<PAGE> 1
File Pursuant to Rule 424(b)(3)
Registration No. 333-25607
PROSPECTUS
- ----------
THE SHERWIN-WILLIAMS COMPANY
OFFER TO EXCHANGE OFFER TO EXCHANGE
ALL OUTSTANDING ALL OUTSTANDING
7.375% DEBENTURES DUE 2027 7.45% DEBENTURES DUE 2097
FOR FOR
7.375% DEBENTURES DUE 2027 7.45% DEBENTURES DUE 2097
WHICH HAVE BEEN REGISTERED WHICH HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT UNDER THE SECURITIES ACT
OF 1933, AS AMENDED OF 1933, AS AMENDED
------------------------
THE EXCHANGE OFFERS
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON JUNE 30, 1997 UNLESS EXTENDED
------------------------
The Sherwin-Williams Company, an Ohio corporation (the "Company"), hereby
offers (the "Exchange Offers"), upon the terms and subject to the conditions set
forth in this Prospectus and the accompanying Letter of Transmittal (the "Letter
of Transmittal"), to exchange its outstanding 7.375% Debentures Due 2027 (the
"Old 2027 Debentures"), of which an aggregate of $150,000,000 in principal
amount is outstanding as of the date hereof, for an equal principal amount of
newly issued 7.375% Debentures Due 2027 (the "New 2027 Debentures"), and to
exchange its outstanding 7.45% Debentures Due 2097 (the "Old 2097 Debentures"),
of which an aggregate of $150,000,000 in principal amount is outstanding as of
the date hereof, for an equal principal amount of newly issued 7.45% Debentures
Due 2097 (the "New 2097 Debentures"). The form and terms of the New 2027
Debentures and New 2097 Debentures (collectively, the "New Debentures") will be
the same as the form and terms of the Old 2027 Debentures and the Old 2097
Debentures (collectively, the "Old Debentures"), respectively, except that (i)
the New Debentures will be registered under the Securities Act of 1933, as
amended (the "Securities Act"), and hence will not bear legends restricting the
transfer thereof and (ii) the holders of the New Debentures will not be entitled
to certain rights of holders of the Old Debentures under the Registration
Agreement (as defined herein), which rights will terminate upon the consummation
of the Exchange Offers. The New 2027 Debentures and the New 2097 Debentures will
evidence the same debt as the Old 2027 Debentures and the Old 2097 Debentures,
respectively, and will be entitled to the benefits of an indenture dated as of
February 1, 1996 governing the Old Debentures and the New Debentures (the
"Indenture"). The Indenture provides for the issuance of both the New Debentures
and the Old Debentures. The New 2027 Debentures and the Old 2027 Debentures are
sometimes referred to herein collectively as the "2027 Debentures"; the Old 2097
Debentures and the New 2097 Debentures sometimes referred to herein collectively
as the "2097 Debentures"; and the 2027 Debentures and the 2097 Debentures are
sometimes referred to herein collectively as the "Debentures."
(Continued on next page)
------------------------
SEE "RISK FACTORS" COMMENCING ON PAGE 11 FOR CERTAIN INFORMATION THAT
SHOULD BE CONSIDERED BY HOLDERS WHO TENDER OLD DEBENTURES IN THE EXCHANGE
OFFERS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE DATE OF THIS PROSPECTUS IS MAY 22, 1997
<PAGE> 2
(Cover page continued)
Interest on the Debentures is payable semiannually on February 1 and August
1 of each year, commencing August 1, 1997. Each of the New 2027 Debentures and
the New 2097 Debentures is redeemable as a whole or in part, at the option of
the Company at any time, at a redemption price equal to the greater of (i) 100%
of the principal amount of each such New Debenture and (ii) the sum of the
present values of the Remaining Scheduled Payments (as defined herein) thereon
discounted at the Treasury Rate (as defined herein) plus, in the case of the New
2027 Debentures, 10 basis points and, in the case of the New 2097 Debentures, 15
basis points, plus, in either case, accrued interest to the date of redemption.
See "Description of the New Debentures -- Optional Redemption." Upon the
occurrence of a Tax Event (as defined herein) the Company will have the right to
shorten the maturity of the New 2097 Debentures to the extent required so that
the interest paid on the New 2097 Debentures will be deductible by the Company
for Federal income tax purposes. See "Description of the New Debentures --
Conditional Right to Shorten Maturity; Certain Federal Income Tax
Considerations Relating to the 2097 Debentures."
Prior to the Exchange Offer, there has been no public market for the Old
Debentures. The Company does not intend to list the New Debentures on any
securities exchange or to seek approval for quotation through any automated
quotation system. There can be no assurance that an active market for the New
Debentures will develop. To the extent that a market for the New Debentures does
develop, the market value of the New Debentures will depend on market conditions
(such as yields on alternative investments), general economic conditions, the
Company's financial condition and other conditions. Such conditions might cause
the New Debentures, to the extent that they are actively traded, to trade at a
significant discount from face value.
The New Debentures will be available only in book-entry form. The Company
expects that the New Debentures issued pursuant to the Exchange Offers will be
issued in the form of one or more fully registered global debentures that will
be deposited with, or on behalf of, The Depository Trust Company ("DTC") and
registered in its name or in the name of Cede & Co., as its nominee. Beneficial
interests in the global debentures representing the New Debentures will be shown
on, and transfers thereof will be effected only through, records maintained by
DTC and its participants. After the initial issuance of such global debentures,
New Debentures in certificated form will be issued in exchange for the global
debentures only in accordance with the terms and conditions set forth in the
Indenture. See "Description of the New Debentures -- Book-Entry, Delivery and
Form" and "Description of the New Debentures -- Certificated Debentures."
The Company will accept for exchange any and all Old Debentures which are
properly tendered in the Exchange Offers prior to 5:00 p.m., New York City time,
on June 30, 1997 (if and as extended, the "Expiration Date"). Tenders of Old
Debentures may be withdrawn at any time prior to 5:00 p.m., New York City time,
on the Expiration Date. The Exchange Offers are not conditioned upon any minimum
principal amount of Old Debentures being tendered for exchange. Old Debentures
may be tendered only in integral multiples of $1,000. In the event the Company
terminates either or both of the Exchange Offers and does not accept for
exchange any Old 2027 Debentures or Old 2097 Debentures, as the case may be, the
Company will promptly return all previously tendered Old 2027 Debentures or Old
2097 Debentures, as the case may be, to the holders thereof.
Based on a previous interpretation by the staff of the Securities and
Exchange Commission (the "Commission") set forth in no-action letters to third
parties, the Company believes that the New Debentures issued pursuant to the
Exchange Offers in exchange for Old Debentures may be offered for resale,
resold, and otherwise transferred by a holder thereof (other than (i) a
broker-dealer who purchases such New Debentures directly from the Company to
resell pursuant to Rule 144A or any other available exemption under the
Securities Act or (ii) a person that is an affiliate of the Company (within the
meaning of Rule 405 under the Securities Act)) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that the holder is acquiring the New Debentures in its ordinary course of
business and is not participating, and has no arrangement or understanding with
any person to participate, in the distribution of the New Debentures. Holders of
Old Debentures wishing to accept either or both of the Exchange Offers must
represent to the Company that such conditions have been met.
2
<PAGE> 3
Each broker-dealer that receives New Debentures for its own account
pursuant to either or both of the Exchange Offers must acknowledge that it will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Debentures. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter," within the meaning of
the Securities Act, in connection with resale of New Debentures received in
exchange for Old Debentures where such Old Debentures were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. The Company has agreed that, for a period of 180 days after the
Expiration Date, it will make this Prospectus available to any broker-dealer for
use in connection with any such resale. See "Plan of Distribution."
The Company believes that none of the registered holders of the Old
Debentures is an affiliate (as such term is defined in Rule 405 under the
Securities Act) of the Company. The Company has not entered into any arrangement
or understanding with any person to distribute the New Debentures to be received
in the Exchange Offers, and to the best of the Company's information and belief,
each person participating in either or both of the Exchange Offers is acquiring
the New Debentures in the ordinary course of business and has no arrangement or
understanding with any person to participate in the distribution of the New
Debentures to be received in either or both of the Exchange Offers.
The Company will not receive any proceeds from the Exchange Offers. The
Company has agreed to bear the expenses of the Exchange Offers. No underwriter
is being used in connection with the Exchange Offers.
3
<PAGE> 4
AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the Commission.
Such reports and other information may be inspected and copied at the public
reference facilities of the Commission, Room 1024, Judiciary Plaza, 450 Fifth
Street, N W., Washington, D.C. 20549, as well as at the following Regional
Offices: 7 World Trade Center, 13th Floor, New York, New York 10048 and 500 West
Madison Street-Suite 1400, Chicago, Illinois 60661. Copies of such material can
be obtained from the Commission by mail at prescribed rates. Requests should be
directed to the Commission's Public Reference Section, Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of documents filed
by the Company with the Commission may also be accessed electronically by means
of the Commission's home page on the world wide web on the Internet at
"http://www.sec.gov". Copies of such material may also be inspected at the
offices of the New York Stock Exchange, Inc. ("NYSE"), 20 Broad Street, New
York, New York.
This Prospectus constitutes a part of a Registration Statement filed by the
Company with the Commission under the Securities Act. This Prospectus omits
certain of the information contained in the Registration Statement in accordance
with the rules and regulations of the Commission. Reference is hereby made to
the Registration Statement and related exhibits for further information with
respect to the Company and the Debentures. Statements contained herein
concerning the provisions of any documents are not necessarily complete and, in
each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference.
------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated into this Prospectus by reference:
(i) the Company's Annual Report on Form 10-K for the year ended
December 31, 1996;
(ii) the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997; and
(iii) the Company's Current Reports on Form 8-K dated January 7, 1997,
January 29, 1997 and April 23, 1997.
Each document or report filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the
termination of any offering of securities made by this Prospectus shall be
deemed to be incorporated by reference into this Prospectus and to be a part of
this Prospectus from the date of filing of such document. Any statement
contained herein, or in a document all or a portion of which is incorporated or
deemed to be incorporated by reference herein, shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE
MADE BY JUNE 23, 1997.
This Prospectus incorporates by reference documents which are not presented
herein or delivered herewith. The Company will provide without charge to any
person to whom this Prospectus is delivered, on the written or oral request of
such person, a copy of any or all of the foregoing documents incorporated by
reference herein (other than exhibits not specifically incorporated by reference
into the texts of such documents). Requests for such documents should be
directed to:
The Sherwin-Williams Company
101 Prospect Avenue, N.W.
12th Floor
Cleveland, OH 44115
Telephone: (216) 566-2000
Attention: Corporate Secretary
4
<PAGE> 5
THE COMPANY
The Sherwin-Williams Company (the "Company"), which was first incorporated
under the laws of the State of Ohio eighteen years after its founding in 1866,
is a leading manufacturer and retailer of coatings and related products to
professional, industrial, commercial and retail customers.
The Company's structure consists of two main segments: the Paint Stores
Segment and the Coatings Segment. The Paint Stores Segment, which operated 2,156
specialty paint stores in the United States, Canada and Puerto Rico at December
31, 1996, is the exclusive distributor of Sherwin-Williams(R) branded
architectural coatings, industrial maintenance products, industrial finishes and
related items produced by the Coatings Segment of the Company and others. The
Paint Stores Segment is also a distributor of similar coatings and other
products manufactured by third parties. Paint, wallcoverings, floorcoverings,
window treatments, spray equipment and other associated products are marketed by
store personnel and direct sale representatives to the do-it-yourself customer,
professional painter, contractor, industrial and commercial maintenance
customer, property manager, architect and manufacturer of products requiring a
factory finish.
The five divisions within the Coatings Segment (Coatings, Consumer Brands,
Automotive, Transportation Services and Diversified Brands) participate in the
manufacture, distribution or sale of coatings and related products. The Coatings
Segment employs a variety of trade names and trademarks including Sherwin-
Williams(R), Dutch Boy(R), Ralph Lauren(TM), Pratt & Lambert(R), Con-Lux(R),
H&C(R), Martin-Senour(R), Cuprinol(R), Krylon(R), Dupli-Color(R), Rubberset(R),
White Lightning(R), Standox(R), Rust Tough(R), Kem-Tone(R), Excelo(TM),
Lazzuril(TM), Colorgin(TM) and other brands.
The Coatings Division manufactures paint and paint-related products for
do-it-yourself customers, professional painters, contractors, industrial and
commercial maintenance accounts, and manufacturers of factory finished products.
Sherwin-Williams(R) branded architectural and industrial finishes are
manufactured exclusively for the Paint Stores Segment. Labels, color cards,
traffic paint, adhesives, private label and other branded products are
manufactured for the Paint Stores Segment, the Consumer Brands Division and
other divisions of the Company. In 1996, one of the primary goals of the
Coatings Division was to integrate the manufacturing operations of Pratt &
Lambert United, Inc. ("Pratt & Lambert"), which was acquired on January 8, 1996.
The Consumer Brands Division is responsible for the sales and marketing of
branded and private label products by a direct sales staff to unaffiliated home
centers, mass merchandisers, independent dealers and distributors. Many of the
country's leading retailers are among the Division's regional and national
customers. The acquisition of Pratt & Lambert provided the Division sales and
marketing responsibility over the Pratt & Lambert(R), Fabulon(R) and M.L.
Campbell(R) brands. In addition to expanding sales of branded products through
independently-owned paint and decorator stores, the acquisition enabled the
Division to significantly enlarge its distribution of private label products in
the mass merchandiser and home center channels. The home center channel
continues to consolidate, creating competition for the business of the best
regional and national home centers. The Division has been successful in
targeting the majority of the strong home centers. The Division's launch of the
Ralph Lauren(TM) paint line was highly successful in 1996, with distribution
through both the independent store and home center channels.
The Automotive Division develops and manufactures motor vehicle finish and
refinish products which are marketed under the Sherwin-Williams(R) and other
branded labels in the United States and Canada through its network of 135
company-operated branches at December 31, 1996. The branches are supported by a
direct sales staff. Products are also marketed through independent jobbers and
wholesale distributors. The Division sells directly to independent automotive
body shops, automotive dealerships, fleet owners and refinishers, production
shops, body builders and manufacturers requiring a factory finish. In
furtherance of the Division's international growth, Productos Quimicos Y
Pinturas, S.A. de C.V. and its affiliated companies ("Productos") were acquired
in January 1996. Productos is the second largest automotive paint distributor in
Mexico, manufacturing and marketing the highly recognized Excelo(TM) brand
product line for the vehicle refinish market. Also in 1996, the Division assumed
the management of the automotive coatings business of the Stierling Group of
companies, a leading producer of automotive coatings in Chile. Lazzuril Tintas
S/A, a Brazilian automotive coatings company, was also acquired.
5
<PAGE> 6
The Transportation Services Division provides warehousing, truckload
freight, pool assembly, freight brokerage and consolidation services primarily
for the Company and for certain external manufacturers, distributors and
retailers throughout the United States and Canada. This Division provides the
Company with total logistics service support which allows increased delivery
schedules, lower field inventory levels and fewer out-of-stocks. The Division
spent the majority of 1996 integrating and consolidating the distribution
centers obtained through the Pratt & Lambert acquisition into its existing
distribution network.
The Diversified Brands Division competes in the following areas: retail and
wholesale consumer aerosols; custom and industrial aerosols; paint applicators;
and cleaning products. The Division participates in the retail and wholesale
paint, automotive, homecare products, institutional, insecticide and industrial
markets. A wide variety of aerosol products are filled, packaged and distributed
to regional, national and international customers. Approximately 6.2 percent of
the Division's total sales in 1996 represented aerosols and paint applicators
sold to the Paint Stores Segment. The remaining products are marketed through
mass merchandisers, home centers, automotive chains and maintenance distribution
channels. In 1996, the Division added consumer, industrial and janitorial
cleaning products, with reputable brand names such as Cello(R) and Spring
Fresh(R), to its product selection in the United States through the acquisitions
of the Household and Professional Products Division of Grow Group, Inc. and
Sunshine Quality Products, Inc. The Division also expanded internationally in
1996 through the acquisition of Industria Quimica Elgin Ltda., a leading
producer and marketer of aerosol paint under the Colorgin(TM) brand label in
Brazil.
Since 1979, the Company's revenues and net income from continuing
operations and dividends have increased in each year. The Company's record is
the result of both internal growth and acquisitions. During 1995 and 1996, the
Company made several significant strategic acquisitions which expanded the
Company's products, distribution channels and geographic coverage. The Company's
largest acquisition over this period was Pratt & Lambert. Pratt & Lambert
manufactures and markets coatings to independent dealers, mass merchandisers,
home centers and specialty markets. The acquisition of Pratt & Lambert provided
the Company with an expanded customer base and the benefit of Pratt & Lambert's
reputation of providing quality products to independent dealers since 1849.
On January 7, 1997, the Company completed its acquisition (the "Thompson
Minwax Acquisition") of Thompson Minwax Holding Corp. ("Thompson Minwax"). The
total purchase price of Thompson Minwax, including the retirement of certain
indebtedness of Thompson Minwax, was approximately $830 million. The Company
funded the acquisition from the proceeds of borrowings of different maturities
and interest rates under the Company's commercial paper program. Thompson Minwax
is a major producer and marketer in the United States of interior stains and
varnishes under the Minwax(R) brand name, exterior water sealers and stains
under the Thompson's(R) brand name, finishing and enamel coating products under
the Formby's(R) and Red Devil(R) brand names, and high-performance specialty
lubricants under the Tri-Flow(TM) brand name. Ronseal Limited, a subsidiary of
Thompson Minwax, is a major producer and seller of interior and exterior stains
in Ireland and the United Kingdom under the leading Ronseal(TM) brand name. The
Company believes that the acquisition of Thompson Minwax broadens the Company's
product offerings, adds strong brand names, increases the Company's penetration
in home centers, mass merchandisers and independent paint stores, and provides a
platform to expand the distribution in the United Kingdom of branded products
currently produced by the Coatings Segment.
6
<PAGE> 7
SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus or incorporated herein by reference.
THE EXCHANGE
THE EXCHANGE OFFERS........ The Company is offering to exchange $1,000
principal amount of New 2027 Debentures and New
2097 Debentures, respectively, for each $1,000
principal amount of Old 2027 Debentures and Old
2097 Debentures, respectively, that are properly
tendered and accepted. The Company will issue the
New 2027 Debentures and New 2097 Debentures on or
promptly after the Expiration Date. There is
$150,000,000 aggregate principal amount of the Old
2027 Debentures outstanding and $150,000,000
aggregate principal amount of the Old 2097
Debentures outstanding. See "The Exchange Offers."
Based on an interpretation of the staff of the
Commission set forth in no-action letters issued to
third parties, the Company believes that New
Debentures issued pursuant to the Exchange Offers
in exchange for Old Debentures may be offered for
resale, resold and otherwise transferred by any
holder thereof (other than (i) a broker-dealer who
purchases such New Debentures directly from the
Company to resell pursuant to Rule 144A or any
other available exemption under the Securities Act
or (ii) any such holder which is an "affiliate" of
the Company within the meaning of Rule 405 under
the Securities Act) without compliance with the
registration and prospectus delivery provisions of
the Securities Act, provided that such New
Debentures are acquired in the ordinary course of
such holder's business and that such holder has no
arrangement or understanding with any person to
participate in the distribution of such New
Debentures. In the event that the Company's belief
is inaccurate, holders of New Debentures who
transfer New Debentures in violation of the
prospectus delivery provisions of the Securities
Act and without an exemption from registration
thereunder may incur liability thereunder. The
Company does not assume or indemnify holders
against such liability. The Exchange Offers are not
being made to, nor will the Company accept
surrenders for exchange from, holders of Old
Debentures (i) in any jurisdiction in which the
Exchange Offers or the acceptance thereof would not
be in compliance with the securities or blue sky
laws of such jurisdiction or (ii) if any holder is
engaged or intends to engage in a distribution of
New Debentures. Each broker-dealer that receives
New Debentures for its own account in exchange for
Old Debentures, where such Old Debentures were
acquired by such broker-dealer as a result of
market-making activities or other trading
activities, must acknowledge that it will deliver a
prospectus meeting the requirements of the
Securities Act in connection with any resale of
such New Debentures. See "Plan of Distribution."
EXPIRATION DATE............ The Exchange Offers will expire at 5:00 p.m., New
York City time, on June 30, 1997, unless either or
both Exchange Offers are extended, in which case
the term "Expiration Date" shall mean the latest
date and time to which each of the Exchange Offers
is extended. The Company will accept for exchange
any and all Old Debentures which are properly
7
<PAGE> 8
tendered in the Exchange Offers prior to 5:00 p.m.,
New York City time, on the Expiration Date. The New
Debentures issued pursuant to the Exchange Offers
will be delivered on or promptly after the
Expiration Date.
CONDITIONS TO THE EXCHANGE
OFFERS................... The Company may terminate the Exchange Offers if it
determines that its ability to proceed with either
or both of the Exchange Offers could be materially
impaired due to any legal or governmental action,
any new law, statute, rule or regulation, any
interpretation by the staff of the Commission of
any existing law, statute, rule or regulation or
the failure to obtain any necessary approvals of
governmental agencies or holders of the Old
Debentures. The Company does not expect any of the
foregoing conditions to occur, although there can
be no assurances any such conditions will not
occur.
PROCEDURES FOR TENDERING
OLD DEBENTURES........... Each holder of Old Debentures wishing to accept
either or both of the Exchange Offers must
complete, sign and date the Letter of Transmittal,
or a facsimile thereof, in accordance with the
instructions contained herein and therein, and mail
or otherwise deliver such Letter of Transmittal, or
such facsimile, together with such Old Debentures
and any other required documentation to The Chase
Manhattan Bank, as Exchange Agent, at the address
set forth herein. By executing the Letter of
Transmittal or by transmitting an Agent's Message
(as defined below) in lieu thereof, each holder
will represent to the Company that, among other
things, the New Debentures acquired pursuant to the
Exchange Offers are being obtained in the ordinary
course of business of the person receiving such New
Debentures, such person does not have an
arrangement or understanding with any person to
participate in the distribution of such New
Debentures and that neither the holder nor any such
other person is an "affiliate," as defined in Rule
405 under the Securities Act, of the Company.
Certain brokers, dealers, commercial banks, trust
companies and other nominees may also effect
tenders by book-entry transfer, including an
Agent's Message in lieu of a Letter of Transmittal.
BENEFICIAL OWNERS.......... Any beneficial owner whose Old Debentures are
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee and
who wishes to tender such Old Debentures in either
or both of Exchange Offers should contact such
registered holder promptly and instruct such
registered holder to tender on such beneficial
owner's behalf. If such beneficial owner wishes to
tender on such owner's own behalf, such owner must,
prior to completing and executing the Letter of
Transmittal and delivering his Old Debentures,
either make appropriate arrangements to register
ownership of the Old Debentures in such owner's
name or obtain a properly completed bond power from
the registered holder. The transfer of registered
ownership may take considerable time and may not be
able to be completed prior to the Expiration Date.
GUARANTEED DELIVERY
PROCEDURES............... Holders of Old Debentures who wish to tender their
Old Debentures and who cannot deliver their Old
Debentures or the Letter of Transmittal to The
Chase Manhattan Bank, as Exchange Agent, prior to
the Expiration Date, or the procedures for
book-entry transfer cannot be completed on a
8
<PAGE> 9
timely basis, must tender their Old Debentures
according to the guaranteed delivery procedures set
forth in "The Exchange Offers -- Guaranteed
Delivery Procedures."
WITHDRAWAL RIGHTS.......... Tenders of Old Debentures may be withdrawn at any
time prior to 5:00 p.m., New York City time, on the
Expiration Date.
CERTAIN FEDERAL INCOME TAX
CONSEQUENCES............. For a discussion of certain federal income tax
consequences relating to the exchange of New
Debentures for Old Debentures, see "Certain Federal
Income Tax Consequences of Participation in the
Exchange Offers."
EXCHANGE AGENT............. The Chase Manhattan Bank is the Exchange Agent. Its
telephone number is (212) 638-0458. The address of
the Exchange Agent is set forth in "The Exchange
Offers -- Exchange Agent." The Chase Manhattan Bank
also serves as trustee under the Indenture.
SHELF REGISTRATION
STATEMENT................ Under certain circumstances described in the
Registration Agreement, certain holders of
Debentures (including holders who are not permitted
to participate in the Exchange Offers or who may
not freely resell New Debentures received in the
Exchange Offers) may require the Company to file,
and use best efforts to cause to become effective,
a shelf registration statement under the Securities
Act, which would cover resales of Debentures by
such holders. See "Description of the New
Debentures -- Registration Agreement."
CONDITIONS TO THE EXCHANGE
OFFERS................... The Exchange Offers are not conditioned on any
minimum principal amount of Old Debentures being
tendered for exchange. The Exchange Offers are
subject to certain other customary conditions, each
of which may be waived by the Company. See "The
Exchange Offers -- Certain Conditions to the
Exchange Offers."
9
<PAGE> 10
SUMMARY DESCRIPTION OF THE NEW DEBENTURES
The terms of the New Debentures and the Old Debentures are identical in all
material respects, except for certain transfer restrictions and registration
rights relating to the Old Debentures. Whenever defined terms of the Indenture
not otherwise defined herein are referred to, such defined terms are
incorporated herein by reference. In the event that neither this Registration
Statement is declared effective nor a Shelf Registration Statement (as defined
herein) is filed on or prior to August 9, 1997, the annual interest rate borne
by the Old Debentures will be increased by 0.25%. If the Exchange Offers are not
consummated and the Shelf Registration Statement is not declared effective by
September 8, 1997, the annual interest rate borne by the Old Debentures will be
increased by an additional 0.25%. If the annual interest rate borne by the Old
Debentures shall have been increased by reason of the circumstances described in
one or both of the two preceding sentences, upon (i) the declaration that this
Registration Statement is effective or a Shelf Registration Statement is filed
at any time after August 9, 1997, the previously increased annual interest rate
borne by the Old Debentures will be decreased by 0.25%, and (ii) the
consummation of the Exchange Offers or the effectiveness of the Shelf
Registration Statement at any time after September 8, 1997, the annual interest
rates on the Old Debentures will revert to the annual interest rates set forth
on the cover page of this Prospectus.
The New Debentures will bear interest from the most recent date to which
interest has been paid on the Old Debentures or, if no interest has been paid on
the Old Debentures, from February 10, 1997. Accordingly, registered holders of
New Debentures on the relevant record date for the first interest payment date
following the consummation of the Exchange Offers will receive interest accruing
from the most recent date to which interest has been paid on the Old Debentures
or, if no interest has been paid, from February 10, 1997. Old Debentures
accepted for exchange will cease to accrue interest from and after the date of
consummation of the Exchange Offers. Holders whose Old Debentures are accepted
for exchange will not receive any payment in respect of interest on such Old
Debentures otherwise payable on any interest payment date, the record date for
which occurs on or after consummation of the Exchange Offers.
THE NEW DEBENTURES
NEW DEBENTURES OFFERED..... $150,000,000 principal amount of 7.375% Debentures
Due 2027 and $150,000,000 principal amount of 7.45%
Debentures Due 2097.
MATURITY................... The New 2027 Debentures will mature on February 1,
2027 and the New 2097 Debentures will mature on
February 1, 2097.
INTEREST PAYMENT DATES..... Interest on the New Debentures is payable
semiannually on each February 1 and August 1,
commencing August 1, 1997.
OPTIONAL REDEMPTION........ Each of the New 2027 Debentures and the New 2097
Debentures will be redeemable as a whole or in
part, at the option of the Company at any time, at
a redemption price equal to the greater of (i) 100%
of the principal amount of each such Debenture and
(ii) the sum of the present values of the Remaining
Scheduled Payments thereon discounted at the
Treasury Rate plus, in the case of the New 2027
Debentures, 10 basis points and, in the case of the
New 2097 Debentures, 15 basis points, plus, in
either case, accrued interest to the date of
redemption. See "Description of the New
Debentures -- Optional Redemption."
CONDITIONAL RIGHTS TO
SHORTEN MATURITY OF 2097
DEBENTURES............... Upon the occurrence of a Tax Event, the Company
will have the right to shorten the maturity of the
New 2097 Debentures to the extent required so that
the interest paid on the New 2097 Debentures will
be deductible by the Company for federal income tax
purposes. See "Description of the New Debentures
-- Conditional Right to Shorten Maturity of 2097
Debentures; Certain Federal Income Tax
Considerations Relating to the 2097 Debentures."
RANKING.................... The New Debentures will be senior securities of the
Company, ranking pari passu with all other
unsubordinated and unsecured indebtedness of the
Company.
10
<PAGE> 11
RISK FACTORS
Holders of Old Debentures should carefully review the information contained
elsewhere in this Prospectus and should particularly consider the following
matters.
CONDITIONAL RIGHT TO SHORTEN MATURITY OF 2097 DEBENTURES; CERTAIN FEDERAL INCOME
TAX CONSIDERATIONS RELATING TO THE 2097 DEBENTURES
The Company intends to deduct interest paid on the Debentures for Federal
income tax purposes. However, the Clinton Administration's budget proposal for
Fiscal Year 1998, released on February 6, 1997, contained a series of proposed
tax law changes that, among other things, would prohibit an issuer from
deducting interest payments on debt instruments with a maximum weighted average
maturity of more than 40 years. This proposal would be effective generally for
instruments issued on or after the date of first Congressional committee action
relating thereto. However, it is not clear from the proposal as to what
constitutes "Congressional committee action" with respect to the proposal. There
can be no assurance that this proposal or similar legislation affecting the
Company's ability to deduct interest paid on the Old or New 2097 Debentures will
not be enacted in the future or that any such legislation would not have a
retroactive effective date.
In addition, under existing general tax law principles, the Internal
Revenue Service or a court might take the position that debt instruments that do
not mature for a very long time (for example, debt instruments like the 2097
Debentures that mature in 100 years) should not be treated as debt for Federal
income tax purposes, but rather as equity. The Company believes that, based on
the factors applied under existing general tax law principles, the 2097
Debentures are valid debt, the Company can deduct interest payments thereon, and
holders should treat such payments as interest. If, however, the 2097 Debentures
were to be treated as equity, the Company would not be able to deduct interest
payments thereon, and holders would be required to treat such payments as
dividends (or other distributions on equity) and not as interest.
Accordingly, upon occurrence of a Tax Event (as defined herein), including,
without limitation, as a result of the circumstances described in the first two
paragraphs of this section, the Company will have the right to shorten the
maturity of the 2097 Debentures to the extent required, in the opinion of a
nationally recognized independent tax counsel, such that, after the shortening
of the maturity, interest paid on the 2097 Debentures will be deductible for
Federal income tax purposes. There can be no assurance that the Company would
not exercise its right to shorten the maturity of the 2097 Debentures upon the
occurrence of such a Tax Event.
If the 2097 Debentures constitute indebtedness for Federal income tax
purposes under the law applicable at the time the Company exercises its right to
shorten the maturity of the 2097 Debentures, such exercise would not be a
taxable event to holders. Prospective investors should be aware, however, that
the Company's exercise of its right to shorten the maturity of the 2097
Debentures will be a taxable event to holders if the 2097 Debentures are treated
as equity for purposes of Federal income taxation under the law applicable when
the maturity is shortened, assuming that the 2097 Debentures of shortened
maturity are treated as debt for such purposes.
Should the 2097 Debentures be treated as equity for Federal income tax
purposes, some holders of the 2097 Debentures may be adversely impacted from a
Federal income tax perspective. For example (and without limiting the potential
holders who might be adversely affected), if the 2097 Debentures are so treated
as equity and payments on the 2097 Debentures are therefore treated as
dividends, in the case of non-U.S. holders of the 2097 Debentures such dividends
would under current law be subject to U.S. withholding tax at a 30% rate or, if
applicable, at a lower rate prescribed by treaty, whereas under current law
interest for many non-U.S. holders are exempt from U.S. withholding tax.
CONSEQUENCES OF FAILURE TO EXCHANGE OLD DEBENTURES
The Old Debentures have not been registered under the Securities Act or any
state securities laws and therefore may not be offered, sold or otherwise
transferred except in compliance with the registration requirements of the
Securities Act and any other applicable securities laws, or pursuant to an
exemption therefrom or in a transaction not subject thereto, and in each case in
compliance with certain other conditions and restrictions. Old Debentures which
remain outstanding after consummation of the Exchange Offer will
11
<PAGE> 12
continue to bear a legend reflecting such restrictions on transfer. In addition,
upon consummation of the Exchange Offers, holders of Old Debentures which remain
outstanding will not be entitled to any rights to have such Old Debentures
registered under the Securities Act or to any similar rights under the
Registration Agreement (subject to certain limited exceptions as described
herein). See "Description of the New Debentures -- Registration Agreement." The
Company does not intend to register under the Securities Act any Old Debentures
which remain outstanding after consummation of the Exchange Offer (subject to
such limited exceptions, if applicable). To the extent that Old Debentures are
tendered and accepted in the Exchange Offer, a holder's ability to sell
untendered Old Debentures could be adversely affected. See "The Exchange
Offers -- Consequences of Failure to Exchange Old Debentures."
ABSENCE OF PUBLIC MARKET
The Old Debentures were issued to, and the Company believes are currently
owned by, a relatively small number of beneficial owners. The Old Debentures
have not been registered under the Securities Act and will be subject to
restrictions on transferability to the extent that they are not exchanged for
the New Debentures. Although the New Debentures will generally be permitted to
be resold or otherwise transferred by the holders (who are not affiliates of the
Company) without compliance with the registration requirements under the
Securities Act, they will constitute a new issue of securities with no
established trading market. Any market-making activity will be subject to the
limits imposed by the Securities Act and the Exchange Act and may be limited
during the Exchange Offers. Accordingly, no assurance can be given that an
active public or other market will develop for the New Debentures or the Old
Debentures or as to the liquidity of or the trading market for New Debentures or
the Old Debentures. If an active public market does not develop, the market
price and liquidity of the New Debentures may be adversely affected.
If a public trading market for the New Debentures develops, future trading
prices of such securities will depend on many factors, including, among other
things, prevailing interest rates, results of operations and the market for
similar securities. Depending on prevailing interest rates, the market for
similar securities and other factors, including the financial condition of the
Company, the New Debentures may trade at a discount.
Notwithstanding the registration of the New Debentures in the Exchange
Offers, holders who are "affiliates" (as defined under Rule 405 of the
Securities Act) of the Company may publicly offer for sale or resell the New
Debentures only in compliance with the provisions of Rule 144 under the
Securities Act.
Each broker-dealer that receives New Debentures for its own account in
exchange for Old Debentures, where such Old Debentures were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such New Debentures. See "Plan of Distribution."
EXCHANGE OFFER PROCEDURES
Unless tenders are made by book-entry transfer, issuance of the New
Debentures in exchange for Old Debentures pursuant to the Exchange Offers will
be made only after a timely receipt by the Exchange Agent of such Old
Debentures, a properly completed and duly executed Letter of Transmittal and all
other required documents. Therefore, holders of the Old Debentures desiring to
tender such Old Debentures in exchange for New Debentures should allow
sufficient time to ensure timely delivery. Neither the Exchange Agent nor the
Company is under any duty to give notification of defects or irregularities with
respect to the tenders of Old Debentures for exchange.
USE OF PROCEEDS
The Company will not receive any proceeds from the Exchange Offers. On
February 10, 1997, the Company issued $150,000,000 principal amount of Old 2027
Debentures and $150,000,000 principal amount of Old 2097 Debentures (the
"Offering"). The Old Debentures were sold by the Company to Salomon Brothers Inc
(the "Initial Purchaser") and were in turn sold by the Initial Purchaser to a
limited number of qualified institutional buyers pursuant to Rule 144A under the
Securities Act and exemptions from applicable state securities laws, and the
Offering was not subject to the registration requirements of the Securities Act
and applicable state securities laws. The net proceeds from the sale of the Old
Debentures sold in the Offering were used to refinance a portion of the
Company's commercial paper outstanding.
12
<PAGE> 13
SUMMARY HISTORICAL FINANCIAL INFORMATION
The summary historical financial information presented below for the years
ended December 31, 1996, 1995, 1994, 1993 and 1992 and as of the end of each
such fiscal year is derived from the consolidated financial statements of the
Company, which have been audited by Ernst & Young LLP, independent auditors, and
should be read in conjunction with the information and audited consolidated
statements and related notes and Management's Discussion and Analysis of
Financial Condition and Results of Operations contained in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996. See also "Unaudited
Pro Forma Combined Condensed Financial Statements." The selected consolidated
financial data and related notes for and as of the three-month periods ended
March 31, 1997 and 1996 are unaudited and, in the opinion of the Company's
management, include all adjustments, consisting of normal recurring accruals,
necessary for a fair presentation of such information. Such unaudited
information should be read in conjunction with Management's Discussion and
Analysis of Financial Condition and Results of Operations and other information
and the consolidated financial statements contained in the Company's Quarterly
Report on Form 10-Q for the quarterly period ended March 31, 1997, which is
incorporated herein by reference. The financial summary information in the table
below does not reflect the financial results of the Company after March 31,
1997. See "Incorporation of Certain Documents by Reference."
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------- YEAR ENDED DECEMBER 31, (a)
MARCH 31, MARCH 31, ----------------------------------------------
1997 1996 1996 1995 1994 1993 1992
--------- --------- ------ ------ ------ ------ ------
(MILLIONS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Net Sales...................................... $ 1,070 $ 858 $4,133 $3,274 $3,100 $2,949 $2,748
Cost of goods sold............................. 626 520 2,405 1,877 1,773 1,697 1,589
Selling, general and administrative expenses... 388 300 1,309 1,075 1,018 981 915
Interest expense............................... 21 6 25 3 3 6 9
Interest and net investment income............. (3) (2) (7) (12) (8) (7) (5)
Other.......................................... 2 26 12 15 8 14
------ ------ ------ ------ ------ ------ ------
Income before income taxes and cumulative
effects of changes in accounting methods..... 38 32 375 319 299 264 226
Income taxes................................... 15 12 146 118 112 99 81
------ ------ ------ ------ ------ ------ ------
Income before cumulative effects of changes in
accounting methods........................... 23 20 229 201 187 165 145
------ ------ ------ ------ ------ ------ ------
Net income..................................... $ 23 $ 20 $ 229 $ 201 $ 187 $ 165 $ 63(b)
====== ====== ====== ====== ====== ====== ======
RATIO OF EARNINGS TO FIXED CHARGES (c)......... 1.8x 2.0x 3.9x 4.2x 4.1x 3.7x 3.4x
Other Data
EBITDA (d)..................................... $ 92 $ 62 $ 522 $ 399 $ 383 $ 340 $ 310
EBITDA as a percentage of sales................ 8.6% 7.2% 12.6% 12.2% 12.4% 11.5% 11.3%
Capital expenditures........................... $ 34 $ 32 $ 123 $ 108 $ 79 $ 63 $ 69
Return on sales (e)............................ 2.2% 2.3% 5.5% 6.1% 6.0% 5.6% 5.3%
Debt to capitalization (f)..................... 49.0 26.7 18.3 2.1 2.0 3.7 7.5
FINANCIAL POSITION
Total assets................................... $ 4,161 $ 2,732 $2,995 $2,141 $1,962 $1,915 $1,730
Working capital................................ 128 257 365 620 592 597 498
Long-term debt................................. 796 127 143 24 20 38 60
Shareholders' equity........................... 1,402 1,220 1,401 1,212 1,053 1,033 906
<FN>
- ---------------
(a) The Company has completed a number of acquisitions during the periods
presented. During 1995, 1996, and the first quarter of 1997, the Company
made many acquisitions of various sizes throughout North and South America,
including the acquisition of Pratt & Lambert in January 1996 and the
acquisition of Thompson Minwax in January 1997. Such acquisitions were
accounted for using the purchase method of accounting and may affect the
comparability of data on a year-to-year basis.
(b) Net income in 1992 includes the net additional annual expense and the
cumulative effects of changes in accounting methods related to the adoption
of Statement of Financial Accounting Standards (SFAS) No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions" and SFAS No.
109, "Accounting for Income Taxes", effective January 1, 1992.
(c) For purposes of computing such ratio, earnings consist of income before
income taxes and the cumulative effects of changes in accounting methods
plus fixed charges, and fixed charges consist of interest expense and gross
rent expense.
(d) "EBITDA" is defined as income before income taxes and cumulative effects of
changes in accounting methods plus interest expense, interest and net
investment income, depreciation, amortization and other. EBITDA is presented
solely as a supplement to the other information provided above. EBITDA is
not a substitute for operating and cash flow data as determined in
accordance with generally accepted accounting principles.
(e) For purposes of calculating return on sales, income before cumulative effect
of changes in accounting methods is divided by net sales.
(f) Debt includes short-term debt, current portion of long-term debt and
long-term debt. Capitalization includes debt and shareholders' equity.
</TABLE>
13
<PAGE> 14
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed balance sheet as of
December 31, 1996 combines the historical consolidated balance sheet information
of the Company and Thompson Minwax as if the Thompson Minwax Acquisition had
been consummated at December 31, 1996. The unaudited pro forma combined
condensed statement of income for the year ended December 31, 1996 combines the
historical consolidated income statement information of the Company and Thompson
Minwax as if the Thompson Minwax Acquisition had been consummated on January 1,
1996. The Thompson Minwax Acquisition is recorded under the purchase method of
accounting after giving effect to the pro forma adjustments and assumptions
described in the accompanying notes.
The pro forma financial statements have been prepared by management of the
Company based upon the historical information incorporated herein by reference
and other financial information. These pro forma statements do not purport to be
indicative of the results which would have occurred had the Thompson Minwax
Acquisition been made as of December 31, 1996 or on January 1, 1996 or which may
be expected to occur in the future. The pro forma statements should be read in
conjunction with the financial statements and notes thereto and Management's
Discussion and Analysis of Financial Condition and Results of Operations
included in the Annual Report on Form 10-K of the Company for the year ended
December 31, 1996, and the Consolidated Financial Statements of Thompson Minwax
which are contained in the Company's Current Report on Form 8-K dated January 7,
1997, both of which are incorporated herein by reference. See "Incorporation of
Certain Documents by Reference."
14
<PAGE> 15
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
THE SHERWIN-WILLIAMS COMPANY AND
THOMPSON MINWAX HOLDING CORP. AND SUBSIDIARIES
THOUSANDS OF DOLLARS
<TABLE>
<CAPTION>
DECEMBER 31, 1996
----------------------------------------------------------------
SHERWIN- THOMPSON PRO FORMA PRO FORMA
WILLIAMS MINWAX ADJUSTMENTS (h) COMBINED
---------- -------- ------------------------- ----------
DR CR
---------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents................. $ 1,880 $ 5,564 $ $ $ 7,444
Accounts receivable, less allowance....... 452,421 41,765 494,186
Finished goods.......................... 529,148
Work-in-process......................... 113,539
---------- ----------
Total inventories......................... 642,687 29,093 671,780
Other current assets...................... 319,199 7,222 326,421
---------- -------- ---------- ---------- ----------
Total current assets............... 1,416,187 83,644 0 0 1,499,831
Deferred pension assets..................... 254,376 254,376
Investment in Thompson Minwax............... 830,000(d) 830,538(g) 0
538(f)
Other assets, including goodwill and
deferred taxes............................ 774,636 641,083 530,446(g) 417,113(e) 1,549,637
20,585(c)
Property, plant and equipment............... 1,133,932 57,930 9,830(c) 1,182,032
Less allowances for depreciation and
amortization............................ 584,541 12,777 12,777(b) 584,541
---------- -------- ---------- ---------- ----------
549,391 45,153 12,777 9,830 597,491
---------- -------- ---------- ---------- ----------
Total assets................................ $2,994,590 $769,880 $1,394,345 $1,257,481 $3,901,335
========== ======== ========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable.......................... $ 385,928 $ 14,999 $ $ $ 400,927
Short-term borrowings..................... 168,001 830,000(d) 998,001
Other current liabilities................. 497,078 27,344 5,673(a) 538(f) 519,287
---------- -------- ---------- ---------- ----------
Total current liabilities.......... 1,051,007 42,343 5,673 830,538 1,918,215
Long-term debt.............................. 142,679 533,575 533,575(a) 142,679
Other long-term liabilities................. 399,672 39,537 439,209
Shareholders' equity:
Common stock, at par...................... 101,650 1 1(g) 101,650
Other capital............................. 203,223 176,693 176,693(g) 203,223
Retained earnings......................... 1,411,295 (23,002) 417,113(e) 539,248(a) 1,411,295
122,665(g) 12,777(b)
9,830(c) 20,585(c)
Cumulative foreign currency translation
adjustment................................ (18,982) 733 733(g) (18,982)
Treasury stock, at cost..................... (295,954) (295,954)
---------- -------- ---------- ---------- ----------
Total shareholders' equity.................. 1,401,232 154,424 727,035 572,610 1,401,232
---------- -------- ---------- ---------- ----------
Total liabilities and shareholders'
equity.................................... $2,994,590 $769,880 $1,266,283 $1,403,148 $3,901,335
========== ======== ========== ========== ==========
<FN>
- ---------------
(a) Remove net assets related to financing of Thompson Minwax.
(b) Remove accumulated depreciation of Thompson Minwax.
(c) Adjust fixed assets and intangibles balances to equal preliminary appraisal
amounts.
(d) Establish investment and record debt incurred to finance the acquisition.
(e) Eliminate goodwill previously recorded by Thompson Minwax.
(f) Record direct costs of acquisition.
(g) Eliminate investment and record initial goodwill based upon purchase price
less net book value of assets acquired.
(h) The majority of Thompson Minwax's assets and liabilities are included at
their historical values. Final appraisal values and purchase accounting
adjustments will not be available for several months.
</TABLE>
15
<PAGE> 16
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
THE SHERWIN-WILLIAMS COMPANY AND
THOMPSON MINWAX HOLDING CORP. AND SUBSIDIARIES
THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1996
----------------------------------------------------------------
SHERWIN- THOMPSON PRO FORMA PRO FORMA
WILLIAMS MINWAX ADJUSTMENTS (g) COMBINED
---------- -------- ------------------------- ----------
DR CR
---------- ----------
<S> <C> <C> <C> <C> <C>
Net sales................................... $4,132,879 $364,371 $ $ $4,497,250
Costs and expenses:
Cost of goods sold........................ 2,405,178 130,347 2,535,525
Selling, general and administrative
expenses.................................. 1,309,086 185,885 14,022(b) 11,208(a) 1,497,785
Interest expense (income)................. 17,718 50,374 58,100(d) 50,374(c) 80,137
4,319(e)
Other expense (income).................... 25,520 (1,456) 24,064
---------- -------- ------- ------- --------
3,757,502 365,150 76,441 61,582 4,137,511
---------- -------- ------- ------- --------
Income before income taxes.................. 375,377 (779) 359,739
Income taxes................................ 146,220 1,320 4,216(f) 143,324
---------- -------- ------- --------
Net income.................................. $ 229,157 $ (2,099) $ 216,415
========== ======== ========
Net income per share........................ $ 1.33 $ 1.25
========== ========
Average shares outstanding (in thousands)... 172,901 172,901
<FN>
- ---------------
(a) Remove goodwill amortization of Thompson Minwax related to L&F Products,
Inc.
(b) Record amortization of excess of purchase price over acquired net assets,
based on an estimated life of 40 years. Such amortization expenses is
subject to possible adjustment upon completion of Thompson Minwax appraisal
valuation.
(c) Remove interest expense of Thompson Minwax.
(d) Record additional estimated interest expense resulting from the end use of
debt to finance the acquisition.
(e) Remove interest income earned on short-term investments.
(f) Record tax effect, using a 35% statutory federal rate on the net
tax-deductible pro forma adjustments.
(g) The Company expects to achieve certain synergies in relation to the business
combination. Such synergies have not been directly identified, and thus are
not included in the above pro forma adjustments.
</TABLE>
16
<PAGE> 17
THE EXCHANGE OFFERS
The Old Debentures were sold by the Company on February 10, 1997 to the
Initial Purchaser, who in turn sold the Old Debentures to a limited number of
qualified institutional buyers pursuant to Rule 144A under the Securities Act.
In connection with the sale of the Old Debentures, the Company and the Initial
Purchaser entered into a registration agreement dated as of February 4, 1997
(the "Registration Agreement"), which requires the Company to file with the
Commission a registration statement under the Securities Act with respect to the
New Debentures of the Company identical in all material respects to the Old
Debentures, and to use its best efforts to cause such registration statement to
become effective under the Securities Act. The Company is further obligated,
upon the effectiveness of that registration statement, to offer the holders of
the Old Debentures the opportunity to exchange their Old Debentures for a like
principal amount of New Debentures, which will be issued without a restrictive
legend and may be reoffered and resold by the holder without restrictions or
limitations under the Securities Act. In the event certain circumstances occur
which would result in either the New Debentures not becoming freely tradeable or
certain holders of the Old Debentures not being eligible to participate in the
Exchange Offer, then the Company is required to file and use its best efforts to
cause the Old Debentures to be registered under the Securities Act. A copy of
the Registration Agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The Exchange Offers are being made
pursuant to the Registration Agreement to satisfy the Company's obligations
thereunder. The term "Holder" with respect to the Exchange Offers means any
person in whose name Old Debentures are registered on the Registrar's books or
any other person who has obtained a properly completed assignment from the
registered holder or any participant in The Depository Trust Company ("DTC")
system whose name appears on a security position listing as the holder of such
Old Debentures and who desires to deliver such Old Debentures by book-entry
transfer at DTC. See "Description of the New Debentures -- Registration
Agreement."
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the
Exchange Offers), the Company will accept for exchange Old Debentures which are
properly tendered on or prior to the Expiration Date and not withdrawn as
permitted below. As used herein, the term "Expiration Date" means 5:00 p.m., New
York City time, on June 30, 1997; provided, however, that if the Company, in its
sole discretion, has extended the period of time during which either or both of
the Exchange Offers are open, the term "Expiration Date" means the latest time
and date to which the applicable Exchange Offer is extended.
As of the date of this Prospectus, $150,000,000 aggregate principal amount
of the Old 2027 Debentures, and $150,000,000 aggregate principal amount of the
Old 2097 Debentures, are outstanding. This Prospectus, together with the Letter
of Transmittal, is first being sent on or about May 22, 1997 to all Holders of
Old Debentures known to the Company. The Company's obligation to accept Old
Debentures for exchange pursuant to the Exchange Offers is subject to certain
customary conditions as set forth under "-- Certain Conditions to the Exchange
Offers" below.
The Company expressly reserves the right, at any time or from time to time,
to extend the period of time during which either or both of the Exchange Offers
are open, and thereby delay acceptance for exchange of any Old Debentures, by
giving oral or written notice of such extension to the Holders thereof as
described below. During any such extension, all Old Debentures previously
tendered will remain subject to the Exchange Offers and may be accepted for
exchange by the Company. Any Old Debentures not accepted for exchange for any
reason will be returned without expense to the tendering Holder thereof as
promptly as practicable after the expiration or termination of the Exchange
Offers.
Old Debentures tendered in the Exchange Offers must be in denominations of
principal amount of $1,000 or any integral multiple thereof.
The Company expressly reserves the right to amend or terminate either or
both of the Exchange Offers, and not to accept for exchange any Old Debentures
not theretofore accepted for exchange, upon the occurrence of any of the
conditions of the Exchange Offers specified below under "-- Certain Conditions
to the Exchange Offers." The Company will give oral or written notice of any
extension, amendment, non-acceptance or termination to the Holders of the Old
Debentures as promptly as practicable, such notice in the
17
<PAGE> 18
case of any extension to be issued by means of a press release or other public
announcement no later than 9:00 a.m., New York City time, on the next business
day after the previously scheduled Expiration Date.
PROCEDURES FOR TENDERING OLD DEBENTURES
Only a Holder of Old Debentures may tender such Old Debentures in the
Exchange Offers. The tender to the Company of Old Debentures by a Holder thereof
as set forth below and the acceptance thereof by the Company will constitute a
binding agreement between the tendering Holder and the Company upon the terms
and subject to the conditions set forth in this Prospectus and in the
accompanying Letter of Transmittal. A Holder who wishes to tender Old Debentures
for exchange pursuant to either or both of the Exchange Offers must transmit a
properly completed and duly executed Letter of Transmittal, including all other
documents required by such Letter of Transmittal, to The Chase Manhattan Bank
(the "Exchange Agent") at the address set forth below under "-- Exchange Agent"
or (in the case of a book-entry transfer) an Agent's Message in lieu of the
Letter of Transmittal on or prior to the Expiration Date. In addition, either
(i) certificates for such Old Debentures must be received by the Exchange Agent
along with the Letter of Transmittal, (ii) a timely confirmation of a book-entry
transfer (a "Book-Entry Confirmation") of such Old Debentures, if such procedure
is available, into the Exchange Agent's account at The Depository Trust Company
(the "Book-Entry Transfer Facility") pursuant to the procedure for book-entry
transfer described below, must be received by the Exchange Agent prior to the
Expiration Date, or (iii) the Holder must comply with the guaranteed delivery
procedures described below. THE METHOD OF DELIVERY OF OLD DEBENTURES, LETTERS OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE
HOLDERS. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL,
PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF
TRANSMITTAL OR CERTIFICATES FOR OLD DEBENTURES SHOULD BE SENT TO THE COMPANY.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to and received by the Exchange Agent and forming a part of a
Book-Entry Confirmation, which states that DTC has received an express
acknowledgment from the tendering Participant, which acknowledgment states that
such Participant has received and agrees to be bound by the Letter of
Transmittal and that the Company may enforce the Letter of Transmittal against
such Participant.
Any beneficial owner whose Old Debentures are registered in the name of a
broker, dealer, commercial bank, trust company, or other nominee and who wishes
to tender should contact the registered Holder promptly and instruct such
registered Holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's behalf, such owner must, prior
to completing and executing the Letter of Transmittal and delivering such
owner's Old Debentures, either make appropriate arrangements to register
ownership of the Old Debentures in such beneficial owner's name or obtain a
properly completed bond power from the registered Holder. The transfer of
registered ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal described
below (see "-- Withdrawal Rights"), as the case may be, must be guaranteed (see
"-- Guaranteed Delivery Procedures") unless the Old Debentures surrendered for
exchange pursuant thereto are tendered (i) by a registered Holder of the Old
Debentures who has not completed the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution (as defined below). In the event
that signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, are required to be guaranteed, such guaranties must be by a
financial institution (including most banks, savings and loan associations and
brokerage houses) that is a participant in the Securities Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Program or the Stock
Exchanges Medallion Program (collectively, "Eligible Institutions"). If Old
Debentures are registered in the name of a person other than a signer of the
Letter of Transmittal, the Old Debentures surrendered for exchange must be
endorsed by or be accompanied by a written instrument or instruments of transfer
or exchange, in satisfactory form as determined by the Company in its sole
discretion, duly executed by the registered Holder exactly as the name
18
<PAGE> 19
or names of the registered Holder or Holders appear on the Old Debentures with
the signature thereon guaranteed by an Eligible Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Old Debentures tendered for exchange will be
determined by the Company in its sole discretion, which determination shall be
final and binding. The Company reserves the absolute right to reject any and all
tenders of any particular Old Debentures not properly tendered or not to accept
any particular Old Debentures which acceptance might, in the judgment of the
Company or its counsel, be unlawful. The Company also reserves the absolute
right to waive any defects or irregularities or conditions of the Exchange
Offers as to any particular Old Debentures either before or after the Expiration
Date (including the right to waive the ineligibility of any Holder who seeks to
tender Old Debentures in the Exchange Offers). The interpretation of the terms
and conditions of the Exchange Offers as to any particular Old Debentures either
before or after the Expiration Date (including the Letter of Transmittal and the
instructions thereto) by the Company shall be final and binding on all parties.
Unless waived, any defects or irregularities in connection with tenders of Old
Debentures for exchange must be cured within such reasonable period of time as
the Company shall determine. None of the Company, the Exchange Agent or any
other person shall be under any duty to give notification of any defect or
irregularity with respect to any tender of Old Debentures for exchange, nor
shall any of them incur any liability for failure to give such notification.
If the Letter of Transmittal or any Old Debentures or powers of attorney
are signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such person should so indicate when signing and, unless waived by the
Company, proper evidence satisfactory to the Company of their authority to so
act must be submitted with the Letter of Transmittal.
By tendering, each Holder will represent to the Company that, among other
things, the New Debentures acquired pursuant to the Exchange Offers are being
obtained in the ordinary course of business of the person receiving such New
Debentures, whether or not such person is the Holder, and that neither the
Holder nor such other person has any arrangement or understanding with any
person to participate in the distribution of the New Debentures. If any Holder
or any such other person is an "affiliate," as defined under Rule 405 of the
Securities Act, of the Company or is engaged in or intends to engage in, or has
an arrangement or understanding with any person to participate in, a
distribution of such New Debentures to be acquired pursuant to the Exchange
Offers, such Holder or any such other person (i) may not rely on the applicable
interpretation of the staff of the Commission and (ii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. Each broker-dealer that receives New
Debentures for its own account in exchange for Old Debentures, where such Old
Debentures were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such New Debentures. See "Plan of Distribution." The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
ACCEPTANCE OF OLD DEBENTURES FOR EXCHANGE; DELIVERY OF NEW DEBENTURES
Upon satisfaction or waiver of all of the conditions to the Exchange
Offers, the Company will accept, promptly after the Expiration Date, all Old
Debentures properly tendered and will issue the New Debentures promptly after
acceptance of the Old Debentures. See "-- Certain Conditions to the Exchange
Offers" below. For purposes of the Exchange Offers, the Company will be deemed
to have accepted properly tendered Old Debentures for exchange when, as and if
the Company has given oral (promptly confirmed in writing) or written notice
thereof to the Exchange Agent.
For each Old Debenture accepted for exchange, the Holder of such Old
Debentures will receive as set forth below under "Description of the New
Debentures -- Book-Entry, Delivery and Form" a New Debenture having a principal
amount equal to that of the surrendered Old Debenture. Accordingly, registered
Holders of New Debentures on the relevant record date for the first interest
payment date following the consummation of
19
<PAGE> 20
the Exchange Offers will receive interest accruing from the most recent date to
which interest has been paid on the Old Debentures or, if no interest has been
paid, from February 10, 1997. Old Debentures accepted for exchange will cease to
accrue interest from and after the date of consummation of the Exchange Offers.
Holders whose Old Debentures are accepted for exchange will not receive any
payment in respect of accrued interest on such Old Debentures otherwise payable
on any interest payment date the record date for which occurs on or after
consummation of the Exchange Offers. If neither this Registration Statement is
declared effective nor the Shelf Registration Statement is filed on or prior to
August 9, 1997, the annual interest rate borne by the Old Debentures will be
increased by 0.25%. If the Exchange Offers are not consummated and the Shelf
Registration Statement is not declared effective by September 8, 1997, the
annual interest rate borne by the Old Debentures will be increased by an
additional 0.25%. If the annual interest rate borne by the Old Debentures shall
have been increased by reason of the circumstances described in one or both of
the two proceeding sentences, upon (i) the declaration that this Registration
Statement is effective or a Shelf Registration Statement is filed at any time
after August 9, 1997, the previously increased annual interest rate borne by the
Old Debentures will be decreased by 0.25%, and (ii) the consummation of the
Exchange Offers or the effectiveness of the Shelf Registration Statement at any
time after September 8, 1997, the annual interest rates on the Old Debentures
will revert to the annual interest rates set forth on the cover page of this
Prospectus. See "Description of the New Debentures -- Registration Agreement."
Old Debentures not tendered or not accepted for exchange will continue to accrue
interest from and after the date of consummation of the Exchange Offers.
In all cases, issuance of New Debentures for Old Debentures that are
accepted for exchange pursuant to the Exchange Offers will be made only after
timely receipt by the Exchange Agent of certificates for such Old Debentures or
a timely Book-Entry Confirmation of such Old Debentures into the Exchange
Agent's account at the Book-Entry Transfer Facility, a properly completed and
duly executed Letter of Transmittal or an Agent's Message in lieu thereof and
all other required documents. If any tendered Old Debentures are not accepted
for any reason set forth in the terms and conditions of the Exchange Offers or
if Old Debentures are submitted for a greater principal amount than the Holder
desires to exchange, such unaccepted or non-exchanged Old Debentures will be
returned without expense to the tendering Holder thereof (or, in the cases of
Old Debentures tendered by book-entry transfer into the Exchange Agent's account
at the Book-Entry Transfer Facility pursuant to the book-entry procedures
described below, such non-exchanged Old Debentures will be credited to an
account maintained with such Book-Entry Transfer Facility) as promptly as
practicable after the expiration or termination of the Exchange Offers.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Debentures at the Book-Entry Transfer Facility for purposes of the
Exchange Offers within two business days after the date of this Prospectus
unless the Exchange Agent already has established an account with the Book-Entry
Transfer Facility suitable for the Exchange Offers, and any financial
institution that is a participant in the Book-Entry Transfer Facility's systems
may make book-entry delivery of Old Debentures by causing the Book-Entry
Transfer Facility to transfer such Old Debentures into the Exchange Agent's
account at the Book-Entry Transfer Facility in accordance with such Book-Entry
Transfer Facility's procedures for transfer. However, although delivery of Old
Debentures may be effected through book-entry transfer at the Book-Entry
Transfer Facility, the Letter of Transmittal or a facsimile thereof, with any
required signature guarantees or an Agent's Message in lieu thereof and any
other required documents, must, in any case, be transmitted to and received by
the Exchange Agent at the addresses set forth below under "-- Exchange Agent" on
or prior to the Expiration Date or the guaranteed procedures described below
must be complied with.
GUARANTEED DELIVERY PROCEDURES
If a registered Holder of the Old Debentures desires to tender such Old
Debentures and time will not permit such Holder's Old Debentures or other
required documents to reach the Exchange Agent before the Expiration Date, or
the procedure for book-entry transfer cannot be completed on a timely basis, a
tender may be effected if (i) the tender is made through an Eligible
Institution, (ii) on or prior to 5:00 p.m., New York
20
<PAGE> 21
City time, on the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Company (by telegram, telex,
facsimile transmission, mail or hand delivery), setting forth the name and
address of the Holder of Old Debentures and the amount of Old Debentures
tendered, stating that the tender is being made thereby and guaranteeing that
within three New York Stock Exchange ("NYSE") trading days after the date of
execution of the Notice of Guaranteed Delivery, the certificates for all
physically tendered Old Debentures, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, together with a properly completed and duly
executed Letter of Transmittal (or facsimile thereof or Agent's Message in lieu
thereof) with any required signature guarantees and any other documents required
by the Letter of Transmittal will be deposited by the Eligible Institution with
the Exchange Agent, and (iii) the certificates for all physically tendered Old
Debentures, in proper form for transfer, or a Book-Entry Confirmation, as the
case may be, together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof or Agent's Message in lieu thereof) with any
required signature guarantees, and any other documents required by the Letter of
Transmittal will be deposited by the Eligible Institution within three NYSE
trading days after the date of execution of the Notice of Guaranteed Delivery.
WITHDRAWAL RIGHTS
Tenders of Old Debentures may be withdrawn at any time prior to 5:00 p.m.,
New York City time, on the Expiration Date. For a withdrawal to be effective, a
written notice or facsimile transmission notice of withdrawal must be received
by the Exchange Agent at the address set forth below under "-- Exchange Agent."
Any such notice of withdrawal must specify the name of the person having
tendered the Old Debentures to be withdrawn, identify the Old Debentures to be
withdrawn (including the principal amount of such Old Debentures), and (where
certificates for Old Debentures have been transmitted) specify the name in which
such Old Debentures are registered, if different from that of the withdrawing
Holder. If certificates for Old Debentures have been delivered or otherwise
identified to the Exchange Agent, then, prior to the release of such
certificates the withdrawing Holder must also submit the serial numbers of the
particular certificates to be withdrawn and a signed notice of withdrawal with
signatures guaranteed by an Eligible Institution unless such Holder is an
Eligible Institution in which case such guarantee will not be required. If Old
Debentures have been tendered pursuant to the procedure for book-entry transfer
described above, any notice of withdrawal must specify the name and number of
the account at the Book-Entry Transfer Facility to be credited with the
withdrawn Old Debentures and otherwise comply with the procedures of such
facility. All questions as to the validity, form and eligibility (including time
of receipt) of such notices will be determined by the Company, whose
determination will be final and binding on all parties. Any Old Debentures so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offers. Any Old Debentures which have been tendered for
exchange but which are not exchanged for any reason will be returned to the
Holder thereof without cost to such Holder (or, in the case of Old Debentures
tendered by book-entry transfer into the Exchange Agent's account at the
Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described above, such Old Debentures will be credited to an account maintained
with such Book-Entry Transfer Facility for the Old Debentures) as soon as
practicable after withdrawal, rejection of tender or termination of the Exchange
Offers. Properly withdrawn Old Debentures may be retendered by following one of
the procedures described under "-- Procedures for Tendering Old Debentures"
above at any time on or prior to the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFERS
Notwithstanding any other provisions of the Exchange Offers, and subject to
its obligations pursuant to the Registration Agreement, the Company shall not be
required to accept for exchange, or to issue New Debentures in exchange for, any
Old Debentures and may terminate or amend either or both of the Exchange Offers,
if at any time before the acceptance of such New Debentures for exchange, any of
the following events shall occur:
21
<PAGE> 22
(i) any injunction, order or decree shall have been issued by any
court or any governmental agency that would prohibit, prevent or otherwise
materially impair the ability of the Company to proceed with either of the
respective Exchange Offers; or
(ii) the Exchange Offers will violate any applicable law or any
applicable interpretation of the staff of the Commission.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company in whole or in part at any time and from time to time
upon advice of outside counsel. The failure by the Company at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and such right shall be deemed an ongoing right which may be asserted at
any time and from time to time.
In addition, the Company will not accept for exchange any Old Debentures
tendered and no New Debentures will be issued in exchange for any such Old
Debentures, if at such time any stop order is threatened by the Commission or in
effect with respect to the Registration Statement of which this Prospectus is a
part or the qualification of the Indenture under the Trust Indenture Act of
1939, as amended.
The Exchange Offer is not conditioned on any minimum principal amount of
Old Debentures being tendered for exchange.
EXCHANGE AGENT
The Chase Manhattan Bank has been appointed as the Exchange Agent for the
Exchange Offers. All executed Letters of Transmittal should be directed to the
Exchange Agent at the address set forth below. Questions and requests for
assistance, requests for additional copies of this Prospectus or of the Letter
of Transmittal and requests for Notices of Guaranteed Delivery should be
directed to the Exchange Agent addressed as follows:
The Chase Manhattan Bank, Exchange Agent
By Mail, Overnight Courier or Hand Delivery:
55 Water Street
Room 234, North Building
New York, New York 10041
Attention: Luis Padilla
By Facsimile:
212-638-7380
212-638-7381
Confirm by Telephone
212-638-0458
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF TRANSMITTAL.
FEES AND EXPENSES
The Company will not make any payment to brokers, dealers, or others
soliciting acceptances of the Exchange Offers.
The cash expenses to be incurred in connection with the Exchange Offers
will be paid by the Company. Such expenses include registration fees, fees and
expenses of the Exchange Agent and Trustee, accounting and legal fees and
printing costs, among others.
TRANSFER TAXES
Holders who tender their Old Debentures for exchanges will not be obligated
to pay any transfer taxes in connection therewith, except that Holders who
instruct the Company to register New Debentures in the name
22
<PAGE> 23
of, or request that Old Debentures not tendered or not accepted in the Exchange
Offers be returned to, a person other than the registered tendering Holder will
be responsible for the payment of the applicable transfer tax thereon.
CONSEQUENCES OF FAILURE TO EXCHANGE OLD DEBENTURES
Holders of Old Debentures who do not exchange their Old Debentures for New
Debentures pursuant to the Exchange Offers will continue to be subject to the
provisions in the Old Debentures regarding transfer and exchange of the Old
Debentures and the restrictions on transfer of such Old Debentures as set forth
in the legend thereon as a consequence of the issuance of the Old Debentures
pursuant to exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws. In
general, the Old Debentures may not be offered or sold, unless registered under
the Securities Act and applicable state securities laws. The Company does not
currently anticipate that it will register Old Debentures under the Securities
Act. See "Description of the New Debentures -- Registration Agreement."
Based on interpretations by the staff of the Commission, as set forth in
no-action letters issued to third parties, the Company believes that New
Debentures issued pursuant to the Exchange Offers in exchange for Old Debentures
may be offered for resale, resold or otherwise transferred by Holders thereof
(other than any such holder which is an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such New Debentures are acquired in the ordinary course or such Holders'
business and such Holders, other than broker-dealers, have no arrangement or
understanding with any person to participate in the distribution of such New
Debentures. However, the Commission has not considered the Exchange Offers in
the context of a no-action letter and there can be no assurance that the staff
of the Commission would make a similar determination with respect to the
Exchange Offers as in such other circumstances. Each Holder, other than a
broker-dealer, must acknowledge that it is not engaged in, and does not intend
to engage in, a distribution of such New Debentures and has no arrangement or
understanding to participate in a distribution of New Debentures. If any Holder
is an affiliate of the Company or is engaged in or intends to engage in or has
any arrangements or understanding with respect to the distribution of the New
Debentures to be acquired pursuant to the Exchange Offers, such Holder (i) may
not rely on the applicable interpretations of the staff of the Commission and
(ii) must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale transaction. Each broker-dealer
that receives New Debentures for its own account in exchange for Old Debentures
pursuant to the Exchange Offers must acknowledge that such Old Debentures were
acquired by such broker-dealer as a result of market-making activities or other
trading activities and that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such New
Debentures. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented form time to time, may be used by a
broker-dealer in connection with resales of New Debentures received in exchange
for Old Debentures where such Old Debentures were acquired by such broker-dealer
as a result of market-making activities or other trading activities. The Company
has agreed that for a period of 180 days after the Expiration Date, it will make
this Prospectus available to any broker-dealer for use in connection with any
such laws of certain jurisdictions, if applicable, where the New Debentures may
not be offered or sold unless they have been registered or qualified for sale in
such jurisdictions or any exemption from registration or qualification is
available and is complied with. The Company has agreed, pursuant to the
Registration Agreement, subject to certain limitations specified therein, to
register or qualify the New Debentures for offer or sale under the securities
laws of such jurisdictions as any Holder reasonably requests in writing. Unless
a Holder so requests, the Company does not currently intend to register or
qualify the sale of the New Debentures in any such jurisdictions.
23
<PAGE> 24
DESCRIPTION OF THE NEW DEBENTURES
GENERAL
The Old Debentures were issued under the Indenture and the New Debentures
also will be issued under the Indenture. The Old Debentures and the New
Debentures will be treated as a single class of securities under the Indenture.
The following summary of certain provisions of the Indenture does not purport to
be complete and is subject to, and is qualified in its entirety by reference to,
all the provisions of the Indenture, including the definitions of certain terms
therein and those terms made a part thereof by the Trust Indenture Act of 1939,
as amended. A copy of the Indenture is available from the Company upon request.
Whenever defined terms of the Indenture not otherwise defined herein are
referred to, such defined terms are incorporated herein by reference. The term
"Debentures" means the New Debentures and the Old Debentures treated as a single
class.
The Indenture does not limit the aggregate principal amount of securities
that can be issued thereunder. Securities may be issued in one or more series as
may be authorized from time to time by the Company. (Section 2.03.)
As long as the Debentures are represented by one or more Global Securities
(see "-- Book-Entry, Delivery and Form"), all payments of interest will be made
by the Company in immediately available funds. Otherwise, subject to certain
exceptions, payments of interest on the Debentures will be made by check mailed
to the Holders of such Debentures.
The Debentures may be transferred or exchanged at the office of the Trustee
at which its corporate trust business is principally administered in the United
States or at the office of the Trustee or the Trustee's agent in the Borough of
Manhattan, the City and State of New York, at which its corporate agency
business is conducted, subject to the limitations provided in the Indenture,
without the payment of any service charge, other than any tax or governmental
charge payable in connection therewith. (Section 2.07.)
All funds paid by the Company to a paying agent for the payment of
principal, premium, if any, or interest with respect to any Debentures that
remain unclaimed at the end of two years after such principal, premium, or
interest shall have become due and payable will be repaid to the Company, and
the holders of such Debentures will thereafter look only to the Company for
payment thereof.
CERTAIN TERMS OF THE DEBENTURES
Each of the 2027 Debentures and the 2097 Debentures will be limited to
$150,000,000 aggregate principal amount.
Maturity. The 2027 Debentures will mature on February 1, 2027; the 2097
Debentures will mature on February 1, 2097.
Interest. The Debentures will bear interest from February 10, 1997,
payable semiannually in arrears on February 1 and August 1 of each year,
commencing August 1, 1997, to the persons who are registered holders at the
close of business on January 15 and July 15 immediately preceding the interest
payment date. If an interest payment date would otherwise be a day that is not a
Business Day, such interest payment date shall not be postponed; provided,
however, that any payment required to be made on such date that is not a
Business Day need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on such date,
and no additional interest shall accrue as a result of such delayed payment.
RANKING
The Debentures will be senior securities of the Company and the
indebtedness evidenced thereby will rank pari passu with all other
unsubordinated and unsecured indebtedness of the Company.
24
<PAGE> 25
OPTIONAL REDEMPTION
Each of the 2027 Debentures and the 2097 Debentures will be redeemable as a
whole or in part, at the option of the Company at any time, at a redemption
price equal to the greater of (i) 100% of the principal amount of each such
Debenture to be redeemed and (ii) the sum of the present values of the Remaining
Scheduled Payments thereon discounted to the redemption date on a semiannual
basis (assuming a 360-day year consisting of twelve 30-day months) at the
Treasury Rate plus, in the case of the 2027 Debentures, 10 basis points and, in
the case of the 2097 Debentures, 15 basis points, plus, in either case, accrued
interest on the principal amount being redeemed to the date of redemption.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual 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.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Reference Treasury Dealer as having a maturity comparable to the
remaining term of such Debentures 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 Debentures.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such business day, (A) the average
of the Reference Treasury Dealer Quotations for such redemption date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations, or
(B) if the Trustee obtains fewer than four such Reference Treasury Dealer
Quotations, the average of all such Quotations. "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. on the third business day preceding such redemption
date.
"Reference Treasury Dealer" means Salomon Brothers Inc and its successor;
provided, however, that if the foregoing shall cease to be a primary U.S.
Government securities dealer in New York City (a "Primary Treasury Dealer"), the
Company shall substitute therefor another Primary Treasury Dealer.
"Remaining Scheduled Payments" means, with respect to any such Debenture,
the remaining scheduled payments of the principal thereof to be redeemed and
interest thereon that would be due after the related redemption date but for
such redemption; provided, however, that, if such redemption date is not an
interest payment date with respect to such Debenture, the amount of the next
succeeding scheduled interest payment thereon will be reduced by the amount of
interest accrued thereon to 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 any such Debentures to be
redeemed.
Unless the Company defaults in payment of the redemption price, on and
after the redemption date interest will cease to accrue on such Debentures or
portions thereof called for redemption.
CONDITIONAL RIGHT TO SHORTEN MATURITY OF 2097 DEBENTURES; CERTAIN FEDERAL INCOME
TAX CONSIDERATIONS RELATING TO THE 2097 DEBENTURES
The Company intends to deduct interest paid on the Debentures for Federal
income tax purposes. However, the Clinton Administration's budget proposal for
Fiscal Year 1998, released on February 6, 1997, contained a series of proposed
tax law changes that, among other things, would prohibit an issuer from
deducting interest payments on debt instruments with a maximum weighted average
maturity of more than
25
<PAGE> 26
40 years. This proposal would be effective generally for instruments issued on
or after the date of first Congressional committee action relating thereto.
However, it is not clear from the proposal as to what constitutes "Congressional
committee action" with respect to the proposal. There can be no assurance that
this proposal or similar legislation affecting the Company's ability to deduct
interest paid on the 2097 Debentures will not be enacted in the future or that
any such legislation would not have a retroactive effective date.
In addition, under existing general tax law principles, the Internal
Revenue Service or a court might take the position that debt instruments that do
not mature for a very long time (for example, debt instruments like the 2097
Debentures that mature in 100 years) should not be treated as debt for Federal
income tax purposes, but rather as equity. The Company believes that, based on
the factors applied under existing general tax law principles, the 2097
Debentures are valid debt, the Company can deduct interest payments thereon, and
holders should treat such payments as interest. If, however, the 2097 Debentures
were to be treated as equity, the Company would not be able to deduct interest
payments thereon, and holders would be required to treat such payments as
dividends (or other distributions on equity) and not as interest.
Accordingly, upon occurrence of a Tax Event, as defined below, including,
without limitation, as a result of the circumstances described in the first two
paragraphs of this section, the Company will have the right to shorten the
maturity of the 2097 Debentures to the extent required, in the opinion of a
nationally recognized independent tax counsel, such that, after the shortening
of the maturity, interest paid on the 2097 Debentures will be deductible for
Federal income tax purposes. There can be no assurance that the Company would
not exercise its right to shorten the maturity of the 2097 Debentures upon the
occurrence of such a Tax Event.
"Tax Event" means that the Company shall have received an opinion of a
nationally recognized independent tax counsel to the effect that on or after the
date of the issuance of the 2097 Debentures, as a result of (a) any amendment
to, clarification of, or change (including any announced prospective change) in
laws, or any regulations thereunder, of the United States, (b) any judicial
decision, official administrative pronouncement, ruling, regulatory procedure,
notice or announcement, including any notice or announcement of intent to adopt
such procedures or regulations (an "Administrative Action"), or (c) any
amendment to, clarification of, or change in the official position or the
interpretation of such Administrative Action or judicial decision that differs
from the theretofore generally accepted position, in each case, on or after, the
date of the issuance of the 2097 Debentures, such change in tax law creates a
more than insubstantial risk that interest paid by the Company on the 2097
Debentures is not, or will not be deductible, in whole or in part, by the
Company for purposes of United States Federal income tax.
In the event that the Company elects to exercise its right to shorten the
maturity of the 2097 Debentures on the occurrence of a Tax Event, the Company
will mail a notice of shortened maturity to each holder of record of the 2097
Debentures by first-class mail not more than 60 days after the occurrence of
such Tax Event, stating the new maturity date of the 2097 Debentures. Such
notice shall be effective immediately upon mailing.
If the 2097 Debentures constitute indebtedness for Federal income tax
purposes under the law applicable at the time the Company exercises its right to
shorten the maturity of the 2097 Debentures, such exercise would not be a
taxable event to holders. Prospective investors should be aware, however, that
the Company's exercise of its right to shorten the maturity of the 2097
Debentures will be a taxable event to holders if the 2097 Debentures are treated
as equity for purposes of Federal income taxation under the law applicable when
the maturity is shortened, assuming that the 2097 Debentures of shortened
maturity are treated as debt for such purposes.
Should the 2097 Debentures be treated as equity for Federal income tax
purposes, some holders of the 2097 Debentures may be adversely impacted from a
Federal income tax perspective. For example (and without limiting the potential
holders who might be adversely affected), if the 2097 Debentures are so treated
as equity and payments on the 2097 Debentures are therefore treated as
dividends, in the case of non-U.S. holders of the 2097 Debentures such dividends
would under current law be subject to U.S. withholding tax at a 30% rate or, if
applicable, at a lower rate prescribed by treaty, whereas under current law
interest for many non-U.S. holders is exempt from U.S. withholding tax.
26
<PAGE> 27
CERTAIN COVENANTS OF THE COMPANY
Limitation on Liens
The Company and its Restricted Subsidiaries will not create any Liens
unless the Debentures then outstanding are equally and ratably secured, with
certain exceptions, including but not limited to: (a) pledges or deposits under
worker's compensation laws, unemployment insurance laws or similar legislation,
or good faith deposits in connection with bids, tenders, contracts (including
government contracts, but excluding contracts for the payment of indebtedness)
or other obligations of like nature, in each case incurred in the ordinary
course of business, (b) statutory and tax Liens for sums not yet due or
delinquent or being contested in good faith by appropriate proceedings, (c)
certain encumbrances and easements, (d) Liens existing at the date of the
Indenture, (e) Liens securing only Indebtedness of a Wholly Owned Subsidiary of
the Company to the Company or one or more Wholly Owned Subsidiaries of the
Company, (f) Purchase Money Liens, (g) Liens on property or shares of stock of
another Person at the time such other Person becomes a Subsidiary of such
Person, provided that such Liens are not created in connection with such other
Person becoming a Subsidiary of such Person, (h) Liens securing a Hedging
Obligation, (i) Liens created in connection with a tax-free financing, (j) Liens
resulting from the deposit of funds or evidences of Indebtedness in trust for
the purpose of decreasing Indebtedness of the Company or any of its
Subsidiaries, (k) rights of a common owner of any interest in property, (l)
Liens placed upon any real property owned or acquired by the Company or any of
its Subsidiaries securing Indebtedness in an amount up to 80% of the fair market
value of such real property, (m) Liens to secure any refinancing, refunding,
extension, renewal or replacement of any Indebtedness secured by certain
permitted Liens, and (n) additional Liens not to exceed a total of 15% of
Consolidated Net Tangible Assets. (Section 4.07.)
Limitation on Sale/Leaseback Transactions
The Company and its Restricted Subsidiaries shall not enter into any
Sale/Leaseback Transaction with respect to any Principal Property unless (i) the
Company or such Restricted Subsidiary would be entitled to create a Lien on such
Principal Property securing Indebtedness in an amount equal to the Attributable
Indebtedness with respect to such Sale/Leaseback Transaction without securing
the Debentures pursuant to the provisions described above under "Limitation on
Liens" or (ii) the Company, within six months from the effective date of such
Sale/Leaseback Transaction, applies an amount equal to the Attributable
Indebtedness with respect to such Sale/Leaseback Transaction to the voluntary
defeasance or retirement of Debentures or other Indebtedness ranking pari passu
with the Debentures; provided that the foregoing will not prevent the Company or
any Restricted Subsidiary from (x) entering into any Sale/Leaseback Transaction
involving a lease with a term of less than three years or (y) entering into any
Sale/Leaseback Transaction between the Company and a Restricted Subsidiary or
between Restricted Subsidiaries. (Section 4.08.)
Limitation on Consolidations and Mergers
The Company shall not consolidate with or merge into, or sell, convey,
transfer, lease or otherwise dispose of all or substantially all of its assets
(in one transaction or a series of related transactions) to another entity
unless such entity is a corporation that assumes all the obligations under the
Debentures and the Indenture and certain other conditions are met (whereupon all
such obligations of the Company shall terminate). (Section 10.01.)
EVENTS OF DEFAULT AND REMEDIES
The following events are defined in the Indenture as "Events of Default"
with respect to the 2027 Debentures and the 2097 Debentures, as the case may be
(Section 6.01.):
(a) Default in the payment of any installment of interest on any such
Debenture, as and when the same shall become due and payable and
continuance of such default for a period of 30 days;
27
<PAGE> 28
(b) Default in the payment of all or any part of the principal or
premium with respect to any such Debenture as and when the same shall
become due and payable, whether at maturity, upon redemption, by
declaration, upon required repurchase, or otherwise;
(c) Failure on the part of the Company to comply with the provisions
of the Indenture relating to consolidations, mergers, and sales of assets;
(d) Failure on the part of the Company duly to observe or perform any
other of the covenants or agreements on the part of the Company in such
Debentures, in the Indenture with respect to such Debentures, or in any
supplemental indenture with respect to such Debentures (other than
covenants or agreements included solely by or for the benefit of Debt
Securities thereunder other than such Debentures) continuing for a period
of 90 days after the date on which written notice specifying such failure
and requiring the Company to remedy the same and stating that such notice
is a "Notice of Default" hereunder shall have been given to the Company by
the Trustee or to the Company and the Trustee by the holders of at least
25% in aggregate principal amount of such Debentures at the time
outstanding;
(e) The Company or any of its "Significant Subsidiaries" (defined as
any subsidiary of the Company that would be a "significant subsidiary" as
defined in Rule 405 under the Securities Act as in effect on the date of
the Indenture) shall (1) voluntarily commence any proceeding or file any
petition seeking relief under the United States Bankruptcy Code or other
federal or state bankruptcy, insolvency, or similar law, (2) consent to the
institution of, or fail to controvert within the time and in the manner
prescribed by law, any such proceeding or the filing of any such petition,
(3) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, or similar official for the Company or any such
Significant Subsidiary or for a substantial part of its property, (4) file
an answer admitting the material allegations of a petition filed against it
in any such proceeding, (5) make a general assignment for the benefit of
creditors, (6) admit in writing its inability or fail generally to pay its
debts as they become due, (7) take corporate action for the purpose of
effecting any of the foregoing, or (8) take any comparable action under any
foreign laws relating to insolvency of the Company or any Significant
Subsidiary;
(f) The entry of an order or decree by a court having competent
jurisdiction for (I) relief with respect to the Company or any of its
Significant Subsidiaries or a substantial part of any of their property
under the United States Bankruptcy Code or any other federal or state
bankruptcy, insolvency, or similar law, (2) the appointment of a receiver,
trustee, custodian, sequestrator, or similar official for the Company or
any such Significant Subsidiary or for a substantial part of any of their
property (except any decree or order appointing such official of any
Significant Subsidiary pursuant to a plan under which the assets and
operations of such Significant Subsidiary are transferred to or combined
with another Subsidiary or Subsidiaries of the Company or to the Company),
or (3) the winding-up or liquidation of the Company or any such Significant
Subsidiary (except any decree or order approving or ordering the winding-up
or liquidation of the affairs of a Significant Subsidiary pursuant to a
plan under which the assets and operations of such Significant Subsidiary
are transferred to or combined with another Subsidiary or Subsidiaries of
the Company or to the Company), and such order or decree shall continue
unstayed and in effect for 60 consecutive days, or any similar relief is
granted under any foreign laws and the order or decree stays in effect for
60 consecutive days.
If an Event of Default described in clause (a), (b), (c), (d), (e) (other
than with respect to the Company) or (f) (other than with respect to the
Company) above occurs and is continuing with respect to the 2027 Debentures or
the 2097 Debentures, unless the principal and interest with respect to all such
Debentures shall have already become due and payable, either the Trustee or the
holders of not less than 25% in aggregate principal amount of such Debentures
then outstanding may declare the principal amount of and interest on such
Debentures due and payable immediately. If an Event of Default described in
clause (e) or (f) (in each case with respect to the Company) above occurs,
unless the principal and interest with respect to all such Debentures shall have
become due and payable, the principal amount of and interest on such Debentures
then outstanding shall become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any holder of such
Debentures. (Section 6.01.)
28
<PAGE> 29
If an Event of Default occurs and is continuing with respect to the 2027
Debentures or the 2097 Debentures, the Trustee shall be entitled and empowered
to institute any action or proceeding for the collection of the sums so due and
unpaid or to enforce the performance of any provisions of such Debentures or the
Indenture, to prosecute any such action or proceeding to judgment or final
decree, and to enforce any such judgment or final decree against the Company or
any other obligor on such Debentures. In addition, if there shall be pending
proceedings for the bankruptcy or reorganization of the Company or any other
obligor on such Debentures, or if a receiver, trustee, or similar official shall
have been appointed for its property, the Trustee shall be entitled and
empowered to file and prove a claim for the whole amount of principal, premium,
if any, and interest owing and unpaid with respect to such Debentures. (Section
6.02.) No holder of any such Debentures shall have any right to institute any
action or proceeding upon or under or with respect to the Indenture, for the
appointment of a receiver or trustee, or for any other remedy, unless (a) such
holder previously shall have given to the Trustee written notice of an Event of
Default with respect to such Debentures and of the continuance thereof, (b) the
holders of not less than 25% in aggregate principal amount of such outstanding
Debentures shall have made written request to the Trustee to institute such
action or proceeding with respect to such Event of Default and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses, and liabilities to be incurred therein or thereby, and (c) the
Trustee, for 60 days after its receipt of such notice, request, and offer of
indemnity shall have failed to institute such action or proceeding and no
direction inconsistent with such written request shall have been given to the
Trustee pursuant to the provisions of the Indenture. (Section 6.04.)
Prior to the acceleration of the maturity of the 2027 Debentures or the
2097 Debentures, the holders of a majority in aggregate principal amount of such
Debentures at the time outstanding may, on behalf of the holders of such
Debentures, waive any past default or Event of Default and its consequences for
such Debentures except (a) a default in the payment of the principal, premium,
if any, or interest with respect to such Debentures or (b) a default with
respect to a provision of the Indenture that cannot be amended without the
consent of each holder affected thereby. In case of any such waiver, such
default shall cease to exist, any Event of Default arising therefrom shall be
deemed to have been cured for all purposes, and the Company, the Trustee, and
the holders of such Debentures shall be restored to their former positions and
rights under the Indenture. (Section 6.06.)
The Trustee shall within 90 days after the occurrence of a default known to
it with respect to the 2027 Debentures or the 2097 Debentures, give to the
holders of such Debentures notice of all uncured defaults with respect to such
Debentures known to it, unless such defaults shall have been cured or waived
before the giving of such notice; provided, however, that except in the case of
default in the payment of principal, premium, if any, or interest with respect
to such Debentures the Trustee shall be protected in withholding such notice if
it in good faith determines that the withholding of such notice is in the
interest of the holders of such Debentures. (Section 6.07.)
BOOK-ENTRY, DELIVERY AND FORM
Each of the 2027 Debentures and the 2097 Debentures sold will be issued in
the form of one or more Global Securities. The Global Securities will be
deposited with, or on behalf of, the Depository and registered in the name of
the Depository or its nominee. Except as set forth below, the Global Securities
may be transferred, in whole and not in part, only to the Depository or another
nominee of the Depository. Investors may hold their beneficial interests in the
Global Securities directly through the Depository if they have an account with
the Depository or indirectly through organizations which have accounts with the
Depository.
The Depository has advised the Company as follows: The Depository is a
limited-purpose trust company and organized under the laws of the State of New
York, a member of the Federal Reserve System, a "clearing corporation" within
the meaning of the New York Uniform Commercial Code, and "a clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. The
Depository was created to hold securities of institutions that have accounts
with the Depository ("participants") and to facilitate the clearance and
settlement of securities transactions among its participants in such securities
through electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
Depository's participants include securities brokers and dealers (which may
include
29
<PAGE> 30
the Initial Purchaser), banks, trust companies, clearing corporations and
certain other organizations. Access to the Depository's book-entry system is
also available to others such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a participant,
whether directly or indirectly ("indirect participants").
Upon the issuance of the Global Securities, the Depository will credit, on
its book-entry registration and transfer system, the principal amount of the
Debentures represented by such Global Securities to the accounts of
participants. The accounts to be credited shall be designated by the Initial
Purchaser (as defined below) of such 2027 Debentures and 2097 Debentures.
Ownership of beneficial interests in the Global Securities will be limited to
participants or persons that may hold interests through participants. Ownership
of beneficial interests in the Global Securities will be shown on, and the
transfer of those ownership interests will be effected only through, records
maintained by the Depository (with respect to participants' interest) and such
participants (with respect to the owners of beneficial interests in the Global
Securities other than participants). The laws of some jurisdictions may require
that certain purchasers of securities take physical delivery of such securities
in definitive form. Such limits and laws may impair the ability to transfer or
pledge beneficial interests in the Global Securities.
So long as the Depository, or its nominee, is the registered holder and
owner of the Global Securities, the Depository or such nominee, as the case may
be, will be considered the sole legal owner and holder of the related Debentures
for all purposes of such Debentures and the Indenture. Except as set forth
below, owners of beneficial interests in the Global Securities will not be
entitled to have the Debentures represented by the Global Securities registered
in their names, will not receive or be entitled to receive physical delivery of
certificated Debentures in definitive form and will not be considered to be the
owners or holders of any Debentures under the Global Securities. The Company
understands that under existing industry practice, in the event an owner of a
beneficial interest in the Global Securities desires to take any action that the
Depository, as the holder of the Global Securities, is entitled to take, the
Depository would authorize the participants to take such action, and that the
participants would authorize beneficial owners owning through such participants
to take such action or would otherwise act upon the instructions of beneficial
owners owning through them.
Payment of principal of and interest on Debentures represented by the
Global Securities registered in the name of and held by the Depository or its
nominee will be made to the Depository or its nominee, as the case may be, as
the registered owner and holder of the Global Securities.
The Company expects that the Depository or its nominee, upon receipt of any
payment of principal of or interest on the Global Securities, will credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the Global Securities
as shown on the records of the Depository or its nominee, The Company also
expects that payments by participants to owners of beneficial interests in the
Global Securities held through such participants will be governed by standing
instructions and customary practices and will be the responsibility of such
participants. The Company will not have any responsibility or liability for any
aspect of the records relating to, or payments made on account of, beneficial
ownership interests in the Global Securities for any Debentures or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests or for any other aspect of the relationship between the
Depository and its participants or the relationship between such participants
and the owners of beneficial interests in the Global Securities owning through
such participants.
Unless and until exchanged in whole or in part for certificated Debentures
in definitive form, the Global Securities for the 2027 Debentures or the 2097
Debentures may not be transferred except as a whole by the Depository to a
nominee of such Depository or by a nominee of such Depository to such Depository
or another nominee of such Depository.
Although the Depository has agreed to the foregoing procedures in order to
facilitate transfers of interests in the Global Securities among participants of
the Depository, it is under no obligation to perform or continue to perform such
procedures, and such procedures may be discontinued at any time. Neither the
Trustee nor the Company will have any responsibility for the performance by the
Depository or its participants or indirect participants of their respective
obligations under the rules and procedures governing their operations.
30
<PAGE> 31
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Debentures will be made by the Initial Purchaser in
immediately available funds. So long as the Debentures are represented by the
Global Securities, all payments of principal and interest will be made by the
Company in immediately available funds.
The Debentures will trade in the Depository's Same-Day Funds Settlement
System until maturity, and secondary market trading activity in the Debentures
will therefore be required by the Depositary to settle in immediately available
funds. No assurance can be given as to the effect, if any, of settlement in
immediately available funds on trading activity in the Debentures.
CERTIFICATED DEBENTURES
If the Depository is at any time unwilling, unable, or ineligible to
continue as depositary, the Company shall appoint a successor depositary or, if
a successor depositary is not appointed by the Company within 90 days, the
Company will issue individual Debentures in exchange for the Global Security
representing such Debentures. (Section 2.15.) In addition, the Company may at
any time and in its sole discretion determine no longer to have Debentures
represented by a Global Security and, in such event, will issue individual
Debentures in exchange for the Global Security representing such Debentures.
(Section 2.15.) In any such instance, an owner of a beneficial interest in a
Global Security will be entitled to physical delivery of individual Debentures
represented by such Global Security equal in principal amount to such beneficial
interest and to have such Debentures registered in its name.
MODIFICATION OF THE INDENTURE
The Company and the Trustee may enter into supplemental indentures without
the consent of the holders of the 2027 Debentures or the 2097 Debentures for one
or more of the following purposes (Section 9.01.):
(a) To evidence the succession of another person to the Company
pursuant to the provisions of the Indenture relating to consolidations,
mergers, and sales of assets and the assumption by such successor of the
covenants, agreements, and obligations of the Company in the Indenture and
in such Debentures;
(b) To surrender any right or power conferred upon the Company by the
Indenture, to add to the covenants of the Company such further covenants,
restrictions, conditions, or provisions for the protection of the holders
of such Debentures as the Board of Directors of the Company shall consider
to be for the protection of the holders of such Debentures and to make the
occurrence, or the occurrence and continuance, of a default in any of such
additional covenants, restrictions, conditions or provisions a default or
an Event of Default under the Indenture (provided, however, that with
respect to any such additional covenant, restriction, condition or
provision, such supplemental Indenture may provide for a period of grace
after default, which may be shorter or longer than that allowed in the case
of other defaults, may provide for an immediate enforcement upon such
default, may limit the remedies available to the Trustee upon such default,
or may limit the right of holders of a majority in aggregate principal
amount of such Debentures);
(c) To cure any ambiguity or to correct or supplement any provision
contained in the Indenture, in any supplemental Indenture, or in any such
Debentures that may be defective or inconsistent with any other provision
contained therein;
(d) To modify or amend the Indenture in such a manner as to permit the
qualification of the Indenture or any supplemental Indenture under the
Trust Indenture Act as then in effect, except that the Indenture may not be
amended to include the provisions referred to in Section 316(a)(2) of the
Trust Indenture Act;
(e) To convey, transfer, assign, mortgage, or pledge any property to
or with the Trustee, or to make such other provisions in regard to matters
or questions arising under the Indenture as shall not adversely affect the
interests of any holders of such Debentures;
(f) To add guarantees with respect to such Debentures or to secure
such Debentures;
31
<PAGE> 32
(g) To make any change that does not adversely affect the rights of
any holder; and
(h) To evidence and provide for the acceptance of appointment by a
successor or separate Trustee with respect to such Debentures and to add to
or change any of the provisions of the Indenture as shall be necessary to
provide for or facilitate the administration of the Indenture by more than
one Trustee.
With the consent of the holders of a majority in aggregate principal amount
of the outstanding Debentures affected thereby, the Company and the Trustee may
from time to time and at any time enter into a supplemental Indenture for the
purpose of adding any provisions to, changing in any manner, or eliminating any
of the provisions of the Indenture or of any supplemental indenture or modifying
in any manner the rights of the holders of such Debentures; provided, however,
that without the consent of the holders of each Debenture so affected, no such
supplemental Indenture shall (a) reduce the percentage in principal amount of
the Debentures whose holders must consent to an amendment, (b) reduce the rate
of or extend the time for payment of interest on any Debenture, (c) reduce the
principal of or extend the stated maturity of any Debenture, (d) reduce the
premium payable upon the redemption of any Debenture or change the time at which
any Debenture may or shall be redeemed, (e) make any Debenture payable in a
currency other than that stated in the Debenture, (f) release any security that
may have been granted with respect to the Debenture or (g) make any change in
the provisions of the Indenture relating to waivers of defaults or amendments
that require unanimous consent. (Section 9.02.)
SATISFACTION AND DISCHARGE OF THE INDENTURE; DEFEASANCE
The Indenture shall generally cease to be of any further effect with
respect to the 2027 Debentures or the 2097 Debentures, as the case may be, if
(a) the Company has delivered to the Trustee for cancellation all such
Debentures or (b) all such Debentures not theretofore delivered to the Trustee
for cancellation shall have become due and payable, or are by their terms to
become due and payable within one year or are to be called for redemption within
one year, and the Company shall have deposited with the Trustee as trust funds
the entire amount sufficient (in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee) without consideration of any reinvestment and after
payment of all taxes or other charges and assessments in respect thereof payable
by the Trustee to pay at maturity or upon redemption all such Debentures, no
default with respect to such Debentures has occurred and is continuing on the
date of such deposit, such deposit does not result in a breach or violation of,
or constitute a default under, the Indenture or any other agreement or
instrument to which the Company is a party and the Company delivered an
officers' certificate and an opinion of counsel each stating that such
conditions have been complied with (and if, in either case, the Company shall
also pay or cause to be paid all other sums payable under the Indenture by the
Company). (Section 11.02.)
In addition, the Company shall have a "legal defeasance option" (pursuant
to which it may terminate, with respect to the 2027 Debentures or the 2097
Debentures, all of its obligations under such Debentures and the Indenture with
respect to such Debentures) and a "covenant defeasance option" (pursuant to
which it may terminate, with respect to the 2027 Debentures or the 2097
Debentures, its obligations with respect to such Debentures under certain
specified covenants contained in the Indenture). If the Company exercises its
legal defeasance option with respect to the 2027 Debentures or the 2097
Debentures, payment of such Debentures may not be accelerated because of an
Event of Default. If the Company exercises its covenant defeasance option with
respect to the 2027 Debentures or the 2097 Debentures, payment of such
Debentures may not be accelerated because of an Event of Default related to the
specified covenants. The Company may exercise its legal defeasance option
notwithstanding its prior exercise of its covenant defeasance option. (Section
11.02.)
The Company may exercise its legal defeasance option or its covenant
defeasance option with respect to the 2027 Debentures or the 2097 Debentures
only if (a) the Company irrevocably deposits in trust with the Trustee cash or
U.S. Government Obligations (as defined in the Indenture) for the payment of
principal, premium, if any, and interest with respect to such Debentures to
maturity or redemption, as the case may be, (b) the Company delivers to the
Trustee a certificate from a nationally recognized form of independent public
accountants expressing their opinion that the payments of principal and interest
when due and without
32
<PAGE> 33
reinvestment on the deposited U.S. Government Obligations plus any deposited
money without investment will provide cash at such times and in such amounts as
will be sufficient to pay the principal, premium, if any, and interest when due
with respect to all such Debentures to maturity or redemption, as the case may
be, (c) 91 days pass after the deposit is made and during the 91-day period no
default described in clause (f) or (g) under "Description of Debt
Securities-Events of Default and Remedies" above with respect to the Company
occurs that is continuing at the end of such period, (d) no default has occurred
and is continuing on the date of such deposit and after giving effect thereto,
(e) the deposit does not constitute a default under any other agreement binding
on the Company, (f) the Company delivers to the Trustee an opinion of counsel to
the effect that the trust resulting from the deposit does not constitute, or is
qualified as, a regulated investment company under the Investment Company Act of
1940, (g) the Company shall have delivered to the Trustee an opinion of counsel
addressing certain federal income tax matters relating to the defeasance, and
(h) the Company delivers to the Trustee an officers' certificate and an opinion
of counsel, each stating that all conditions precedent to the defeasance and
discharge of such Debentures as contemplated by the Indenture have been complied
with. (Section 11.03.)
The Trustee shall hold in trust cash or U.S. Government Obligations
deposited with it as described above and shall apply the deposited cash and the
proceeds from deposited U.S. Government Obligations to the payment of principal,
premium, if any, and interest with respect to such Debentures. (Section 11.04.)
The Company has the right to replace the Trustee under certain
circumstances, including (subject to the Company satisfying certain conditions)
if the Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to another corporation
or banking association. (Section 7.08.)
The Company may maintain banking and other commercial relationships with
the Trustee and its affiliates in the ordinary course of business, and the
Trustee may own Debentures.
REGISTRATION AGREEMENT
The Company entered into the Registration Agreement with the Initial
Purchaser on February 4, 1997 in connection with the sale of the Old Debentures
pursuant to which the Company has agreed, for the benefit of the Holders of each
of the Old 2027 Debentures and the Old 2097 Debentures, at the Company's cost,
to (i) file this Exchange Offer Registration Statement within 90 days after the
date of original issuance of the Old Debentures (the "Issue Date") with the
Commission with respect to the Exchange Offers and (ii) use its best efforts to
cause the Exchange Offer Registration Statement to be declared effective under
the Securities Act within 180 days after the Issue Date. Promptly after the
Exchange Offer Registration Statement is declared effective, the Company will
consummate the Exchange Offers. The Company will keep the Exchange Offers open
for not less than 30 days (or longer if required by applicable law) after the
date notice of the Exchange Offers is mailed to the holders of the Old
Debentures.
In the event that any changes in law or applicable interpretations of the
staff of the Commission do not permit the Company to effect the Exchange Offers
with respect to the Old 2027 Debentures or the Old 2097 Debentures, or if for
any reason the Exchange Offer Registration Statement is not declared effective
within 180 days following the Issue Date, or upon the request of the Initial
Purchaser under certain circumstances, the Company will, in lieu of effecting
the registration of the New Debentures pursuant to the Exchange Offer
Registration Statement and at its cost, (i) as promptly as practicable, file
with the Commission a Shelf Registration Statement covering resales of the
applicable Old Debentures, (ii) use its best efforts to cause the Shelf
Registration Statement to be declared effective under the Securities Act by the
210th day after the Issue Date (or promptly in the event of a request by the
Initial Purchaser) and (iii) keep effective the Shelf Registration Statement
until the earliest of (x) the third anniversary of the Issue Date (or the first
anniversary of the effective date if such Shelf Registration Statement is filed
at the request of the Initial Purchaser), (y) the time when the Old Debentures
registered thereunder can be sold by non-affiliates pursuant to Rule 144 under
the Securities Act without limitation under clauses (c), (e), (f) and (h) of
Rule 144, or (z) such time as all the Debentures registered thereunder have been
sold. During any consecutive 365-day period, the Company will have the ability
to suspend the availability of the Shelf Registration Statement for up to two
33
<PAGE> 34
periods of up to 45 consecutive days, but no more than an aggregate of 60 days
during any 365-day period. The Company will, in the event of the filing of a
Shelf Registration Statement, provide to each holder of such applicable Old
Debentures copies of the prospectus which is part of the Shelf Registration
Statement, notify each such holder when the Shelf Registration Statement for
such Old Debentures has become effective and take certain other actions as are
required to permit unrestricted resales of such Old Debentures. A Holder of such
Debentures that sells such Debentures pursuant to the Shelf Registration
Statement generally will be required to be named as a selling security holder in
the related prospectus and to deliver a prospectus to the purchaser, will be
subject to certain of the civil liability provisions under the Securities Act in
connection with such sales and will be bound by the provisions of the
Registration Agreement which are applicable to such a holder (including certain
indemnification obligations). In addition, each Holder of such Old Debentures
will be required to deliver information to be used in connection with the Shelf
Registration Statement and to provide comments on the Shelf Registration
Statement within the time periods set forth in the Registration Agreement in
order to have their Old Debentures included in the Shelf Registration Statement
and to benefit from the provisions regarding Special Interest set forth in the
following paragraph. If the Company has consummated the Exchange Offers, then,
subject to certain limited exceptions, the Company will have no obligation to
file or to maintain the effectiveness of a Shelf Registration Statement with
respect to any Old 2027 Debentures or Old 2097 Debentures that are not tendered
in the Exchange Offers.
In the event that (i) by the 90th day following the Issue Date, the
Exchange Offer Registration Statement is not filed with the Commission, (ii) by
the 180th day following the Issue Date, neither the Exchange Offer Registration
Statement is declared effective nor (if the Exchange Offers are not permitted as
described above) the Shelf Registration Statement is filed with the Commission,
or (iii) by the 210th day following the Issue Date, neither the Exchange Offers
with respect to the Old 2027 Debentures and the Old 2097 Debentures are
consummated nor the Shelf Registration Statement is declared effective (each
such event referred to in clauses (i) through (iii), a "Registration Default"),
interest will accrue on the applicable Old Debentures (in addition to stated
interest on such Debentures) from and including the next day following each such
Registration Default. In each case such additional interest (the "Special
Interest") will be payable in cash semiannually in arrears each February 1 and
August 1, at a rate per annum equal to 0.25% of the principal amount of such
Debentures for each such Registration Default. The aggregate amount of Special
Interest payable pursuant to the above provisions could in no event ever have
exceeded 0.75% per annum of the principal amount of such Debentures, and,
because the Company filed the Exchange Offer Registration Statement by the 90th
day following the Issue Date, the aggregate amount of Special Interest payable
pursuant to the above provisions will not exceed 0.50% per annum of the
principal amount of such Debentures. Upon (a) the filing of the Exchange Offer
Registration Statement after the 90-day period described in clause (i) above,
(b) the effectiveness of the Exchange Offer Registration Statement or the filing
of the Shelf Registration Statement after the 180-day period described in clause
(ii) above or (c) the consummation of the Exchange Offer for such Debentures or
the effectiveness of a Shelf Registration Statement, as the case may be, after
the 210-day period described in clause (iii) above, the Special Interest payable
on such Debentures as a result of the applicable Registration Default will cease
to accrue. For purposes of the preceding sentence, the curing of a Registration
Default by the means described in clause (b) above shall constitute a cure of
the Registration Defaults described in clauses (i) and (ii) above, and the
curing of a Registration Default by the means described in clause (c) above
shall constitute a cure of the Registration Defaults described in clauses (i),
(ii) and (iii) above.
In the event that a Shelf Registration Statement is declared effective
pursuant to the paragraph preceding the immediately preceding paragraph, if the
Company fails to keep such Registration Statement continuously effective for the
period required by the Registration Agreement (except as specifically permitted
therein ), then from such time as the Shelf Registration Statement is no longer
effective until the earlier of (i) the date that the Shelf Registration
Statement is again deemed effective and (ii) the date that is the earliest of
(x) the third anniversary of the Issue Date (or until the first anniversary of
the effective date if the Shelf Registration Statement is filed at the request
of the Initial Purchaser), (y) the time when the Debentures registered
thereunder can be sold by non-affiliates pursuant to Rule 144 under the
Securities Act without any limitations under clauses (c), (e), (f) and (h) of
Rule 144, or (z) the date as of which all of such Debentures are sold pursuant
to the Shelf Registration Statement, Special Interest shall accrue at a rate per
annum equal to 0.25%
34
<PAGE> 35
of the principal amount of the Debentures (0.50% thereof if the Shelf
Registration Statement is no longer effective for 30 days or more) and shall be
payable in cash semiannually in arrears each February 1 and August 1.
The summary herein of certain provisions of the Registration Agreement does
not purport to be complete and is subject to, and is qualified in its entirety
by reference to, all the provisions of the Registration Agreement, a copy of
which is available upon request to the Company.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF PARTICIPATION
IN THE EXCHANGE OFFERS
Regardless of whether the Old Debentures are characterized as debt or
equity for federal income tax purposes, an exchange of the Old Debentures for
the New Debentures pursuant to the Exchange Offers will not constitute a taxable
event for federal income tax purposes. As a result, Holders who exchange their
Old Debentures for New Debentures should not recognize any income, gain or loss
for federal income tax purposes with respect to such exchange. An exchanging
Holder will have the same adjusted basis and holding period in the New
Debentures as it had in the Old Debentures immediately before the exchange. An
exchange of Old Debentures for New Debentures should not effect the
determination of whether the Debentures are characterized as debt or equity for
federal income tax purposes.
For a discussion of proposed legislation which could effect, and other
information regarding, the tax treatment of the 2097 Debentures, see
"Description of the New Debentures -- Conditional Right to Shorten Maturity of
2097 Debentures; Certain Federal Income Tax Considerations Relating to the 2097
Debentures."
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO THEM OF EXCHANGING OLD DEBENTURES FOR NEW DEBENTURES IN THE
EXCHANGE OFFERS, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL, OR
FOREIGN TAX LAWS.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Debentures for its own account
pursuant to the Exchange Offers must acknowledge that it will deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such New Debentures. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Debentures received in exchange for Old Debentures where
such Old Debentures were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, starting on the Expiration Date and ending on the close of business 180
days after the Expiration Date, it will make this Prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale.
The Company will not receive any proceeds from any sale of New Debentures
by broker-dealers. New Debentures received by broker-dealers for their own
account pursuant to the Exchange Offers may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Debentures or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or at negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from any
such broker-dealer and/or the purchasers of any such New Debentures. Any
broker-dealer that resells New Debentures that were received by it for its own
account pursuant to the Exchange Offers and any broker or dealer that
participates in a distribution of such New Debentures may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit of any
such resale of New Debentures and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that by acknowledging that it will deliver
and by delivering a prospectus meeting the requirements of the Securities Act, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
35
<PAGE> 36
For a period of 180 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offers (including the expenses of one counsel for the
Holders of the Old Debentures) other than commissions or concessions of any
brokers or dealers and will indemnify the Holders of the Debentures (including
any brokerdealers) against certain liabilities, including liabilities under the
Securities Act.
LEGAL MATTERS
The validity of the New Debentures offered hereby will be passed upon for
the Company by Louis E. Stellato, Vice President, General Counsel and Secretary
of the Company. At March 31, 1997, Mr. Stellato beneficially owned 44,545 shares
of common stock of the Company and held options to purchase an additional
103,600 shares of common stock of which 68,932 were exercisable within 60 days
of such date.
INDEPENDENT ACCOUNTANTS
The consolidated financial statements and schedule of the Company appearing
in the Company's Annual Report on Form 10-K for the year ended December 31,
1996, incorporated by reference in this Prospectus, have been audited by Ernst &
Young LLP, independent auditors, as stated in their report included therein.
The consolidated financial statements relating to Thompson Minwax as of
December 31, 1995 and for the year ended December 31, 1995, incorporated by
reference in this Prospectus have been audited by Deloitte & Touche LLP,
independent accountants, as stated in their report incorporated by reference
herein.
36
<PAGE> 37
================================================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE AS OF WHICH
INFORMATION IS GIVEN IN THIS PROSPECTUS. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 4
Incorporation of Certain Documents by
Reference........................... 4
The Company........................... 5
Summary............................... 7
Risk Factors.......................... 11
Use of Proceeds....................... 12
Summary Historical Financial
Information......................... 13
Unaudited Pro Forma Combined Condensed
Financial Statements................ 14
The Exchange Offers................... 17
Description of the New Debentures..... 24
Certain Federal Income Tax
Consequences of Participation in the
Exchange Offers..................... 35
Plan of Distribution.................. 35
Legal Matters......................... 36
Independent Accountants............... 36
</TABLE>
================================================================================
================================================================================
$300,000,000
THE SHERWIN-WILLIAMS
COMPANY
$150,000,000
7.375% DEBENTURES DUE 2027
$150,000,000
7.45% DEBENTURES DUE 2097
[SHERWIN WILLIAMS COMPANY LOGO]
PROSPECTUS
DATED MAY 22, 1997
=============================================================================
