VAL Valaris Limited

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Act of 1934

 

Date of Report (Date of earliest event reported):  November 24, 2015

 

THE VALSPAR CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware	1-3011	36-2443580
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
1101 South 3rd Street, Minneapolis, Minnesota		55415
(Address of principal executive offices)		(Zip Code)

 

Registrant’s telephone number, including area code:  (612) 851-7000

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Item 2.02.	Results of Operations and Financial Condition.
	On November 24, 2015, the Company issued the press release attached as Exhibit 99.1, which sets out the Company’s results of operations for the fiscal quarter and full year ended October 30, 2015.
Item 9.01	Financial Statements and Exhibits.
(d)	Exhibits
	99.1	Fourth Quarter and Year-End Earnings Press Release dated November 24, 2015

 

 

 

 

 

 

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

	THE VALSPAR CORPORATION
Dated:  November 24, 2015	/s/ Rolf Engh
	Name:	Rolf Engh
	Title:	Secretary

 

 

 

 

 

 

 

 

EXHIBIT INDEX

 

 

Exhibit No.		Description
99.1		Fourth Quarter and Year-End Earnings Press Release dated November 24, 2015

 

 

 

 

 

Exhibit 99.1

 

	News Release

 

Valspar Reports Fiscal Fourth Quarter 2015 and Year-End Results¹

·

Fiscal 2015 Highlights:

o

Diluted EPS (as adjusted) increased 6% to a record $4.62

o

Net sales increased 1%2

o

Coatings segment volume increased 3% and Paints segment volume declined 4%

·

Fiscal Fourth Quarter 2015 Highlights:

o

Diluted EPS (as adjusted) decreased 2% to $1.35

o

Net sales increased 1%2

o

EBIT margin (as adjusted) improved 150 bps to 15.4%, driven by the Coatings segment

·

Fiscal 2016 Guidance:

o

Sales guidance of growth in the “mid-single digits” in constant currency (sales including the impact of foreign currency translation expected to be “up slightly” compared to fiscal 2015)

o

Diluted EPS (as adjusted) guidance of $4.80 to $5.00 (range includes 20 cent impact from foreign currency translation)

o

Diluted EPS (as adjusted) guidance range reflects 8% to 13% growth in constant currency

¹ Fiscal 2015 highlights and fiscal 2016 guidance commentary above includes “non-GAAP” financial measures as supplemental information. Such non-GAAP information should be considered in conjunction with the GAAP financial measures.

² Fiscal Q4 and full year 2015 net sales results above exclude the estimated impact of foreign currency translation and the 53^rd week in fiscal 4^th quarter of 2014 (53^rd week impacted North America only). These results should not be confused with the GAAP numbers in this earnings release.

 

Minneapolis – (BUSINESS WIRE) – November 24, 2015 – The Valspar Corporation today reported fiscal fourth quarter 2015 net sales of $1.15 billion, a decrease of 9 percent over the prior year. This includes the effects of foreign currency translation that negatively impacted net sales by 6 percent; the estimated impact of the extra week in fiscal fourth quarter 2014 that reduced sales by 3 percent; and acquisitions that added 4 percent to net sales in the quarter. Total volume declined 2 percent in fiscal fourth quarter 2015. This includes the estimated impact of the extra week in fiscal fourth quarter 2014 that reduced volume by 3 percent and acquisitions that added 2 percent to volume in the quarter. Reported net income of $102 million and earnings per diluted share of $1.26 for fiscal fourth quarter 2015 include nonrecurring items, which are detailed in the “Reconciliation of Non-GAAP Financial Measures” included in this release. Fourth quarter 2015 adjusted net income and earnings per diluted share, excluding these nonrecurring items, were $109 million and $1.35, respectively.

 

Fiscal year 2015 net sales were $4.4 billion, and decreased 5 percent versus the prior year. This includes the effects of foreign currency translation that negatively impacted net sales by 5 percent; the estimated impact of the extra week in fiscal fourth quarter 2014 that reduced sales by 1 percent; and acquisitions added 2 percent to net sales in the year. Reported net income of $400 million and earnings per diluted share of $4.85 for fiscal 2015 include nonrecurring items, which are detailed in the “Reconciliation of Non-GAAP Financial Measures” included in this release. Fiscal year 2015 adjusted net income and earnings per diluted share, excluding these nonrecurring items, were $381 million and $4.62, respectively.

“2015 was another year of record earnings for Valspar,” said Gary E. Hendrickson, chairman and chief executive officer. “Adjusted EBIT grew 4 percent and EPS increased 6 percent for the year. We delivered this growth while facing difficult comparisons to the exceptional performance in 2014, a strengthening U.S. Dollar and a product line adjustment at a significant customer. Our performance in 2015 demonstrates the strength of Valspar’s diverse portfolio of businesses and operating model. We’re executing well, by winning new business and achieving significant productivity. In addition, we leveraged the success of this performance, by increasing our dividend 15 percent and repurchasing 5 percent of our outstanding shares during the year. ”

 

“During the fourth quarter of 2015, the Coatings segment continued its positive momentum, with new business wins in all product lines.” Hendrickson added. “In the Paints segment, international volume increased and sell-through trends improved in North America. Consolidated EBIT margin (as adjusted) increased 150 basis points in the fourth quarter, driven by strong commercial execution and significant productivity initiatives.”

 

Commenting on the company’s outlook Hendrickson said, “Looking ahead to fiscal 2016, we expect sales to increase in the mid-single digits and adjusted EPS growth of 8 to 13 percent, excluding the impact of foreign currency.”

 

Fiscal Fourth Quarter and Full Year 2015 Segment Results

Fiscal fourth quarter 2015 net sales in the Coatings segment decreased 11 percent to $638 million. This includes the effects of foreign currency translation that negatively impacted net sales by 7 percent and the estimated impact of the extra week in fiscal fourth quarter 2014 that reduced net sales by 3 percent in the quarter. Volumes decreased 3 percent in the fiscal fourth quarter of 2015. This includes the estimated impact of the extra week in fiscal fourth quarter 2014 that reduced volume by 3 percent in the quarter. Coatings segment adjusted earnings before interest and taxes (EBIT) of $125 million increased 7 percent, driven by benefits from productivity initiatives and improvements in cost/price, partially offset by the impact of currency translation. Adjusted EBIT as a percent of net sales increased to 19.5% from 16.4% in the prior year.

 

Fiscal 2015 net sales in the Coatings segment decreased 3 percent to $2.50 billion. This includes the effects of foreign currency translation that negatively impacted net sales by 6 percent and the estimated impact of the extra week in fiscal fourth quarter 2014 that reduced net sales by 1 percent in the year. Coatings segment EBIT of $445 million increased 6 percent from $418 million. Adjusted EBIT as a percent of net sales increased to 17.8% from 16.2% in the prior year.

Fiscal fourth quarter 2015 net sales in the Paints segment decreased 7 percent to $452 million. This includes the effects of foreign currency translation that negatively impacted net sales by 5 percent, the estimated impact of the extra week in fiscal fourth quarter 2014 that reduced net sales by 3 percent and acquisitions added 10 percent to net sales in the quarter. Volumes were down 2 percent in the fiscal fourth quarter of 2015. This includes the estimated impact of the extra week in fiscal fourth quarter 2014 that reduced volume by 2 percent and acquisitions that added 5 percent to volume in the quarter. Paints segment adjusted EBIT of $63 million declined 10 percent, driven by the lower sales, partially offset by positive benefits from productivity initiatives and the Quest acquisition. Adjusted EBIT as a percent of net sales declined to 14.0% from 14.4% in the prior year.

Fiscal 2015 net sales in the Paints segment decreased 8 percent to $1.7 billion. This includes the effects of foreign currency translation that negatively impacted net sales by 4 percent, the estimated impact of the extra week in fiscal fourth quarter 2014 that reduced net sales by 1 percent and acquisitions added 4 percent to net sales in the year. Paints segment adjusted EBIT of $191 million decreased 7 percent from $204 million. Adjusted EBIT as a percent of net sales increased to 11.5% from 11.3% in the prior year.

 

Dividends and Share Repurchases

During the quarter, the company paid a quarterly dividend of $0.30 per common share outstanding, or $24 million. For the full year fiscal 2015, the company paid dividends of $97 million (representing a per share increase of 15 percent). Valspar is a member of the S&P High Yield Dividend Aristocrats®, which is comprised of companies increasing dividends every year for at least 20 consecutive years. During the quarter, the company repurchased 900 thousand shares of its stock, for $77 million. For the full year fiscal 2015, the company repurchased approximately 3.9 million shares (or 5%) of the Company’s stock for $322 million.

 

Fiscal 2016 Guidance

The company is providing initial guidance for fiscal 2016, which includes sales growth in the “mid-single digits” in constant currency (sales including the estimated impact of foreign currency translation expected to be “up slightly” compared to fiscal 2015). The company expects annual Fiscal 2016 diluted EPS (as adjusted) of $4.80 to $5.00. This guidance range includes a 20 cent unfavorable impact from foreign currency translation. Annual Fiscal 2016 diluted EPS (as adjusted) guidance reflects growth of 8% to 13% in constant currency.

 

 

An earnings conference call is scheduled for 11:00 a.m. Eastern Time (10:00 a.m. Central Time) today and will be webcast and accessible from the Investor Relations section of Valspar’s website at http://investors.valspar.com.

 

Valspar: If it matters, we’re on it.®
Valspar is a global leader in the coatings industry providing customers with innovative, high-quality products and value-added services.  Our 11,100 employees worldwide deliver advanced coatings solutions with best-in-class appearance, performance, protection and sustainability to customers in more than 100 countries. Valspar offers a broad range of superior coatings products for the consumer market, and highly-engineered solutions for the construction, industrial, packaging and transportation markets. Founded in 1806, Valspar is headquartered in Minneapolis. Valspar’s reported net sales in fiscal 2015 were $4.4 billion and its shares are traded on the New York Stock Exchange (symbol: VAL). For more information, visit www.valspar.com and follow @valspar on Twitter.

 

 

# # #

 

Investor Contact:

Bill Seymour

612.656.1328

william.seymour@valspar.com

 

 

Media Contact:

Kimberly A. Welch

612.656.1347

kim.welch@valspar.com

 

 

FORWARD-LOOKING STATEMENTS

Certain statements contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. Forward-looking statements are based on management’s current expectations, estimates, assumptions and beliefs about future events, conditions and financial performance. Forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside our control and could cause actual results to differ materially from such statements. Any statement that is not historical in nature is a forward-looking statement. We may identify forward-looking statements with words and phrases such as “expects,” “projects,” “estimates,” “anticipates,” “believes,” “could,” “may,” “will,” “plans to,” “intends,” “should” and similar expressions. These risks, uncertainties and other factors include, but are not limited to, deterioration in general economic conditions, both domestic and international, that may adversely affect our business; fluctuations in availability and prices of raw materials, including raw material shortages and other supply chain disruptions, and the inability to pass along or delays in passing along raw material cost increases to our customers; dependence of internal sales and earnings growth on business cycles affecting our customers and growth in the domestic and international coatings industry; market share loss to, and pricing or margin pressure from, larger competitors with greater financial resources; significant indebtedness that restricts the use of cash flow from operations for acquisitions and other investments; dependence on acquisitions for growth, and risks related to future acquisitions, including adverse changes in the results of acquired businesses, the assumption of unforeseen liabilities and disruptions resulting from the integration of acquisitions; risks and uncertainties associated with operating in foreign markets, including achievement of profitable growth in developing markets; impact of fluctuations in foreign currency exchange rates on our financial results; loss of business with key customers; damage to our reputation and business resulting from product claims or recalls, litigation, customer perception and other matters; our ability to respond to technology changes and to protect our technology; possible interruption, failure or compromise of the information systems we use to operate our business; changes in governmental regulation, including more stringent environmental, health and safety regulations; our reliance on the efforts of vendors, government agencies, utilities and other third parties to achieve adequate compliance and avoid disruption of our business; unusual weather conditions adversely affecting sales; changes in accounting policies and standards and taxation requirements such as new tax laws or revised tax law interpretations; the nature, cost and outcome of pending and future litigation and other legal proceedings; and civil unrest and the outbreak of war and other significant national and international events. We undertake no obligation to subsequently revise any forward-looking statement to reflect new information, events or circumstances after the date of such statement, except as required by law.

 

 

THE VALSPAR CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

For the Three Months and Years Ended October 30, 2015 and October 31, 2014

(Dollars in thousands, except per share amounts)

 

		Three Months Ended								Years Ended
		October 30,				October 31,				October 30,				October 31,
		2015				2014				2015				2014
Net Sales1		$	1,149,538			$	1,261,377			$	4,392,622			$	4,625,624
Cost of Sales1			727,842				828,040				2,822,798				3,058,107
Restructuring Charges - Cost of Sales			6,609				10,794				14,007				28,471
Acquisition-related Charges - Cost of Sales			1,476				—				4,428				—
Gross Profit			413,611				422,543				1,551,389				1,539,046
Research and Development			33,223				33,706				132,813				134,134
Selling, General and Administrative			209,826				224,061				810,136				832,335
Restructuring Charges - Operating Expenses			1,568				2,030				7,562				12,668
Acquisition-related Charges - Operating Expenses			—				—				892				—
Operating Expenses			244,617				259,797				951,403				979,137
Gain on Sale of Certain Assets			—				—				48,001				—
Income From Operations			168,994				162,746				647,987				559,909
Interest Expense			22,170				17,505				81,348				65,330
Other (Income) Expense, Net			2,039				196				2,838				2,697
Income Before Income Taxes			144,785				145,045				563,801				491,882
Income Taxes			42,429				36,989				164,295				146,481
Net Income		$	102,356			$	108,056			$	399,506			$	345,401
Average Number of Shares O/S - basic			79,147,730				82,434,042				80,429,741				83,710,111
Average Number of Shares O/S - diluted			81,032,079				84,635,463				82,446,703				86,046,057
Net Income per Common Share - basic		$	1.29			$	1.31			$	4.97			$	4.13
Net Income per Common Share - diluted		$	1.26			$	1.28			$	4.85			$	4.01

 

¹ Certain amounts in the 2014 financial statements have been reclassified to conform to the 2015 presentation. In the first quarter of 2015, we reclassified freight costs on shipments to customers as cost of sales. Previously these costs were recorded as a deduction from net sales. Reclassifications had no effect on net income (loss), cash flows or stockholders’ equity as previously reported.

 

 

 

 

 

 

THE VALSPAR CORPORATION

SEGMENT INFORMATION (UNAUDITED AND SUBJECT TO RECLASSIFICATION)

For the Three Months and Years Ended October 30, 2015 and October 31, 2014

(Dollars in thousands)

 

		Three Months Ended								Years Ended
		October 30,				October 31,				October 30,				October 31,
		2015				2014				2015				2014
Coatings Segment
Net Sales1		$	638,425			$	714,291			$	2,496,528			$	2,585,416
Earnings Before Interest and Taxes (EBIT)			122,707				106,494				483,649				389,390
Key Metrics (GAAP):
Sales Growth1			(10.6%	)			15.3%				(3.4%	)			13.8%
EBIT, % of Net Sales1			19.2%				14.9%				19.4%				15.1%
Key Metrics (non-GAAP)2:
Adjusted EBIT		$	124,772			$	116,992			$	445,222			$	418,292
Adjusted EBIT, % of Net Sales1			19.5%				16.4%				17.8%				16.2%
Paints Segment
Net Sales1		$	451,840			$	484,095			$	1,661,186			$	1,806,051
EBIT			55,638				67,578				173,435				192,222
Key Metrics (GAAP):
Sales Growth1			(6.7%	)			6.7%				(8.0%	)			6.9%
EBIT, % of Net Sales1			12.3%				14.0%				10.4%				10.6%
Key Metrics (non-GAAP)2:
Adjusted EBIT		$	63,135			$	69,877			$	190,668			$	204,156
Adjusted EBIT, % of Net Sales1			14.0%				14.4%				11.5%				11.3%
Other and Administrative
Net Sales1		$	59,273			$	62,991			$	234,908			$	234,157
EBIT			(11,390	)			(11,522	)			(11,935	)			(24,400	)
Key Metrics (GAAP):
Sales Growth1			(5.9%	)			5.3%				0.3%				0.3%
EBIT, % of Net Sales1			(19.2%	)			(18.3%	)			(5.1%	)			(10.4%	)
Key Metrics (non-GAAP)2:
Adjusted EBIT		$	(11,299	)		$	(11,495	)		$	(11,853	)		$	(24,097	)
Adjusted EBIT, % of Net Sales1			(19.1%	)			(18.2%	)			(5.0%	)			(10.3%	)

 

¹ Certain amounts in the 2014 financial statements have been reclassified to conform to the 2015 presentation. In the first quarter of 2015, we reclassified freight costs on shipments to customers as cost of sales. Previously these costs were recorded as a deduction from net sales. Reclassifications had no effect on net income (loss), cash flows or stockholders’ equity as previously reported.

 

² The information on this page includes non-GAAP financial measures. Please refer to the "RECONCILIATION OF NON-GAAP FINANCIAL MEASURES" included in this release for detailed information.

 

 

 

THE VALSPAR CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

As of October 30, 2015 and October 31, 2014

(Dollars in thousands)

 

		October 30, 2015				October 31, 2014
Assets
Current Assets:
Cash and Cash Equivalents		$	185,961			$	128,203
Restricted Cash			1,307				2,868
Accounts and Notes Receivable, Net			857,256				840,447
Inventories			451,909				486,262
Deferred Income Taxes			37,707				28,898
Prepaid Expenses and Other			97,090				90,579
Total Current Assets			1,631,230				1,577,257
Goodwill			1,287,703				1,125,824
Intangibles, Net			643,100				592,512
Other Assets			112,735				83,072
Long-Term Deferred Income Taxes			11,042				10,184
Property, Plant & Equipment, Net			632,765				645,102
Total Assets		$	4,318,575			$	4,033,951
Liabilities and Stockholders' Equity
Current Liabilities:
Short-term Debt		$	334,022			$	443,854
Current Portion of Long-Term Debt			131				162,502
Trade Accounts Payable			553,737				600,875
Income Taxes			36,010				26,017
Other Accrued Liabilities			442,839				471,173
Total Current Liabilities			1,366,739				1,704,421
Long Term Debt, Net of Current Portion			1,706,933				950,035
Deferred Income Taxes			240,919				219,261
Other Long-Term Liabilities			148,975				149,143
Total Liabilities			3,463,566				3,022,860
Stockholders' Equity			855,009				1,011,091
Total Liabilities and Stockholders' Equity		$	4,318,575			$	4,033,951

 

 

 

THE VALSPAR CORPORATION

SELECTED INFORMATION (UNAUDITED AND SUBJECT TO RECLASSIFICATION)

For the Three Months and Years Ended October 30, 2015 and October 31, 2014

(Dollars in thousands)

 

		Three Months Ended								Years Ended
		October 30,				October 31,				October 30,				October 31,
		2015				2014				2015				2014
Depreciation and Amortization		$	24,545			$	26,658			$	92,603			$	100,910
Capital Expenditures			36,280				45,391				97,126				121,271
Dividends Paid			23,834				21,541				96,890				87,427

 

 

 

 

 

 

THE VALSPAR CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)

For the Three Months and Years Ended October 30, 2015 and October 31, 2014

(Dollars in thousands, except per share amounts)

 

The following information provides reconciliations of non-GAAP financial measures from operations presented in the accompanying news release to the most comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the U.S. (“GAAP”). The company has provided non-GAAP financial measures, which are not calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measures presented in the accompanying news release that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented in the news release. The non-GAAP financial measures in the accompanying news release may differ from similar measures used by other companies. The following tables reconcile gross profit, operating expense, earnings before interest and taxes (EBIT), net income, net income per common share - diluted, and diluted earnings per share (EPS) guidance for the periods presented (GAAP financial measures) to adjusted gross profit, adjusted operating expense, adjusted earnings before interest and taxes (EBIT), adjusted net income, adjusted net income per common share - diluted, and adjusted diluted earnings per share (EPS) guidance (non-GAAP financial measures) for the periods presented.

		Three Months Ended October 30, 2015								Three Months Ended October 31, 2014
		Dollars				% of Net Sales				Dollars				% of Net Sales
Coatings Segment
EBIT		$	122,707				19.2%			$	106,494				14.9%
Restructuring Charges - Cost of Sales			680				0.1%				8,760				1.2%
Restructuring Charges - Operating Expense			1,385				0.2%				1,738				0.2%
Adjusted EBIT 2		$	124,772				19.5%			$	116,992				16.4%
Paints Segment
EBIT		$	55,638				12.3%			$	67,578				14.0%
Restructuring Charges - Cost of Sales			5,929				1.3%				2,114				0.4%
Acquisition-related Charges - Cost of Sales			1,476				0.3%				—				0.0%
Restructuring Charges - Operating Expense			92				0.0%				185				0.0%
Adjusted EBIT 2		$	63,135				14.0%			$	69,877				14.4%
Other and Administrative
EBIT		$	(11,390	)			(19.2%	)		$	(11,522	)			(18.3%	)
Restructuring Charges - Cost of Sales			—				0.0%				(80	)			(0.1%	)
Restructuring Charges - Operating Expense			91				0.2%				107				0.2%
Adjusted EBIT 2		$	(11,299	)			(19.1%	)		$	(11,495	)			(18.2%	)
Total
Gross Profit		$	413,611				36.0%			$	422,543				33.5%
Restructuring Charges - Cost of Sales			6,609				0.6%				10,794				0.9%
Acquisition-related Charges - Cost of Sales			1,476				0.1%				—				0.0%
Adjusted Gross Profit		$	421,696				36.7%			$	433,337				34.4%
Operating Expenses		$	244,617				21.3%			$	259,797				20.6%
Restructuring Charges - Operating Expense			(1,568	)			(0.1%	)			(2,030	)			(0.2%	)
Acquisition-related Charges - Operating Expense			—				0.0%				—				0.0%
Adjusted Operating Expenses 2		$	243,049				21.1%			$	257,767				20.4%
EBIT		$	166,955				14.5%			$	162,550				12.9%
Restructuring Charges - Total			8,177				0.7%				12,824				1.0%
Acquisition-related Charges - Total			1,476				0.1%				—				0.0%
Adjusted EBIT 2		$	176,608				15.4%			$	175,374				13.9%
Net Income		$	102,356							$	108,056
After Tax Restructuring Charges - Total			5,989								9,083
After Tax Acquisition-related Charges - Total			925								—
Adjusted Net Income		$	109,270							$	117,139
Net Income per Common Share - diluted		$	1.26							$	1.28
After Tax Restructuring Charges - Total			0.07								0.10
After Tax Acquisition-related Charges - Total			0.01								—
Adjusted Net Income per Common Share - diluted 2		$	1.35							$	1.38

 

¹ Certain amounts in the 2014 financial statements have been reclassified to conform to the 2015 presentation. In the first quarter of 2015, we reclassified freight costs on shipments to customers as cost of sales. Previously these costs were recorded as a deduction from net sales. Reclassifications had no effect on net income (loss), cash flows or stockholders’ equity as previously reported.

 

² The data in this schedule has been individually rounded, and therefore may not sum.

 

 

THE VALSPAR CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)

For the Years Ended October 30, 2015 and October 31, 2014

(Dollars in thousands, except per share amounts)

 

		Year Ended October 30, 2015								Year Ended October 31, 2014
		Dollars				% of Net Sales				Dollars				% of Net Sales
Coatings Segment
Earnings Before Interest and Taxes (EBIT)		$	483,649				19.4%			$	389,390				15.1%
Restructuring Charges - Cost of Sales			4,456				0.2%				18,269				0.7%
Restructuring Charges - Operating Expense			5,118				0.2%				10,633				0.4%
Gain on Sale of Certain Assets			(48,001	)			(1.9%	)			—				0.0%
Adjusted EBIT 2		$	445,222				17.8%			$	418,292				16.2%
Paints Segment
EBIT		$	173,435				10.4%			$	192,222				10.6%
Restructuring Charges - Cost of Sales			9,551				0.6%				10,216				0.6%
Acquisition-related Charges - Cost of Sales			4,428				0.3%				—				0.0%
Restructuring Charges - Operating Expense			2,362				0.1%				1,718				0.1%
Acquisition-related Charges - Operating Expense			892				0.1%				—				0.0%
Adjusted EBIT 2		$	190,668				11.5%			$	204,156				11.3%
Other and Administrative
EBIT		$	(11,935	)			(5.1%	)		$	(24,400	)			(10.4%	)
Restructuring Charges - Cost of Sales			—				0.0%				(14	)			0.0%
Restructuring Charges - Operating Expense			82				0.0%				317				0.1%
Adjusted EBIT 2		$	(11,853	)			(5.0%	)		$	(24,097	)			(10.3%	)
Total
Gross Profit		$	1,551,389				35.3%			$	1,539,046				33.3%
Restructuring Charges - Cost of Sales			14,007				0.3%				28,471				0.6%
Acquisition-related Charges - Cost of Sales			4,428				0.1%				—				0.0%
Adjusted Gross Profit		$	1,569,824				35.7%			$	1,567,517				33.9%
Operating Expenses		$	951,403				21.7%			$	979,137				21.2%
Restructuring Charges - Operating Expense			(7,562	)			(0.2%	)			(12,668	)			(0.3%	)
Acquisition-related Charges - Operating Expense			(892	)			(0.0%	)			—				0.0%
Adjusted Operating Expenses		$	942,949				21.5%			$	966,469				20.9%
EBIT		$	645,149				14.7%			$	557,212				12.0%
Restructuring Charges - Total			21,569				0.5%				41,139				0.9%
Acquisition-related Charges - Total			5,320				0.1%				—				0.0%
Gain on Sale of Certain Assets			(48,001	)			(1.1%	)			—				0.0%
Adjusted EBIT		$	624,037				14.2%			$	598,351				12.9%
Net Income		$	399,506							$	345,401
After Tax Restructuring Charges - Total			15,158								28,941
After Tax Acquisition-related Charges			3,637								—
After Tax Gain on Sale of Certain Assets			(37,216	)							—
Adjusted Net Income		$	381,085							$	374,342
Net Income per Common Share - diluted		$	4.85							$	4.01
After Tax Restructuring Charges - Total			0.18								0.34
After Tax Acquisition-related Charges - Total			0.04								—
After Tax Gain on Sale of Certain Assets			(0.45	)							—
Adjusted Net Income per Common Share - diluted 2		$	4.62							$	4.35
Fiscal 2016 Annual Adjusted Diluted EPS Guidance (Non-GAAP)										$4.80 - $5.00

 

¹ Certain amounts in the 2014 financial statements have been reclassified to conform to the 2015 presentation. In the first quarter of 2015, we reclassified freight costs on shipments to customers as cost of sales. Previously these costs were recorded as a deduction from net sales. Reclassifications had no effect on net income (loss), cash flows or stockholders’ equity as previously reported.

 

² The data in this schedule has been individually rounded, and therefore may not sum.