparable terminology. These forward-looking statements are
based on managements expectations and beliefs concerning
future events and are necessarily subject to risks,
uncertainties and other factors, many of which are outside of
our control, that could cause actual results to differ
materially from such statements. These uncertainties and other
factors include, but are not limited to, dependence of internal
earnings growth on economic conditions and growth in the
domestic and international coatings industry; risks related to
any future acquisitions, including risks of adverse changes in
the results of acquired businesses and the assumption of
unforeseen liabilities, risks of disruptions in business
resulting from the integration process and higher interest costs
resulting from further borrowing for any such acquisitions; our
reliance on the efforts of vendors, government agencies,
utilities and other third parties to achieve adequate compliance
and avoid disruption of our business; risks of disruptions in
business resulting from our relationships with customers and
suppliers; unusual weather conditions adversely affecting sales;
changes in raw materials pricing and availability; delays in
passing along cost increases to customers; changes in
governmental regulation, including more stringent environmental,
health and safety regulations; the nature, cost and outcome of
pending and future litigation and other legal proceedings; the
outbreak of war and other significant national and international
events; and other risks and uncertainties, including those
discussed under the caption Risk Factors in our
periodic reports on
Forms 10-K
and 10-Q. In
addition, we may update our descriptions of such risks and
uncertainties and assumptions in any prospectus supplement.
We do not, nor does any other person, assume responsibility for
the accuracy and completeness of these statements. We disclaim
any intention or obligation to publicly update or revise any of
the forward-looking statements after the date of this offering
memorandum to conform them to actual results, whether as a
result of new information, future events, or otherwise. All of
the forward-looking statements contained in this prospectus, the
prospectus supplement and documents incorporated by reference
herein are qualified in their entirety by reference to the
factors discussed under the captions Risk Factors in
the prospectus supplement and Managements Discussion
and Analysis of Financial Condition and Results of
Operations in our most recent
Form 10-K
(incorporated by reference in this prospectus) and similar
sections in our future filings that may be incorporated by
reference in this prospectus.
The above list of uncertainties and other risk factors that may
affect results addressed in the forward-looking statements may
not be exhaustive. Other sections of this prospectus, the
prospectus supplement and documents incorporated by reference in
this prospectus may describe additional uncertainties or risk
factors that could adversely impact our business and financial
performance. We operate in a continually changing business
environment, and new risk factors emerge from time to time.
Management cannot predict these new risk factors, nor can it
assess the impact, if any, of these new risk factors on our
businesses or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from
those projected in any forward-looking statements. Accordingly,
forward-looking statements should not be relied upon as a
prediction of actual results.
3
RATIO OF
EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of our earnings to our
fixed charges for the periods indicated:
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Quarter Ended
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Fiscal Year Ended
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January 26,
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October 27,
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October 28,
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October 29,
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October 31,
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October 25,
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2007
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2006
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2005
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2004
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2003
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2002
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Ratio of Earnings to Fixed Charges
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3.0
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5.8
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5.4
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5.8
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4.5
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4.7x
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For purposes of computing the ratios of earnings to fixed
charges:
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Earnings represent income from continuing operations
before taxes and cumulative effect of changes in accounting
principles plus fixed charges; and
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Fixed Charges for continuing operations consist of
interest on indebtedness and amortization of debt expense and
the interest component of such rental expense, which has been
calculated based on an implied asset value and the weighted
average interest rate on our debt for the relevant period.
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DESCRIPTION
OF COMMON STOCK
The following description of our common stock (the
Common Stock), together with the additional
information included in any applicable prospectus supplements,
summarizes the material terms and provisions of the Common
Stock, but is not complete. For the complete terms of the Common
Stock, please refer to our certificate of incorporation, as
amended, our bylaws and our rights agreement, which are
incorporated by reference into the registration statement that
includes this prospectus.
Our certificate of incorporation, as amended, authorizes us to
issue up to 250,000,000 shares of Common Stock. As of
March 8, 2007, there were 102,277,342 shares of Common
Stock outstanding, net of treasury shares, held by approximately
1,518 direct registered stockholders.
Our Common Stock is traded on the New York Stock Exchange under
the symbol VAL. The Transfer Agent and Registrar for
the Common Stock is Mellon Investor Services LLC.
The holders of Common Stock are entitled to one vote for each
share held of record on all matters submitted to a vote of the
stockholders. Holders of the Common Stock are entitled to
receive dividends out of assets legally available at the times
and in the amounts that our board of directors may determine.
The Common Stock has no preemptive rights and is not subject to
conversion or redemption. Upon liquidation, dissolution or
winding-up
of our company, the holders of Common Stock are entitled to
share in all assets legally available for distribution to
stockholders after payment of all liabilities and the
liquidation preferences, if any, of any outstanding preferred
stock. Each outstanding share of Common Stock is, and any shares
of Common Stock offered by this prospectus when they are paid
for will be, fully paid and nonassessable.
Members of our board of directors are divided into three classes
and serve staggered three-year terms. This means that
approximately one-third of our directors are elected at each
annual meeting of shareholders and that it would take two years
to replace a majority of the board of directors unless they are
removed.
Our bylaws provide that special meetings of stockholders can be
called only by the chairman of the board, a majority of the
board of directors, a majority of the executive committee of the
board of directors, or the president.
Rights
Plan
On April 19, 2000, our board of directors declared a
dividend of one common share purchase right (the
Right) for each outstanding share of Common
Stock. The dividend was payable to stockholders of record on
May 11, 2000. Each Right entitles the registered holder to
purchase from us one share of Common Stock at a price of
$140.00 per share, subject to adjustment. The description
and terms of the rights are set forth in a Rights Agreement,
dated as of May 1, 2000, between us and Mellon Investor
Services LLC, as rights agent.
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The Rights are evidenced by the certificates representing Common
Shares outstanding as of May 11, 2000, and no separate
certificates evidencing the Rights were distributed. The Rights
will separate from the Common Stock and become exercisable upon:
(a) the tenth day following the first date of public
announcement that a person or group of affiliated or associated
persons has become the beneficial owner of 15% or more of our
outstanding Common Stock; or (b) the tenth day following
the commencement or public announcement of a tender offer or
exchange offer, the consummation of which would result in a
person or group of affiliated or associated persons becoming the
beneficial owner of 15% or more of our outstanding Common Stock,
unless our board of directors has determined that the tender or
exchange offer is in our best interests.
The purchase price payable and the number of shares of Common
Stock issuable upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution: (a) in
the event of a stock dividend on, or a subdivision, combination
or reclassification of, the Common Stock, (b) upon the
grant to holders of the Common Stock of certain rights, options
or warrants to subscribe for or purchase Common Stock or
convertible securities at less than the then current market
price of the Common Stock, or (c) upon the distribution to
holders of the Common Stock of evidences of indebtedness or
assets (excluding quarterly cash dividends or dividends payable
in Common Stock) or of subscription rights or warrants (other
than those described in clause (b) of this paragraph). With
certain exceptions, no adjustment in the purchase price will be
required until cumulative adjustments require an adjustment of
at least 1% in the purchase price.
In the event the Rights are exercisable, and in some
circumstances if additional conditions are met, holders of our
Common Stock, other than the acquiror, may purchase shares of
Common Stock or securities of the acquiror with a then current
market value of two times the exercise price of the Right. At
any time after the Rights become exercisable (subject to certain
exceptions), and prior to the acquisition by an acquiror of 50%
or more of our outstanding Common Stock, our board of directors
may exchange all or part of the Rights for shares of Common
Stock at an exchange ratio of one share of Common Stock per
Right, subject to adjustment.
Until a Right is exercised, the holder of the Right has no
rights, as such, as a stockholder of our company. The Rights are
redeemable for $.001 per Right, subject to adjustment, at
the option of our board of directors. The Rights will expire on
May 11, 2010, unless they are redeemed or exchanged prior
to that time, or unless our board of directors extends that date.
The Rights plan adopted by our board of directors is designed to
protect and maximize the value of the outstanding equity
interests in our company in the event of an unsolicited attempt
by an acquiror to take over our company, in a manner or on terms
not approved by our board of directors. Takeover attempts
frequently include coercive tactics to deprive the board of
directors and stockholders of any real opportunity to determine
our companys destiny. The board declared the Rights
dividend to deter coercive tactics, including a gradual
accumulation of shares of Common Stock in the open market of a
15% or greater position to be followed by a merger or a partial
or two-tier tender offer that does not treat all of our
stockholders equally. These tactics unfairly pressure
stockholders, squeeze them out of their investment without
giving them any real choice and deprive them of the full value
of their shares. The declaration of the Rights dividend is not
intended to prevent a takeover of our company and will not do
so. Because we may redeem the Rights, they should not interfere
with any merger or business combination approved by our board of
directors.
The Rights may have the effect of rendering more difficult or
discouraging an acquisition of our company deemed undesirable by
the board of directors. The Rights may cause substantial
dilution to a person or group that attempts to acquire us on
terms or in a manner not approved by our board of directors,
unless the offer is conditioned upon the purchase or redemption
of the Rights.
Delaware
Anti-Takeover Law
Our company is subject to Section 203 of the Delaware
General Corporation Law regulating corporate takeovers. In
general, this law prohibits a publicly-held Delaware corporation
from engaging in a business combination with an
interested stockholder for three years after the
person became an interested stockholder unless, subject to
specified exceptions, the business combination or the
transaction in which the
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person became an interested stockholder is approved in a
prescribed manner. Generally, a business combination
includes a merger, asset sale, stock sale or other transaction
that results in a financial benefit to the interested
stockholder. Generally, an interested stockholder is
a person who, together with affiliates and associates, owns, or
within three years prior, did own 15 percent or more of our
voting stock. These provisions may have the effect of delaying,
deferring or preventing a change in control of our company
without further action by our stockholders.
DESCRIPTION
OF DEBT SECURITIES
This section describes the general terms and provisions of the
debt securities. The prospectus supplement will describe the
specific terms of any debt securities offered through that
prospectus supplement and any general terms outlined in this
section that will not apply to those debt securities.
The Debt Securities will be issued under an indenture (the
Indenture) dated April 24, 2002, between
us and The Bank of New York Trust Company, N.A. (the
Trustee). As used in this prospectus,
Debt Securities means the debentures, notes,
bonds and other evidences of indebtedness that we issue and the
Trustee authenticates and delivers under the Indenture.
We have summarized certain terms and provisions of the Indenture
in this section. The summary is not complete. We have also
incorporated by reference the Indenture as an exhibit to the
registration statement that included this prospectus. You should
read the form of Indenture for additional information before you
buy any Debt Securities. The summary that follows includes
references to section numbers of the Indenture so that you can
more easily locate these provisions. Capitalized terms used but
not defined in this summary have the meanings specified in the
Indenture.
General
The Debt Securities will be our direct unsecured obligations.
The Indenture does not limit the amount of Debt Securities that
we may issue and permits us to issue Debt Securities from time
to time. Debt Securities issued under the Indenture will be
issued as part of a series that has been established by us
pursuant to the Indenture (Section 302). Unless a
prospectus supplement relating to Debt Securities states
otherwise, the Indenture and the terms of the Debt Securities
will not contain any covenants designed to afford holders of any
Debt Securities protection in a highly leveraged or other
transaction involving us that may adversely affect holders of
the Debt Securities.
A prospectus supplement relating to a series of Debt Securities
being offered will include specific terms relating to the
offering. These terms will include some or all of the following:
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the title and type of the Debt Securities;
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any limit on the total principal amount of the Debt Securities;
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the price at which the Debt Securities will be issued;
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the date or dates on which the principal of and premium, if any,
on the Debt Securities will be payable;
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the maturity date of the Debt Securities;
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if the Debt Securities will bear interest, and if so:
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the interest rate on the Debt Securities;
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the date from which interest will accrue;
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the record and interest payment dates for the Debt Securities;
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the first interest payment date; and
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any circumstances under which we may defer interest payments;
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any optional conversion provisions that would permit us or the
Holders (as defined below) of Debt Securities to elect to
convert the Debt Securities prior to their final maturity;
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any optional redemption provisions that would permit us or the
Holders (as defined below) of Debt Securities to elect
redemption of the Debt Securities prior to their final maturity;
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any sinking fund provisions that would obligate us to redeem the
Debt Securities prior to their final maturity;
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the currency or currencies in which the Debt Securities will be
denominated and payable, if other than U.S. dollars;
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any provisions that would permit us or the Holders of the Debt
Securities to elect the currency or currencies in which the Debt
Securities are paid;
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whether the Debt Securities will be subordinated to our other
debt;
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any changes to or additional Events of Default (as defined
below);
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any changes to or additional covenants;
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whether the Debt Securities will be issued in whole or in part
in the form of Global Securities and, if so, the Depositary for
those Global Securities (a Global Security
means a Debt Security that we issue in accordance with the
Indenture to represent all or part of a series of Debt
Securities);
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any special tax implications of the Debt Securities; and
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any other terms of the Debt Securities.
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A Holder means the person in whose name a
Note is registered in the Note Register (Section 101).
Payment
and Transfer
In the prospectus supplement, we will designate a Place
of Payment where you can receive payment of the
principal of and any premium and interest on the Debt Securities
or transfer the Debt Securities. Even though we will designate a
Place of Payment, we may elect to pay any interest on the Debt
Securities by mailing a check to the person listed as the owner
of the Debt Securities in the Note Register or by wire
transfer to an account designated by that person
(Section 307). There will be no service charge for any
registration of transfer or exchange of the Debt Securities, but
we may require you to pay any tax or other governmental charge
payable in connection with a transfer or exchange of the Debt
Securities.
Denominations
Unless the prospectus supplement states otherwise, the Debt
Securities will be issued only in registered form, without
coupons, in denominations of $1,000 each, or multiples of $1,000.
Original
Issue Discount
Debt Securities may be issued under the Indenture as Original
Issue Discount Securities and sold at a substantial discount
below their stated principal amount. If a Debt Security is an
Original Issue Discount Security, that means
that an amount less than the principal amount of the Debt
Security will be due and payable upon a declaration of
acceleration of the maturity of the Debt Security pursuant to
the Indenture (Section 301). The prospectus supplement will
describe the federal income tax consequences and other special
factors which should be considered prior to purchasing any
Original Issue Discount Securities.
7
Consolidation,
Merger or Sale
The Indenture generally permits a consolidation or merger
between us and another corporation. It also permits the sale or
transfer by us of all or substantially all of our property and
assets and the purchase by us of all or substantially all of the
property and assets of another corporation. These transactions
are permitted if:
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the resulting or acquiring corporation (if other than us)
assumes all of our responsibilities and liabilities under the
Indenture, including the payment of all amounts due on the Debt
Securities and performance of the covenants in the
Indenture; and
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immediately after the transaction, no Event of Default exists.
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If we consolidate or merge with or into any other corporation or
sell all or substantially all of our assets according to the
terms and conditions of the Indenture, the resulting or
acquiring corporation will be substituted for us in the
Indenture with the same effect as if it had been an original
party to the Indenture. As a result, the successor corporation
may exercise our rights and powers under the Indenture, in our
name or in its own name and we will be released from all our
liabilities and obligations under the Indenture and under the
Debt Securities (Sections 801 and 802).
Modification
and Waiver
Under the Indenture, certain of our rights and obligations and
certain of the rights of Holders of the Debt Securities may be
modified or amended with the consent of the Holders of a
majority in aggregate principal amount of the Outstanding Debt
Securities of each series of Debt Securities affected by the
modification or amendment. The following modifications and
amendments will not be effective against any Holder without its
consent:
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a change in the stated maturity date of any payment of principal
or interest;
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a change in the rate of interest;
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a reduction in certain payments due on the Debt Securities;
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a change in the Place of Payment or currency in which any
payment on the Debt Securities is payable;
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a limitation of a Holders right to sue us for the
enforcement of certain payments due on the Debt Securities;
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a reduction in the percentage of Outstanding Debt Securities
required to consent to a modification, waiver or amendment of
the Indenture; or
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a modification of any of the foregoing requirements or a
reduction in the percentage of Outstanding Debt Securities
required to waive compliance with certain provisions of the
Indenture or to waive certain defaults under the Indenture
(Section 902).
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Events of
Default
The term Event of Default when used in the
Indenture with respect to any series of Debt Securities, means
any of the following:
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failure to pay interest on any Debt Security of that series for
10 days after the payment is due;
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failure to pay the principal of or any premium on any Debt
Security of that series when due;
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failure to perform any other covenant in the Indenture that
applies to Debt Securities of that series for 30 days after
we have received written notice of the failure to perform in the
manner specified in the Indenture;
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default in payment of principal amount of $10 million or
more under any Indebtedness for borrowed money (including other
series of Debt Securities), or default under any mortgage, lien
or other similar encumbrance, indenture or instrument (including
the Indenture) which secures any Indebtedness for
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borrowed money, and which results in acceleration of the
maturity of an outstanding principal amount of Indebtedness
greater than $10 million, unless such default is cured or
such acceleration is rescinded;
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certain events in bankruptcy, insolvency or reorganization;
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a final judgment for payment of money in excess of
$10 million is entered against us and the judgment is
unsatisfied for 60 days without a stay of execution; or
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any other Event of Default that may be specified for the Debt
Securities of that series when that series is created.
(Section 501)
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If an Event of Default for any series of Debt Securities occurs
and continues, the Trustee or the Holders of at least 25% in
aggregate principal amount of the Outstanding Debt Securities of
the series may declare the entire principal of all the Debt
Securities of that series to be due and payable immediately. If
such a declaration occurs, the Holders of a majority of the
aggregate principal amount of the Outstanding Debt Securities of
that series can, subject to certain conditions, rescind the
declaration (Section 502).
The prospectus supplement relating to each series of Debt
Securities that are Original Issue Discount Securities will
describe the particular provisions that relate to the
acceleration of maturity of a portion of the principal amount of
such series when an Event of Default occurs and continues.
An Event of Default for a particular series of Debt Securities
does not necessarily constitute an event of Default for any
other series of Debt Securities issued under the Indenture. The
Indenture requires us to file an Officers Certificate with
the Trustee each quarter that states that certain defaults do
not exist under the terms of the Indenture (Section 1011).
The Trustee may withhold notice to the Holders of Debt
Securities of any default (except defaults in the payment of
principal, premium, or interest) if it considers such
withholding of notice to be in the best interests of the Holders
(Section 602).
Other than its duties in the case of a default, a Trustee is not
obligated to exercise any of its rights or powers under the
Indenture at the request, order or direction of any Holders,
unless the Holders offer the Trustee reasonable indemnification
(Section 603). If reasonable indemnification is provided,
then, subject to certain other rights of the Trustee, the
Holders of a majority in principal amount of the Outstanding
Debt Securities of any series may, with respect to the Debt
Securities of that series, direct the time, method and place of:
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conducting any proceeding for any remedy available to the
Trustee; or
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exercising any trust or power conferred upon the Trustee
(Section 512).
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The Holder of a Debt Security of any series will have the right
to begin any proceeding with respect to the Indenture or for any
remedy only if:
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the Holder has previously given the Trustee written notice of a
continuing Event of Default with respect to that series;
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the Holders of at least 25% in aggregate principal amount of the
Outstanding Debt Securities of that series have made a written
request of, and offered reasonable indemnification to, the
Trustee to begin such proceeding;
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the Trustee has not started such proceeding within 60 days
after receiving the request; and
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the Trustee has not received directions inconsistent with such
request from the Holders of a majority in aggregate principal
amount of the Outstanding Debt Securities of that series during
those 60 days (Section 507).
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However, the Holder of any Debt Security will have an absolute
right to receive payment of principal of and any premium and
interest on the Debt Security when due and to institute suit to
enforce such payment (Section 508).
9
DESCRIPTION
OF SECURITIES WARRANTS
This section describes the general terms and provisions of the
Securities Warrants (as defined below). The prospectus
supplement will describe the specific terms of the Securities
Warrants offered through that prospectus supplement and any
general terms outlined in this section that will not apply to
those Securities Warrants.
We may issue warrants for the purchase of Common Stock or Debt
Securities (the Securities Warrants).
Securities Warrants may be issued alone or together with Common
Stock or Debt Securities offered by any prospectus supplement
and may be attached to or separate from those securities. Each
series of Securities Warrants will be issued under a separate
warrant agreement (a Securities Warrant
Agreement) between us and a bank or trust company, as
warrant agent (the Securities Warrant Agent),
which will be described in the applicable prospectus supplement.
The Securities Warrant Agent will act solely as our agent in
connection with the Securities Warrants and will not act as an
agent or trustee for any holders of Securities Warrants.
We have summarized certain terms and conditions of the
Securities Warrant Agreements and Securities Warrants in this
section. The summary is not complete. We have also filed the
forms of Securities Warrant Agreements and the certificates
representing the Securities Warrants (the Securities
Warrant Certificates) as exhibits to the registration
statement that includes this prospectus. You should read the
applicable forms of Securities Warrant Agreements and Securities
Warrant Certificates for additional information before you buy
any Securities Warrants.
General
If we offer Securities Warrants, the applicable prospectus
supplement will describe their terms. If Securities Warrants for
the purchase of Debt Securities are offered, the applicable
prospectus supplement will describe the terms of such Securities
Warrants, including the following if applicable:
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the offering price;
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the currencies in which such Securities Warrants are being
offered;
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the designation, aggregate principal amount, currencies,
denominations and terms of the series of the Debt Securities
that can be purchased if a holder exercises such Securities
Warrants;
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the designation and terms of any series of Debt Securities with
which such Securities Warrants are being offered and the number
of Securities Warrants offered with each Debt Security or share
of Common Stock;
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the date on and after which the holder of such Securities
Warrants can transfer them separately from the related Common
Stock or series of Debt Securities;
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the principal amount of the Series of Debt Securities that can
be purchased if a holder exercised such Securities Warrant and
the price and currencies in which such principal amount may be
purchased upon exercise;
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the date on which the right to exercise such Securities Warrants
begins and the date on which such right expires;
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United States federal income tax consequences; and
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any other terms of such Securities Warrants.
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Securities Warrants for the purchase of Debt Securities will be
in registered form only.
If Securities Warrants for the purchase of Common Stock are
offered, the applicable prospectus supplement will describe the
terms of such Securities Warrants, including the following where
applicable:
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the total number of shares of Common Stock that can be purchased
if a holder exercises such Securities Warrant and the price at
which such Common Stock may be purchased upon each exercise;
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the designation and terms of any series of Debt Securities with
which such Securities Warrants are being offered and the number
of Securities Warrants being offered with each Debt Security or
share of Common Stock;
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the date on and after which the holder of such Securities
Warrants can transfer them separately from the related Common
Stock or series of Debt Securities;
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the date on which the right to exercise such Securities Warrants
begins and the date on which such right expires;
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United States federal income tax consequences; and
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any other terms of such Securities Warrants.
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Securities Warrants for the purchase of Common Stock will be in
registered form only.
A holder of Securities Warrant Certificates may:
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exchange them for new certificates of different denominations,
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present them for registration of transfer, and
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exercise them at the corporate trust office of the Securities
Warrant Agent or any other office indicated in the applicable
prospectus supplement.
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Until any Securities Warrants to purchase Debt Securities are
exercised, the holder of such Securities Warrants will not have
any of the rights of holders of the Debt Securities that can be
purchased upon exercise, including the right to receive payments
of principal, premium or interest on the underlying Debt
Securities or to enforce covenants in the Indenture. Until any
Securities Warrants to purchase Common Stock are exercised,
holders of such Securities Warrants will not have any rights of
holders of the underlying Common Stock, including the right to
receive dividends or to exercise any voting rights.
Exercise
of Securities Warrants
Each holder of a Securities Warrant is entitled to purchase the
principal amount of Debt Securities or number of shares of
Common Stock, as the case may be, at the exercise price
described in the applicable prospectus supplement. After the
close of business on the day when the right to exercise
terminates (or a later date if we extend the time for exercise),
unexercised Securities Warrants will become void.
A holder of Securities Warrants may exercise them by following
the general procedure outlined below:
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delivering to the Securities Warrant Agent the payment required
by the applicable prospectus supplement to purchase the
underlying security;
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properly completing and signing the reverse side of the
Securities Warrant Certificate representing the Securities
Warrants; and
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delivering the Securities Warrant Certificate representing the
Securities Warrants to the Securities Warrant Agent within five
business days of the Securities Warrant Agent receiving payment
of the exercise price.
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If you comply with the procedures described above, your
Securities Warrants will be considered to have been exercised
when the Securities Warrant Agent receives payment of the
exercise price. After you have completed those procedures, we
will, as soon as practicable, issue and deliver to you the Debt
Securities or Common Stock that you purchased upon exercise. If
you exercise fewer than all of the Securities Warrants
represented by a Securities Warrant Certificate, a new
Securities Warrant Certificate will be issued to you for the
unexercised amount of Securities Warrants. Holders of Securities
Warrants will be required to pay any tax
11
or governmental charge that may be imposed in connection with
transferring the underlying securities in connection with the
exercise of the Securities Warrants.
Amendments
and Supplements to Securities Warrant Agreements
We may amend or supplement a Securities Warrant Agreement
without the consent of the holders of the applicable Securities
Warrants if the changes are not inconsistent with the provisions
of the Securities Warrants and do not materially adversely
affect the interests of the holders of the Securities Warrants.
We, along with the Securities Warrant Agent, may also modify or
amend a Securities Warrant Agreement and the terms of the
Securities Warrants if a majority of the then outstanding
unexercised Securities Warrants affected by the modification or
amendment consent. However, no modification or amendment that
accelerates the expiration date, increases the exercise price,
reduces the majority consent requirement for any such
modification or amendment, or otherwise materially adversely
affects the rights of the holders of the Securities Warrants may
be made without the consent of each holder affected by the
modification or amendment.
Common
Stock Warrant Adjustment
Unless the applicable prospectus supplement states otherwise,
the exercise price of, and the number of shares of Common Stock
covered by, a Common Stock Warrant will be adjusted in the
manner set forth in the applicable prospectus supplement if
certain events occur, including:
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if we issue capital stock as a dividend or distribution on the
Common Stock;
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if we subdivide, reclassify or combine the Common Stock;
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if we issue rights or warrants to all holders of Common Stock
entitling them to purchase Common Stock at less than the current
market price; or
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if we distribute to all holders of Common Stock evidences of our
indebtedness or our assets, excluding certain cash dividends and
distributions described below, or rights or warrants, excluding
those referred to above.
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Except as stated above, the exercise price and number of shares
of Common Stock covered by a Common Stock Warrant will not be
adjusted if we issue Common Stock or any securities convertible
into or exchangeable for Common Stock, or securities carrying
the right to purchase Common Stock or securities convertible
into or exchangeable for Common Stock.
Holders of Common Stock Warrants may have additional rights
under the following circumstances:
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a reclassification or change of the Common Stock;
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a consolidation or merger involving our company; or
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a sale or conveyance to another corporation of all or
substantially all of our property and assets.
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If one of the above transactions occurs and holders of our
Common Stock are entitled to receive stock, securities, other
property or assets, including cash, with respect to or in
exchange for such Common Stock, the holders of the Common Stock
Warrants then outstanding will be entitled to receive upon
exercise of their Common Stock Warrants the kind and amount of
shares of stock and other securities or property that they would
have received upon the reclassification, change, consolidation,
merger, sale or conveyance if they had exercised their Common
Stock Warrants immediately before the transaction.
PLAN OF
DISTRIBUTION
We may sell any combination of the securities offered pursuant
to this prospectus through agents, through underwriters or
dealers or directly to one or more purchasers, or through a
combination of these methods.
Underwriters, dealers and agents that participate in the
distribution of the securities offered pursuant to this
prospectus may be underwriters as defined in the Securities Act
of 1933 and any discounts or commissions
12
received by them from us and any profit on the resale of the
offered securities by them may be treated as underwriting
discounts and commissions under the Securities Act of 1933. Any
underwriters or agents will be identified and their compensation
(including underwriting discount) will be described in the
prospectus supplement. The prospectus supplement will also
describe other terms of the offering, including any discounts or
concessions allowed or reallowed or paid to dealers and any
securities exchanges on which the offered securities may be
listed.
The distribution of the securities offered under this prospectus
may occur 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.
If the prospectus supplement indicates, we will authorize
dealers or our agents to solicit offers by certain institutions
to purchase offered securities from us pursuant to contracts
that provide for payment and delivery on a future date. We must
approve all institutions, but they may include, among others:
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commercial and savings banks;
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insurance companies;
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pension funds;
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investment companies; and
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educational and charitable institutions.
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The institutional purchasers obligations under the
contract are only subject to the condition that the purchase of
the offered securities at the time of delivery is allowed by the
laws that govern the purchaser. The dealers and our agents will
not be responsible for the validity or performance of the
contracts.
We may have agreements with the underwriters, dealers and agents
to indemnify them against certain civil liabilities, including
liabilities under the Securities Act of 1933, or to contribute
with respect to payments which the underwriters, dealers or
agents may be required to make as a result of those certain
civil liabilities.
When we issue the securities offered by this prospectus, they
may be new securities without an established trading market. If
we sell a security offered by this prospectus to an underwriter
for public offering and sale, the underwriter may make a market
for that security, but the underwriter will not be obligated to
do so and could discontinue any market making without notice at
any time. Therefore, we cannot give any assurances to you
concerning the liquidity of any security offered by this
prospectus.
Underwriters and agents and their affiliates may be customers
of, engage in transactions with, or perform services for us or
our subsidiaries in the ordinary course of their businesses.
LEGAL
MATTERS
Unless otherwise stated in an applicable prospectus supplement,
Rolf Engh, Esq., our Executive Vice President, General Counsel
and Secretary, will pass upon certain legal matters relating to
the issuance and sale of the securities offered by this
prospectus. Mr. Engh owns or has a right to own a number of
shares of our common stock representing less than one percent of
the total number of outstanding shares of our common stock.
EXPERTS
The consolidated financial statements and schedule of The
Valspar Corporation appearing in The Valspar Corporations
Annual Report
(Form 10-K)
for the year ended October 27, 2006 and The Valspar
Corporations managements assessment of the
effectiveness of internal control over financial reporting as of
October 27, 2006 included therein, have been audited by
Ernst & Young LLP, independent registered public
accounting firm, as set forth in their reports thereon included
therein, and incorporated herein by reference. Such consolidated
financial statements and schedule and managements
assessment are incorporated herein by reference in reliance upon
such reports given on the authority of such firm as experts in
accounting and auditing.
13
$300,000,000
THE VALSPAR
CORPORATION
7.250% Senior Notes due
2019
PROSPECTUS SUPPLEMENT
Joint Book-Running
Managers
Banc of America Securities
LLC
Goldman, Sachs &
Co.
Wachovia Securities
Co-Managers
Deutsche Bank Securities
Mitsubishi UFJ Securities
PNC Capital Markets LLC
U.S. Bancorp Investments, Inc.
Comerica Securities
June 16, 2009