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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Valaris Limited | NYSE:VAL | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
3.17 | 4.87% | 68.22 | 68.475 | 66.12 | 66.12 | 576,480 | 19:02:44 |
FORM 10-Q
|
(Mark One)
|
|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the quarterly period ended July 29, 2016
|
|
or
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the transition period from _______________________ to ___________________
|
THE VALSPAR CORPORATION
|
(Exact name of registrant as specified in its charter)
|
Delaware
|
|
36-2443580
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
1101 South 3rd Street,
|
|
|
Minneapolis, Minnesota
|
|
55415
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
|
|
Large accelerated filer
x
|
Accelerated filer
¨
|
|
Non-accelerated filer
¨
|
Smaller reporting company
¨
|
PART I.
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Page No.
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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PART II.
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Item 1.
|
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Item 1A.
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Item 2.
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Item 6.
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ASSETS
|
July 29,
2016 |
|
October 30,
2015 |
|
July 31,
2015 |
||||||
|
(Unaudited)
|
|
(Note)
|
|
(Unaudited)
|
||||||
CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
|||
Cash and cash equivalents
|
$
|
170,223
|
|
|
$
|
185,961
|
|
|
$
|
342,647
|
|
Restricted cash
|
836
|
|
|
1,307
|
|
|
1,628
|
|
|||
Accounts and notes receivable less allowance
(7/29/16 – $8,362; 10/30/15 – $9,550; 7/31/15 – $12,803) |
828,689
|
|
|
857,256
|
|
|
876,800
|
|
|||
Inventories
|
523,637
|
|
|
451,909
|
|
|
512,609
|
|
|||
Deferred income taxes
|
32,898
|
|
|
37,707
|
|
|
28,120
|
|
|||
Prepaid expenses and other
|
137,228
|
|
|
97,090
|
|
|
103,241
|
|
|||
TOTAL CURRENT ASSETS
|
1,693,511
|
|
|
1,631,230
|
|
|
1,865,045
|
|
|||
|
|
|
|
|
|
||||||
GOODWILL
|
1,286,591
|
|
|
1,287,703
|
|
|
1,304,831
|
|
|||
INTANGIBLES, NET
|
627,939
|
|
|
643,100
|
|
|
653,020
|
|
|||
OTHER ASSETS
|
125,462
|
|
|
112,735
|
|
|
117,415
|
|
|||
LONG-TERM DEFERRED INCOME TAXES
|
10,056
|
|
|
11,042
|
|
|
6,893
|
|
|||
Property, plant and equipment, gross
|
1,638,765
|
|
|
1,582,338
|
|
|
1,585,308
|
|
|||
Less accumulated depreciation
|
(992,243
|
)
|
|
(949,573
|
)
|
|
(954,494
|
)
|
|||
PROPERTY, PLANT AND EQUIPMENT, NET
|
646,522
|
|
|
632,765
|
|
|
630,814
|
|
|||
TOTAL ASSETS
|
$
|
4,390,081
|
|
|
$
|
4,318,575
|
|
|
$
|
4,578,018
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
July 29,
2016 |
|
October 30, 2015
|
|
July 31,
2015 |
||||||
|
(Unaudited)
|
|
(Note)
|
|
(Unaudited)
|
||||||
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
|||
Short-term debt
|
$
|
242,208
|
|
|
$
|
334,022
|
|
|
$
|
474,169
|
|
Current portion of long-term debt
|
150,101
|
|
|
131
|
|
|
158,091
|
|
|||
Trade accounts payable
|
563,078
|
|
|
553,737
|
|
|
554,493
|
|
|||
Income taxes payable
|
19,485
|
|
|
36,010
|
|
|
43,530
|
|
|||
Other accrued liabilities
|
421,717
|
|
|
442,839
|
|
|
390,590
|
|
|||
TOTAL CURRENT LIABILITIES
|
1,396,589
|
|
|
1,366,739
|
|
|
1,620,873
|
|
|||
LONG-TERM DEBT, NET OF CURRENT PORTION
|
1,557,001
|
|
|
1,706,933
|
|
|
1,706,950
|
|
|||
LONG-TERM DEFERRED INCOME TAXES
|
242,977
|
|
|
240,919
|
|
|
226,798
|
|
|||
OTHER LONG-TERM LIABILITIES
|
152,112
|
|
|
148,975
|
|
|
139,188
|
|
|||
TOTAL LIABILITIES
|
3,348,679
|
|
|
3,463,566
|
|
|
3,693,809
|
|
|||
STOCKHOLDERS' EQUITY:
|
|
|
|
|
|
|
|
|
|||
Common stock (par value - $0.50; authorized -
250,000,000 shares; shares issued, including shares in
treasury - 118,442,624)
|
59,220
|
|
|
59,220
|
|
|
59,220
|
|
|||
Additional paid-in capital
|
488,138
|
|
|
474,044
|
|
|
459,567
|
|
|||
Retained earnings
|
2,380,754
|
|
|
2,209,628
|
|
|
2,131,106
|
|
|||
Accumulated other comprehensive income (loss)
|
(200,355
|
)
|
|
(195,498
|
)
|
|
(139,166
|
)
|
|||
Less cost of common stock in treasury
(7/29/16 – 39,107,550 shares; 10/30/15 – 39,458,773 shares; 7/31/15 – 38,657,543 shares) |
(1,686,355
|
)
|
|
(1,692,385
|
)
|
|
(1,626,518
|
)
|
|||
TOTAL STOCKHOLDERS' EQUITY
|
1,041,402
|
|
|
855,009
|
|
|
884,209
|
|
|||
|
|
|
|
|
|
||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
4,390,081
|
|
|
$
|
4,318,575
|
|
|
$
|
4,578,018
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
July 29,
2016 |
|
July 31,
2015 |
|
July 29,
2016 |
|
July 31,
2015 |
||||||||
Net sales
|
$
|
1,141,942
|
|
|
$
|
1,149,126
|
|
|
$
|
3,084,495
|
|
|
$
|
3,243,084
|
|
Cost of sales
|
718,052
|
|
|
733,572
|
|
|
1,935,176
|
|
|
2,094,956
|
|
||||
Restructuring charges - cost of sales
|
1,943
|
|
|
1,319
|
|
|
7,304
|
|
|
7,398
|
|
||||
Acquisition-related charges - cost of sales
|
—
|
|
|
2,952
|
|
|
—
|
|
|
2,952
|
|
||||
Gross profit
|
421,947
|
|
|
411,283
|
|
|
1,142,015
|
|
|
1,137,778
|
|
||||
Research and development
|
36,211
|
|
|
34,951
|
|
|
104,330
|
|
|
99,590
|
|
||||
Selling, general and administrative
|
207,461
|
|
|
206,432
|
|
|
610,006
|
|
|
600,310
|
|
||||
Restructuring charges
|
3,302
|
|
|
3,280
|
|
|
8,708
|
|
|
5,994
|
|
||||
Proposed merger-related charges
|
4,616
|
|
|
—
|
|
|
22,856
|
|
|
—
|
|
||||
Acquisition-related charges
|
16
|
|
|
892
|
|
|
1,141
|
|
|
892
|
|
||||
Operating expenses
|
251,606
|
|
|
245,555
|
|
|
747,041
|
|
|
706,786
|
|
||||
Gain on sale of certain assets
|
—
|
|
|
—
|
|
|
—
|
|
|
48,001
|
|
||||
Income from operations
|
170,341
|
|
|
165,728
|
|
|
394,974
|
|
|
478,993
|
|
||||
Interest expense
|
23,082
|
|
|
22,622
|
|
|
68,286
|
|
|
59,178
|
|
||||
Other (income)/expense - net
|
103
|
|
|
70
|
|
|
1,469
|
|
|
799
|
|
||||
Income before income taxes
|
147,156
|
|
|
143,036
|
|
|
325,219
|
|
|
419,016
|
|
||||
Income taxes
|
30,168
|
|
|
40,174
|
|
|
75,773
|
|
|
121,866
|
|
||||
Net income
|
$
|
116,988
|
|
|
$
|
102,862
|
|
|
$
|
249,446
|
|
|
$
|
297,150
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per common share - basic
|
$
|
1.48
|
|
|
$
|
1.29
|
|
|
$
|
3.16
|
|
|
$
|
3.68
|
|
Net income per common share - diluted
|
$
|
1.44
|
|
|
$
|
1.25
|
|
|
$
|
3.08
|
|
|
$
|
3.58
|
|
|
|
|
|
|
|
|
|
||||||||
Average number of common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
||||
- basic
|
79,124,763
|
|
|
80,020,089
|
|
|
78,947,072
|
|
|
80,857,078
|
|
||||
- diluted
|
81,185,695
|
|
|
81,999,701
|
|
|
80,904,905
|
|
|
82,910,996
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Dividends paid per common share
|
$
|
0.33
|
|
|
$
|
0.30
|
|
|
$
|
0.99
|
|
|
$
|
0.90
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
July 29,
2016 |
|
July 31,
2015 |
|
July 29,
2016 |
|
July 31,
2015 |
||||||||
Net income
|
$
|
116,988
|
|
|
$
|
102,862
|
|
|
$
|
249,446
|
|
|
$
|
297,150
|
|
Other comprehensive income (loss)
|
(25,684
|
)
|
|
4,025
|
|
|
(4,857
|
)
|
|
(119,496
|
)
|
||||
Comprehensive income
|
$
|
91,304
|
|
|
$
|
106,887
|
|
|
$
|
244,589
|
|
|
$
|
177,654
|
|
|
Nine Months Ended
|
||||||
|
July 29,
2016 |
|
July 31,
2015 |
||||
OPERATING ACTIVITIES:
|
|
|
|
|
|
||
Net income
|
$
|
249,446
|
|
|
$
|
297,150
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|
|
|
|
|
||
Depreciation
|
62,445
|
|
|
61,346
|
|
||
Amortization
|
8,718
|
|
|
6,712
|
|
||
Stock-based compensation
|
23,032
|
|
|
9,481
|
|
||
Gain on asset divestitures
|
(527
|
)
|
|
(51,193
|
)
|
||
Impairment of certain long-lived assets
|
5,867
|
|
|
—
|
|
||
Changes in certain assets and liabilities:
|
|
|
|
|
|
||
(Increase)/decrease in accounts and notes receivable
|
29,918
|
|
|
(91,046
|
)
|
||
(Increase)/decrease in inventories and other assets
|
(88,929
|
)
|
|
(88,891
|
)
|
||
Increase/(decrease) in trade accounts payable and other accrued liabilities
|
(8,282
|
)
|
|
(30,897
|
)
|
||
Increase/(decrease) in income taxes, net
|
(24,084
|
)
|
|
8,385
|
|
||
Increase/(decrease) in other liabilities
|
(1,917
|
)
|
|
(3,616
|
)
|
||
Other
|
(5,284
|
)
|
|
(4,835
|
)
|
||
Net cash provided by operating activities
|
250,403
|
|
|
112,596
|
|
||
INVESTING ACTIVITIES:
|
|
|
|
|
|
||
Purchases of property, plant and equipment
|
(89,159
|
)
|
|
(60,846
|
)
|
||
Acquisition of businesses, net of cash acquired
|
(24,408
|
)
|
|
(348,749
|
)
|
||
Proceeds from divestiture of businesses
|
—
|
|
|
54,552
|
|
||
Cash proceeds on disposal of assets
|
10,131
|
|
|
5,663
|
|
||
Decrease in restricted cash
|
471
|
|
|
1,240
|
|
||
Net cash used in investing activities
|
(102,965
|
)
|
|
(348,140
|
)
|
||
FINANCING ACTIVITIES:
|
|
|
|
|
|
||
Proceeds from issuance of debt
|
—
|
|
|
1,187,357
|
|
||
Payments of debt
|
(2,035
|
)
|
|
(477,676
|
)
|
||
Net change in other borrowings
|
1,842
|
|
|
7,377
|
|
||
Net proceeds (repayments) of commercial paper
|
(93,238
|
)
|
|
56,960
|
|
||
Proceeds from stock options exercised
|
14,714
|
|
|
9,878
|
|
||
Treasury stock purchases
|
(18,134
|
)
|
|
(251,415
|
)
|
||
Excess tax benefit from stock-based compensation
|
12,452
|
|
|
11,297
|
|
||
Dividends paid
|
(78,307
|
)
|
|
(73,056
|
)
|
||
Net cash (used in)/provided by financing activities
|
(162,706
|
)
|
|
470,722
|
|
||
|
|
|
|
||||
Increase/(decrease) in cash and cash equivalents
|
(15,268
|
)
|
|
235,178
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(470
|
)
|
|
(20,734
|
)
|
||
Cash and cash equivalents at beginning of period
|
185,961
|
|
|
128,203
|
|
||
Cash and cash equivalents at end of period
|
$
|
170,223
|
|
|
$
|
342,647
|
|
|
July 29,
2016 |
|
October 30,
2015 |
|
July 31,
2015 |
||||||
Manufactured products
|
$
|
331,614
|
|
|
$
|
268,832
|
|
|
$
|
327,171
|
|
Raw materials, supplies and work-in-progress
|
192,023
|
|
|
183,077
|
|
|
185,438
|
|
|||
Total Inventories
|
$
|
523,637
|
|
|
$
|
451,909
|
|
|
$
|
512,609
|
|
|
Nine Months Ended
|
||||||
|
July 29,
2016 |
|
July 31,
2015 |
||||
Beginning balance
|
$
|
82,871
|
|
|
$
|
80,627
|
|
Additional net deferred revenue/accrual made during the period
|
14,632
|
|
|
8,631
|
|
||
Payments made during the period
|
(6,878
|
)
|
|
(6,792
|
)
|
||
Ending balance
|
$
|
90,625
|
|
|
$
|
82,466
|
|
|
July 29,
2016 |
||
Remainder of 2016
|
$
|
—
|
|
2017
|
1,559
|
|
|
2018
|
—
|
|
|
2019
|
—
|
|
|
2020
|
—
|
|
|
Thereafter
|
—
|
|
|
Total
|
$
|
1,559
|
|
•
|
Level 1:
Observable inputs based on quoted prices (unadjusted) in active markets for identical assets or liabilities.
|
•
|
Level 2:
Observable inputs based on quoted prices for similar assets and liabilities in active markets, or quoted prices for identical assets and liabilities in inactive markets.
|
•
|
Level 3:
Unobservable inputs that reflect an entity’s own assumptions about what inputs a market participant would use in pricing the asset or liability based on the best information available in the circumstances.
|
|
Fair Value at July 29, 2016
|
|
Fair Value Measurements Using Inputs Considered as
|
||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents
|
$
|
18,145
|
|
|
$
|
18,145
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Restricted cash
1
|
836
|
|
|
836
|
|
|
—
|
|
|
—
|
|
||||
Foreign currency contracts
2
|
117
|
|
|
—
|
|
|
117
|
|
|
—
|
|
||||
Deferred compensation plan assets
3
|
12,608
|
|
|
12,608
|
|
|
—
|
|
|
—
|
|
||||
Total Assets
|
$
|
31,706
|
|
|
$
|
31,589
|
|
|
$
|
117
|
|
|
$
|
—
|
|
|
Fair Value at October 30, 2015
|
|
Fair Value Measurements Using Inputs Considered as
|
||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents
|
$
|
26,139
|
|
|
$
|
26,139
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Restricted cash
1
|
1,307
|
|
|
1,307
|
|
|
—
|
|
|
—
|
|
||||
Foreign currency contracts
2
|
207
|
|
|
—
|
|
|
207
|
|
|
—
|
|
||||
Deferred compensation plan assets
3
|
6,579
|
|
|
6,579
|
|
|
—
|
|
|
—
|
|
||||
Total Assets
|
$
|
34,232
|
|
|
$
|
34,025
|
|
|
$
|
207
|
|
|
$
|
—
|
|
|
Fair Value at July 31, 2015
|
|
Fair Value Measurements Using Inputs Considered as
|
||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents
|
$
|
195,504
|
|
|
$
|
195,504
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Restricted cash
1
|
1,628
|
|
|
1,628
|
|
|
—
|
|
|
—
|
|
||||
Foreign currency contracts
2
|
485
|
|
|
—
|
|
|
485
|
|
|
—
|
|
||||
Deferred compensation plan assets
3
|
6,721
|
|
|
6,721
|
|
|
—
|
|
|
—
|
|
||||
Total Assets
|
$
|
204,338
|
|
|
$
|
203,853
|
|
|
$
|
485
|
|
|
$
|
—
|
|
|
Fair Value at July 29, 2016
|
|
Fair Value Measurements Using Inputs Considered as
|
||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||
Debt
1
|
|
|
|
|
|
|
|
|
|
|
|
||||
Publicly traded debt
|
$
|
1,813,769
|
|
|
$
|
1,813,769
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Non-publicly traded debt
|
249,311
|
|
|
—
|
|
|
249,311
|
|
|
—
|
|
||||
Total Debt
|
$
|
2,063,080
|
|
|
$
|
1,813,769
|
|
|
$
|
249,311
|
|
|
$
|
—
|
|
|
Fair Value at October 30, 2015
|
|
Fair Value Measurements Using Inputs Considered as
|
||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||
Debt
1
|
|
|
|
|
|
|
|
|
|
|
|
||||
Publicly traded debt
|
$
|
1,741,003
|
|
|
$
|
1,741,003
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Non-publicly traded debt
|
341,086
|
|
|
—
|
|
|
341,086
|
|
|
—
|
|
||||
Total Debt
|
$
|
2,082,089
|
|
|
$
|
1,741,003
|
|
|
$
|
341,086
|
|
|
$
|
—
|
|
|
Fair Value at July 31, 2015
|
|
Fair Value Measurements Using Inputs Considered as
|
||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||
Debt
1
|
|
|
|
|
|
|
|
|
|
|
|
||||
Publicly traded debt
|
$
|
1,897,759
|
|
|
$
|
1,897,759
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Non-publicly traded debt
|
487,789
|
|
|
—
|
|
|
487,789
|
|
|
—
|
|
||||
Other
2
|
1,420
|
|
|
—
|
|
|
1,420
|
|
|
—
|
|
||||
Total Debt
|
$
|
2,386,968
|
|
|
$
|
1,897,759
|
|
|
$
|
489,209
|
|
|
$
|
—
|
|
|
July 29,
2016 |
|
October 30,
2015 |
|
July 31,
2015 |
||||||
Short-term debt
|
$
|
242,208
|
|
|
$
|
334,022
|
|
|
$
|
474,169
|
|
Current portion of long-term debt
|
150,101
|
|
|
131
|
|
|
158,091
|
|
|||
Long-term debt
|
1,557,001
|
|
|
1,706,933
|
|
|
1,706,950
|
|
|||
Total Debt
|
$
|
1,949,310
|
|
|
$
|
2,041,086
|
|
|
$
|
2,339,210
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
July 29,
2016 |
|
July 31,
2015 |
|
July 29,
2016 |
|
July 31,
2015 |
||||||||
Service cost
|
$
|
683
|
|
|
$
|
764
|
|
|
$
|
2,046
|
|
|
$
|
2,782
|
|
Interest cost
|
3,288
|
|
|
3,491
|
|
|
9,878
|
|
|
10,570
|
|
||||
Expected return on plan assets
|
(4,839
|
)
|
|
(4,891
|
)
|
|
(14,551
|
)
|
|
(14,729
|
)
|
||||
Amortization of prior service cost
|
112
|
|
|
123
|
|
|
336
|
|
|
360
|
|
||||
Recognized actuarial loss
|
1,640
|
|
|
1,642
|
|
|
4,920
|
|
|
4,958
|
|
||||
Net periodic benefit cost
|
884
|
|
|
1,129
|
|
|
2,629
|
|
|
3,941
|
|
||||
Curtailment gain
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,083
|
)
|
||||
Net total periodic benefit cost
|
$
|
884
|
|
|
$
|
1,129
|
|
|
$
|
2,629
|
|
|
$
|
858
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
July 29,
2016 |
|
July 31,
2015 |
|
July 29,
2016 |
|
July 31,
2015 |
||||||||
Service cost
|
$
|
72
|
|
|
$
|
51
|
|
|
$
|
215
|
|
|
$
|
153
|
|
Interest cost
|
90
|
|
|
92
|
|
|
269
|
|
|
276
|
|
||||
Amortization of prior service credit
|
(32
|
)
|
|
(32
|
)
|
|
(96
|
)
|
|
(96
|
)
|
||||
Recognized actuarial loss
|
96
|
|
|
108
|
|
|
289
|
|
|
324
|
|
||||
Net periodic benefit cost
|
$
|
226
|
|
|
$
|
219
|
|
|
$
|
677
|
|
|
$
|
657
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
July 29,
2016 |
|
July 31,
2015 |
|
July 29,
2016 |
|
July 31,
2015 |
||||
Effective tax rate
|
20.5
|
%
|
|
28.1
|
%
|
|
23.3
|
%
|
|
29.1
|
%
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
July 29,
2016 |
|
July 31,
2015 |
|
July 29,
2016 |
|
July 31,
2015 |
||||||||
Basic
|
|
|
|
|
|
|
|
|
|
||||||
Net income
|
$
|
116,988
|
|
|
$
|
102,862
|
|
|
$
|
249,446
|
|
|
$
|
297,150
|
|
Weighted-average common shares outstanding - basic
|
79,124,763
|
|
|
80,020,089
|
|
|
78,947,072
|
|
|
80,857,078
|
|
||||
Net income per common share - basic
|
$
|
1.48
|
|
|
$
|
1.29
|
|
|
$
|
3.16
|
|
|
$
|
3.68
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
||||||
Net income
|
$
|
116,988
|
|
|
$
|
102,862
|
|
|
$
|
249,446
|
|
|
$
|
297,150
|
|
Weighted-average common shares outstanding - basic
|
79,124,763
|
|
|
80,020,089
|
|
|
78,947,072
|
|
|
80,857,078
|
|
||||
Diluted effect of stock options and unvested restricted stock
|
2,060,932
|
|
|
1,979,612
|
|
|
1,957,833
|
|
|
2,053,918
|
|
||||
Weighted-average common shares outstanding - diluted
|
81,185,695
|
|
|
81,999,701
|
|
|
80,904,905
|
|
|
82,910,996
|
|
||||
Net income per common share - diluted
|
$
|
1.44
|
|
|
$
|
1.25
|
|
|
$
|
3.08
|
|
|
$
|
3.58
|
|
Three Months Ended July 29, 2016
|
Foreign Currency Translation
1
|
|
Benefit Obligations
2
|
|
Financial Instruments
3
|
|
Accumulated Other Comprehensive Income (Loss)
|
||||||||
Balance, April 29, 2016
|
$
|
(91,055
|
)
|
|
$
|
(76,916
|
)
|
|
$
|
(6,700
|
)
|
|
$
|
(174,671
|
)
|
Other comprehensive income (loss) before reclassifications
|
(27,192
|
)
|
|
—
|
|
|
(492
|
)
|
|
(27,684
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income (loss) to earnings
|
—
|
|
|
1,817
|
|
|
183
|
|
|
2,000
|
|
||||
Balance, July 29, 2016
|
$
|
(118,247
|
)
|
|
$
|
(75,099
|
)
|
|
$
|
(7,009
|
)
|
|
$
|
(200,355
|
)
|
Three Months Ended July 31, 2015
|
Foreign Currency Translation
1
|
|
Benefit Obligations
2
|
|
Financial Instruments
3
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
||||||||
Balance, May 1, 2015
|
$
|
(59,622
|
)
|
|
$
|
(76,232
|
)
|
|
$
|
(7,337
|
)
|
|
$
|
(143,191
|
)
|
Other comprehensive income (loss) before reclassifications
|
2,329
|
|
|
—
|
|
|
34
|
|
|
2,363
|
|
||||
Amounts reclassified from accumulated other comprehensive income (loss) to earnings
|
—
|
|
|
1,827
|
|
|
(165
|
)
|
|
1,662
|
|
||||
Balance, July 31, 2015
|
$
|
(57,293
|
)
|
|
$
|
(74,405
|
)
|
|
$
|
(7,468
|
)
|
|
$
|
(139,166
|
)
|
Nine Months Ended July 29, 2016
|
Foreign Currency Translation
1
|
|
Benefit Obligations
2
|
|
Financial Instruments
3
|
|
Accumulated Other Comprehensive Income (Loss)
|
||||||||
Balance, October 30, 2015
|
$
|
(107,489
|
)
|
|
$
|
(80,541
|
)
|
|
$
|
(7,468
|
)
|
|
$
|
(195,498
|
)
|
Other comprehensive income (loss) before reclassifications
|
(10,758
|
)
|
|
—
|
|
|
(91
|
)
|
|
(10,849
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income (loss) to earnings
|
—
|
|
|
5,442
|
|
|
550
|
|
|
5,992
|
|
||||
Balance, July 29, 2016
|
$
|
(118,247
|
)
|
|
$
|
(75,099
|
)
|
|
$
|
(7,009
|
)
|
|
$
|
(200,355
|
)
|
Nine Months Ended July 31, 2015
|
Foreign Currency Translation
1
|
|
Benefit Obligations
2
|
|
Financial Instruments
3
|
|
Accumulated Other Comprehensive Income (Loss)
|
||||||||
Balance, October 31, 2014
|
$
|
70,820
|
|
|
$
|
(82,402
|
)
|
|
$
|
(8,088
|
)
|
|
$
|
(19,670
|
)
|
Other comprehensive income (loss) before reclassifications
|
(128,113
|
)
|
|
—
|
|
|
1,054
|
|
|
(127,059
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income (loss) to earnings
|
—
|
|
|
7,997
|
|
|
(434
|
)
|
|
7,563
|
|
||||
Balance, July 31, 2015
|
$
|
(57,293
|
)
|
|
$
|
(74,405
|
)
|
|
$
|
(7,468
|
)
|
|
$
|
(139,166
|
)
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
July 29,
2016 |
|
July 31,
2015 |
|
July 29,
2016 |
|
July 31,
2015 |
||||||||
Cost of sales
|
$
|
716
|
|
|
$
|
719
|
|
|
$
|
2,146
|
|
|
$
|
3,085
|
|
Research and development
|
228
|
|
|
223
|
|
|
682
|
|
|
1,164
|
|
||||
Selling, general and administrative
|
873
|
|
|
885
|
|
|
2,614
|
|
|
3,748
|
|
||||
Total before income taxes
|
$
|
1,817
|
|
|
$
|
1,827
|
|
|
$
|
5,442
|
|
|
$
|
7,997
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
July 29,
2016 |
|
July 31,
2015 |
|
July 29,
2016 |
|
July 31,
2015 |
||||||||
Net sales
|
|
|
|
|
|
|
|
|
|
||||||
Coatings
|
$
|
631,034
|
|
|
$
|
640,225
|
|
|
$
|
1,762,033
|
|
|
$
|
1,858,103
|
|
Paints
|
445,421
|
|
|
443,844
|
|
|
1,143,578
|
|
|
1,209,346
|
|
||||
Other and Administrative
|
116,693
|
|
|
125,986
|
|
|
323,243
|
|
|
337,356
|
|
||||
Less Inter-segment Sales
|
(51,206
|
)
|
|
(60,929
|
)
|
|
(144,359
|
)
|
|
(161,721
|
)
|
||||
Total Net sales
|
$
|
1,141,942
|
|
|
$
|
1,149,126
|
|
|
$
|
3,084,495
|
|
|
$
|
3,243,084
|
|
|
|
|
|
|
|
|
|
||||||||
EBIT
|
|
|
|
|
|
|
|
|
|||||||
Coatings
|
$
|
126,333
|
|
|
$
|
117,311
|
|
|
$
|
335,252
|
|
|
$
|
360,942
|
|
Paints
|
58,933
|
|
|
45,897
|
|
|
105,494
|
|
|
117,797
|
|
||||
Other and Administrative
|
(15,028
|
)
|
|
2,450
|
|
|
(47,241
|
)
|
|
(545
|
)
|
||||
Total EBIT
|
170,238
|
|
|
165,658
|
|
|
393,505
|
|
|
478,194
|
|
||||
Interest expense
|
23,082
|
|
|
22,622
|
|
|
68,286
|
|
|
59,178
|
|
||||
Income before income taxes
|
$
|
147,156
|
|
|
$
|
143,036
|
|
|
$
|
325,219
|
|
|
$
|
419,016
|
|
Nine Months Ended July 29, 2016
|
Liability Beginning Balance October 30, 2015
|
|
Expense
|
|
Payments and Other Activity
|
|
Liability Ending Balance July 29, 2016
|
||||||||
Coatings
|
|
|
|
|
|
|
|
|
|
|
|
||||
Severance and employee benefits
|
$
|
6,679
|
|
|
$
|
766
|
|
|
$
|
(4,874
|
)
|
|
$
|
2,571
|
|
Asset-related charges
|
—
|
|
|
(60
|
)
|
|
60
|
|
|
—
|
|
||||
Exit costs (consulting/site clean-up)
|
—
|
|
|
450
|
|
|
(450
|
)
|
|
—
|
|
||||
Total Coatings
|
6,679
|
|
|
1,156
|
|
|
(5,264
|
)
|
|
2,571
|
|
||||
Paints
|
|
|
|
|
|
|
|
||||||||
Severance and employee benefits
|
6,004
|
|
|
5,909
|
|
|
(6,274
|
)
|
|
5,639
|
|
||||
Asset-related charges
|
—
|
|
|
5,300
|
|
|
(5,300
|
)
|
|
—
|
|
||||
Exit costs (consulting/site clean-up)
|
1,069
|
|
|
1,933
|
|
|
(3,002
|
)
|
|
—
|
|
||||
Total Paints
|
7,073
|
|
|
13,142
|
|
|
(14,576
|
)
|
|
5,639
|
|
||||
Other and Administrative
|
|
|
|
|
|
|
|
||||||||
Severance and employee benefits
|
38
|
|
|
1,714
|
|
|
(228
|
)
|
|
1,524
|
|
||||
Total Other and Administrative
|
38
|
|
|
1,714
|
|
|
(228
|
)
|
|
1,524
|
|
||||
Total
|
$
|
13,790
|
|
|
$
|
16,012
|
|
|
$
|
(20,068
|
)
|
|
$
|
9,734
|
|
Nine Months Ended July 31, 2015
|
Liability Beginning Balance October 31, 2014
|
|
Expense
|
|
Payments and Other Activity
|
|
Liability Ending Balance July 31, 2015
|
||||||||
Coatings
|
|
|
|
|
|
|
|
|
|
|
|
||||
Severance and employee benefits
|
$
|
8,711
|
|
|
$
|
7,355
|
|
|
$
|
(9,000
|
)
|
|
$
|
7,066
|
|
Exit costs (consulting/site clean-up)
|
4,437
|
|
|
154
|
|
|
(4,591
|
)
|
|
—
|
|
||||
Total Coatings
|
13,148
|
|
|
7,509
|
|
|
(13,591
|
)
|
|
7,066
|
|
||||
Paints
|
|
|
|
|
|
|
|
||||||||
Severance and employee benefits
|
803
|
|
|
2,892
|
|
|
(2,291
|
)
|
|
1,404
|
|
||||
Asset-related charges
|
—
|
|
|
1,407
|
|
|
(1,407
|
)
|
|
—
|
|
||||
Exit costs (consulting/site clean-up)
|
1,901
|
|
|
1,593
|
|
|
(2,419
|
)
|
|
1,075
|
|
||||
Total Paints
|
2,704
|
|
|
5,892
|
|
|
(6,117
|
)
|
|
2,479
|
|
||||
Other and Administrative
|
|
|
|
|
|
|
|
||||||||
Severance and employee benefits
|
152
|
|
|
(9
|
)
|
|
(94
|
)
|
|
49
|
|
||||
Total Other and Administrative
|
152
|
|
|
(9
|
)
|
|
(94
|
)
|
|
49
|
|
||||
Total
|
$
|
16,004
|
|
|
$
|
13,392
|
|
|
$
|
(19,802
|
)
|
|
$
|
9,594
|
|
•
|
Overview
|
•
|
Results of Operations
|
•
|
Financial Condition
|
•
|
Non-GAAP Financial Measures
|
•
|
Critical Accounting Estimates
|
•
|
Off-Balance Sheet Arrangements
|
•
|
Forward-Looking Statements
|
•
|
Focusing on Customer Success
by delivering coatings products and solutions that add value for our customers;
|
•
|
Building Strong Brands and Distribution Partners
by investing in brands that are well recognized in the markets in which we operate and building differentiated distribution networks in key markets;
|
•
|
Developing Differentiated Technologies
by investing in technologies that enhance our competitive position and add value for our customers;
|
•
|
Driving Industry-Leading Innovation
by developing unique products and services that differentiate us in the marketplace with our customers; and
|
•
|
Attracting and Developing the Best People
by creating a world class team with deep expertise and stockholder value orientation.
|
•
|
Adhering to our values, engaging in ethical business conduct and doing business with integrity;
|
•
|
Improving the safety and reducing the environmental footprint of our business and the products we manufacture while also delivering solutions that enable our customers to meet their safety and environmental objectives; and
|
•
|
Demonstrating our corporate citizenship by supporting the communities in which we work and live through volunteer efforts and philanthropy.
|
Net Sales
|
Three Months Ended
|
|
Nine Months Ended
|
|
||||||||||||||||||
|
July 29, 2016
|
|
July 31, 2015
|
|
% Change
|
|
July 29, 2016
|
|
July 31, 2015
|
|
% Change
|
|
|
|||||||||
Coatings
|
$
|
631,034
|
|
|
$
|
640,225
|
|
|
(1.4
|
)%
|
|
$
|
1,762,033
|
|
|
$
|
1,858,103
|
|
|
(5.2
|
)%
|
|
Paints
|
445,421
|
|
|
443,844
|
|
|
0.4
|
%
|
|
1,143,578
|
|
|
1,209,346
|
|
|
(5.4
|
)%
|
|
||||
Other and Administrative
|
65,487
|
|
|
65,057
|
|
|
0.7
|
%
|
|
178,884
|
|
|
175,635
|
|
|
1.8
|
%
|
|
||||
Consolidated Net Sales
|
$
|
1,141,942
|
|
|
$
|
1,149,126
|
|
|
(0.6
|
)%
|
|
$
|
3,084,495
|
|
|
$
|
3,243,084
|
|
|
(4.9
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
Consolidated Net Sales –
Consolidated net sales for the
third
quarter of
2016
decreased
0.6%
compared to the
third
quarter of
2015
, including a
negative
impact of
2.1%
from foreign currency exchange. Excluding foreign currency exchange, the increase was driven by higher sales in our Coil and Wood product lines and the acquisition of Quest in the third quarter of 2015, partially offset by lower sales in our global General Industrial product line and our Consumer Paints product line in North America. Year-to-date, consolidated net sales
decreased
4.9%
, including a
negative
impact of
3.5%
from foreign currency exchange. Excluding foreign currency exchange, the decrease was driven by lower sales in our Consumer Paints product line, primarily in North America, and lower sales in our General Industrial product lines, partially offset by the acquisition of Quest and higher sales in our Coil product line.
|
•
|
Coatings Segment Net Sales –
Our Coatings segment net sales for the
third
quarter of
2016
decreased
1.4%
compared to the
third
quarter of
2015
, including a
negative
impact of
2.7%
from foreign currency exchange. Excluding foreign currency exchange, the increase was driven by improved sales in our Coil and Wood product lines, partially offset by lower sales in our General Industrial product lines. Year-to-date, our Coatings segment net sales
decreased
5.2%
, including a
negative
impact of
4.3%
from foreign currency exchange. Excluding foreign currency exchange, the decrease was driven by lower sales in our General Industrial product lines, partially offset by improved sales in our Coil product line.
|
•
|
Paints Segment Net Sales –
Our Paints segment net sales for the
third
quarter of
2016
increased
0.4%
compared to the
third
quarter of
2015
, including a
negative
impact of
1.5%
from foreign currency exchange. Excluding foreign currency exchange, the increase was driven by the acquisition of Quest, partially offset by lower sales in North America at Lowe's. Year-to-date, our Paints segment net sales
decreased
5.4%
, including a
negative
impact of
2.6%
from foreign currency
|
Gross Profit
|
Three Months Ended
|
|
Nine Months Ended
|
|
||||||||||||
|
July 29, 2016
|
|
July 31, 2015
|
|
July 29, 2016
|
|
July 31, 2015
|
|
||||||||
Consolidated Gross Profit
|
$
|
421,947
|
|
|
$
|
411,283
|
|
|
$
|
1,142,015
|
|
|
$
|
1,137,778
|
|
|
As a percent of Net Sales
|
36.9
|
%
|
|
35.8
|
%
|
|
37.0
|
%
|
|
35.1
|
%
|
|
||||
|
|
|
|
|
|
|
|
|
•
|
Gross Profit –
The gross profit rate for the
third
quarter of
2016
increased
compared to the
third
quarter of 2015. The increase was driven by improved productivity. The gross profit rate for the year-to-date period of
2016
increased
compared to the year-to-date period of 2015. The increase was driven by improved productivity and favorable price/cost comparison, partially offset by the impact of lower volume on manufacturing costs. Productivity includes procurement efficiencies, product reformulations and benefits from previously completed restructuring actions. Cost/price comparison reflects the impact of market changes in raw material costs, offset by changes in product pricing and promotions. Restructuring charges of
$1,943
or
0.2%
of net sales and
$7,304
or
0.2%
of net sales were included in the
third
quarter and year-to-date of
2016
, respectively. Restructuring charges of
$1,319
or
0.1%
of net sales and
$7,398
or
0.2%
of net sales were included in the
third
quarter and year-to-date of
2015
, respectively.
|
Operating Expenses
1
|
Three Months Ended
|
|
Nine Months Ended
|
|
||||||||||||
|
July 29, 2016
|
|
July 31, 2015
|
|
July 29, 2016
|
|
July 31, 2015
|
|
||||||||
Consolidated Operating Expenses
|
$
|
251,606
|
|
|
$
|
245,555
|
|
|
$
|
747,041
|
|
|
$
|
706,786
|
|
|
As a percent of Net Sales
|
22.0
|
%
|
|
21.4
|
%
|
|
24.2
|
%
|
|
21.8
|
%
|
|
||||
|
|
|
|
|
|
|
|
|
•
|
Consolidated Operating Expenses (dollars) –
Consolidated operating expenses for the
third
quarter of
2016
increased
$6,051
or
2.5%
compared to the
third
quarter of
2015
, including a favorable impact of
1.7%
from foreign currency exchange. Year-to-date consolidated operating expenses
increased
$40,255
or
5.7%
, including a favorable impact of
3.4%
from foreign currency exchange. Excluding foreign currency exchange, the increase in both periods was primarily due to higher employee-related costs, proposed merger-related charges and the addition of Quest, partially offset by lower marketing expenses. Charges related to the proposed Merger of
$4,616
and
$22,856
were included in the
third
quarter and year-to-date of 2016, respectively. There were no proposed merger-related charges in the prior year periods. Restructuring charges of
$3,302
or
0.3%
of net sales and
$8,708
or
0.3%
of net sales were included in the
third
quarter
|
EBIT
1
|
Three Months Ended
|
|
Nine Months Ended
|
|
||||||||||||
|
July 29, 2016
|
|
July 31, 2015
|
|
July 29, 2016
|
|
July 31, 2015
|
|
||||||||
Coatings
|
$
|
126,333
|
|
|
$
|
117,311
|
|
|
$
|
335,252
|
|
|
$
|
360,942
|
|
|
As a percent of Net Sales
|
20.0
|
%
|
|
18.3
|
%
|
|
19.0
|
%
|
|
19.4
|
%
|
|
||||
Paints
|
$
|
58,933
|
|
|
$
|
45,897
|
|
|
$
|
105,494
|
|
|
$
|
117,797
|
|
|
As a percent of Net Sales
|
13.2
|
%
|
|
10.3
|
%
|
|
9.2
|
%
|
|
9.7
|
%
|
|
||||
Other and Administrative
|
$
|
(15,028
|
)
|
|
$
|
2,450
|
|
|
$
|
(47,241
|
)
|
|
$
|
(545
|
)
|
|
As a percent of Net Sales
|
(22.9
|
)%
|
|
3.8
|
%
|
|
(26.4
|
)%
|
|
(0.3
|
)%
|
|
||||
Consolidated EBIT
|
$
|
170,238
|
|
|
$
|
165,658
|
|
|
$
|
393,505
|
|
|
$
|
478,194
|
|
|
As a percent of Net Sales
|
14.9
|
%
|
|
14.4
|
%
|
|
12.8
|
%
|
|
14.7
|
%
|
|
||||
|
|
|
|
|
|
|
|
|
•
|
Consolidated EBIT –
EBIT for the
third
quarter of
2016
increased
$4,580
or
2.8%
from the prior year. The quarter included
$4,616
in proposed merger-related expenses, recorded in Other and Administrative. Year-to-date EBIT
decreased
$84,689
or
17.7%
from the prior year. Prior year first quarter EBIT included a pre-tax gain of $48,001 from the sale of certain assets of a non-strategic specialty product offering, recorded in the Coatings segment. Year-to-date EBIT includes
$22,856
in proposed merger-related charges, recorded in Other and Administrative. Restructuring charges of
$5,245
or
0.5%
of net sales and
$16,012
or
0.5%
of net sales were included in the
third
quarter and year-to-date of
2016
, respectively. Restructuring charges of
$4,599
or
0.4%
of net sales and
$13,392
or
0.4%
of net sales were included in the
third
quarter and year-to-date of
2015
, respectively. Foreign currency exchange had a negative impact on consolidated EBIT of approximately
$3,000
in the
third
quarter and
$11,300
year-to-date.
|
•
|
Coatings Segment EBIT –
EBIT as a percent of net sales increased
1.7
percentage points for the
third
quarter compared to the prior year period. The increase was primarily due to improved productivity. Year-to-date EBIT as a percent of net sales decreased
0.4
percentage points compared to the prior year period. The decrease was primarily due to the gain on sale of certain assets in the prior period, offset by improved productivity and favorable cost/price comparison. Restructuring charges of
$790
and
$1,156
were included in the
third
quarter and year-to-date of
2016
, respectively. Restructuring charges of
$2,600
and
$7,509
were included in the
third
quarter and year-to-date of
2015
, respectively.
|
•
|
Paints Segment EBIT –
EBIT as a percent of net sales for the
third
quarter increased
2.9
percentage points compared to the prior year period. The increase was driven by improved productivity including benefits of our restructuring initiatives and lower marketing expenses, partially offset by impairment of a certain asset group in our Consumer Paints product line. Year-to-date EBIT as a percent of net sales decreased
0.5
percentage points compared to the prior year period. The decrease was driven by the effect of lower volumes in our Consumer Paints product line, partially offset by improved productivity including benefits of our restructuring initiatives and favorable cost/price comparison. Restructuring charges of
$2,700
and
$13,142
were included in the
third
quarter and year-to-date of
2016
, respectively. Restructuring charges of
$1,999
and
$5,892
were included in the
third
quarter and year-to-date of
2015
, respectively.
|
•
|
Other and Administrative EBIT –
Other and Administrative EBIT includes corporate expenses. EBIT as a percent of net sales for the
third
quarter was
26.7
percentage points unfavorable compared to the prior year period. Year-to-date EBIT as a percent of net sales was
26.1
percentage points unfavorable compared to the prior year period. The decline in both periods was primarily due to proposed merger-related costs, increased employee-related costs and other administrative expenses.
|
Interest Expense
|
Three Months Ended
|
|
Nine Months Ended
|
|
||||||||||||
|
July 29, 2016
|
|
July 31, 2015
|
|
July 29, 2016
|
|
July 31, 2015
|
|
||||||||
Consolidated Interest Expense
|
$
|
23,082
|
|
|
$
|
22,622
|
|
|
$
|
68,286
|
|
|
$
|
59,178
|
|
|
|
|
|
|
|
|
|
|
|
•
|
Interest Expense –
Interest expense
increased
compared to the
third
quarter and year-to-date periods of
2015
primarily due to higher average debt levels, primarily from the Quest acquisition.
|
Effective Tax Rate
|
Three Months Ended
|
|
Nine Months Ended
|
|
||||||||
|
July 29, 2016
|
|
July 31, 2015
|
|
July 29, 2016
|
|
July 31, 2015
|
|
||||
Effective Tax Rate
|
20.5
|
%
|
|
28.1
|
%
|
|
23.3
|
%
|
|
29.1
|
%
|
|
|
|
|
|
|
|
|
|
|
•
|
Effective Tax Rate –
The lower
third
quarter and year-to-date
2016
effective tax rates were primarily driven by recognition of U.S. foreign tax credits and research and development credits in fiscal year 2016.
|
Net Income
|
Three Months Ended
|
|
Nine Months Ended
|
|
||||||||||||||||||
|
July 29, 2016
|
|
July 31, 2015
|
|
% Change
|
|
July 29, 2016
|
|
July 31, 2015
|
|
% Change
|
|
||||||||||
Consolidated Net Income
|
$
|
116,988
|
|
|
$
|
102,862
|
|
|
13.7
|
%
|
|
$
|
249,446
|
|
|
$
|
297,150
|
|
|
(16.1
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
July 29, 2016
|
|
July 31, 2015
|
|
July 29, 2016
|
|
July 31, 2015
|
||||||||
Coatings Segment
|
|
|
|
|
|
|
|
|
|
||||||
Earnings before interest and taxes (EBIT)
|
$
|
126,333
|
|
|
$
|
117,311
|
|
|
$
|
335,252
|
|
|
$
|
360,942
|
|
Restructuring charges – cost of sales
|
22
|
|
|
825
|
|
|
94
|
|
|
3,776
|
|
||||
Restructuring charges – operating expense
|
768
|
|
|
1,775
|
|
|
1,062
|
|
|
3,733
|
|
||||
Acquisition-related charges – operating expense
|
16
|
|
|
—
|
|
|
926
|
|
|
—
|
|
||||
Gain on sale of certain assets
|
—
|
|
|
—
|
|
|
—
|
|
|
(48,001
|
)
|
||||
Adjusted EBIT
|
$
|
127,139
|
|
|
$
|
119,911
|
|
|
$
|
337,334
|
|
|
$
|
320,450
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
July 29, 2016
|
|
July 31, 2015
|
|
July 29, 2016
|
|
July 31, 2015
|
||||||||
Paints Segment
|
|
|
|
|
|
|
|
||||||||
EBIT
|
$
|
58,933
|
|
|
$
|
45,897
|
|
|
$
|
105,494
|
|
|
$
|
117,797
|
|
Restructuring charges – cost of sales
|
1,921
|
|
|
494
|
|
|
7,210
|
|
|
3,622
|
|
||||
Acquisition-related charges – cost of sales
|
—
|
|
|
2,952
|
|
|
—
|
|
|
2,952
|
|
||||
Impairment of certain long-lived assets – cost of sales
|
5,867
|
|
|
—
|
|
|
5,867
|
|
|
—
|
|
||||
Restructuring charges – operating expense
|
779
|
|
|
1,505
|
|
|
5,932
|
|
|
2,270
|
|
||||
Acquisition-related charges – operating expense
|
—
|
|
|
892
|
|
|
215
|
|
|
892
|
|
||||
Adjusted EBIT
|
$
|
67,500
|
|
|
$
|
51,740
|
|
|
$
|
124,718
|
|
|
$
|
127,533
|
|
|
|
|
|
|
|
|
|
||||||||
Other and Administrative
|
|
|
|
|
|
|
|
||||||||
EBIT
|
$
|
(15,028
|
)
|
|
$
|
2,450
|
|
|
$
|
(47,241
|
)
|
|
$
|
(545
|
)
|
Restructuring charges – operating expense
|
1,755
|
|
|
—
|
|
|
1,714
|
|
|
(9
|
)
|
||||
Proposed merger-related charges – operating expense
|
4,616
|
|
|
—
|
|
|
22,856
|
|
|
—
|
|
||||
Adjusted EBIT
|
$
|
(8,657
|
)
|
|
$
|
2,450
|
|
|
$
|
(22,671
|
)
|
|
$
|
(554
|
)
|
|
|
|
|
|
|
|
|
||||||||
Total
|
|
|
|
|
|
|
|
||||||||
Gross profit
|
$
|
421,947
|
|
|
$
|
411,283
|
|
|
$
|
1,142,015
|
|
|
$
|
1,137,778
|
|
Restructuring charges – cost of sales
|
1,943
|
|
|
1,319
|
|
|
7,304
|
|
|
7,398
|
|
||||
Acquisition-related charges – cost of sales
|
—
|
|
|
2,952
|
|
|
—
|
|
|
2,952
|
|
||||
Impairment of certain long-lived assets – cost of sales
|
5,867
|
|
|
—
|
|
|
5,867
|
|
|
—
|
|
||||
Adjusted gross profit
|
$
|
429,757
|
|
|
$
|
415,554
|
|
|
$
|
1,155,186
|
|
|
$
|
1,148,128
|
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses
|
$
|
251,606
|
|
|
$
|
245,555
|
|
|
$
|
747,041
|
|
|
$
|
706,786
|
|
Restructuring charges – operating expense
|
(3,302
|
)
|
|
(3,280
|
)
|
|
(8,708
|
)
|
|
(5,994
|
)
|
||||
Proposed merger-related charges – operating expense
|
(4,616
|
)
|
|
—
|
|
|
(22,856
|
)
|
|
—
|
|
||||
Acquisition-related charges – operating expense
|
(16
|
)
|
|
(892
|
)
|
|
(1,141
|
)
|
|
(892
|
)
|
||||
Adjusted operating expenses
|
$
|
243,672
|
|
|
$
|
241,383
|
|
|
$
|
714,336
|
|
|
$
|
699,900
|
|
|
|
|
|
|
|
|
|
||||||||
EBIT
|
$
|
170,238
|
|
|
$
|
165,658
|
|
|
$
|
393,505
|
|
|
$
|
478,194
|
|
Restructuring charges – total
|
5,245
|
|
|
4,599
|
|
|
16,012
|
|
|
13,392
|
|
||||
Proposed merger-related charges – total
|
4,616
|
|
|
—
|
|
|
22,856
|
|
|
—
|
|
||||
Acquisition-related charges – total
|
16
|
|
|
3,844
|
|
|
1,141
|
|
|
3,844
|
|
||||
Impairment of certain long-lived assets – total
|
5,867
|
|
|
—
|
|
|
5,867
|
|
|
—
|
|
||||
Gain on sale of certain assets
|
—
|
|
|
—
|
|
|
—
|
|
|
(48,001
|
)
|
||||
Adjusted EBIT
|
$
|
185,982
|
|
|
$
|
174,101
|
|
|
$
|
439,381
|
|
|
$
|
447,429
|
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
116,988
|
|
|
$
|
102,862
|
|
|
$
|
249,446
|
|
|
$
|
297,150
|
|
Restructuring charges – total
1
|
5,245
|
|
|
4,599
|
|
|
16,012
|
|
|
13,392
|
|
||||
Proposed merger-related charges – total
2
|
4,616
|
|
|
—
|
|
|
22,856
|
|
|
—
|
|
||||
Acquisition-related charges – total
3
|
16
|
|
|
3,844
|
|
|
1,141
|
|
|
3,844
|
|
||||
Impairment of certain long-lived assets – total
4
|
5,867
|
|
|
—
|
|
|
5,867
|
|
|
—
|
|
||||
Gain on sale of certain assets
5
|
—
|
|
|
—
|
|
|
—
|
|
|
(48,001
|
)
|
||||
Total pre-tax adjustments
|
15,744
|
|
|
8,443
|
|
|
45,876
|
|
|
(30,765
|
)
|
||||
Income taxes impact - total
6
|
(5,414
|
)
|
|
(2,529
|
)
|
|
(16,500
|
)
|
|
5,430
|
|
||||
Adjusted net income
|
$
|
127,318
|
|
|
$
|
108,776
|
|
|
$
|
278,822
|
|
|
$
|
271,815
|
|
|
|
|
|
|
|
|
|
||||||||
Average number of shares outstanding - diluted
|
81,185,695
|
|
|
81,999,701
|
|
|
80,904,905
|
|
|
82,910,996
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Adjusted net income per common share – diluted
|
$
|
1.57
|
|
|
$
|
1.33
|
|
|
$
|
3.45
|
|
|
$
|
3.28
|
|
|
|
|
|
|
|
|
|
•
|
the attention of our management may be directed to transaction-related considerations and may be diverted from the day-to-day operations of our business;
|
•
|
our employees may experience uncertainty about their future roles with us, which might adversely affect our ability to hire, retain and motivate key personnel and other employees;
|
•
|
customers, suppliers or other parties which we maintain business relationships may experience uncertainty prior to the closing of the Merger and seek alternative relationships with third parties or seek to terminate or re-negotiate their relationships with us; and
|
•
|
the Merger Agreement restricts us from engaging in certain actions without the consent of Sherwin-Williams, which could prevent us from pursuing opportunities that may arise prior to the consummation of the Merger.
|
Exhibit
Number
|
|
Description
|
|
|
|
10.1
|
|
Amendment to The Valspar Corporation 2015 Omnibus Equity Plan (incorporated by reference to Exhibit 10.1 of Valspar’s Form 8-K filed on June 10, 2016).
|
|
|
|
10.2
|
|
The Valspar Corporation Amended and Restated Key Employee Annual Bonus and Long-Term Incentive Plan dated June 8, 2016 (incorporated by reference to Exhibit 10.2 of Valspar’s Form 8-K filed on June 10, 2016).
|
|
|
|
31.1 *
|
|
Section 302 Certification of the Chief Executive Officer
|
|
|
|
31.2 *
|
|
Section 302 Certification of the Chief Financial Officer
|
|
|
|
32.1 *
|
|
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. §1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
101.INS *
|
|
XBRL Instance Document
|
|
|
|
101.SCH *
|
|
XBRL Schema Document
|
|
|
|
101.CAL *
|
|
XBRL Calculation Linkbase Document
|
|
|
|
101.DEF *
|
|
XBRL Definition Linkbase Document
|
|
|
|
101.LAB *
|
|
XBRL Label Linkbase Document
|
|
|
|
101.PRE *
|
|
XBRL Presentation Linkbase Document
|
|
|
|
THE VALSPAR CORPORATION
|
|
|
||||
Date: September 7, 2016
|
|
|
By
|
/s/ Rolf Engh
|
|
|
|
Rolf Engh
|
|
|
|
|
Executive Vice President, General Counsel and Secretary
|
|
|
||||
Date: September 7, 2016
|
|
|
By
|
/s/ James L. Muehlbauer
|
|
|
|
James L. Muehlbauer
|
|
|
|
|
Executive Vice President, Chief Financial and Administrative Officer
|
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