Exhibit 99.1
| FOR IMMEDIATE RELEASE | November 21, 2005 |
VALSPAR REPORTS FULL YEAR RESULTS
MINNEAPOLIS, MINNESOTA – The Valspar Corporation (NYSE–VAL), a leading coatings manufacturer, today reported net income for the fourth quarter ended October 28, 2005 of $50,966,000, a 26% increase over net income of $40,447,000 for the comparable period a year ago. Diluted earnings per share for the fourth quarter of 2005 were $0.50 versus $0.38 per diluted share in last year’s fourth quarter. Last year’s results have been adjusted to reflect a 2-for-1 stock split effective September 23, 2005. Results of operations for the fourth quarters of fiscal 2004 and 2005 each included favorable items that generated after-tax benefits of approximately $0.04 per share. In addition, this year’s lower fourth quarter tax rate increased earnings by approximately $0.02 per share versus the comparable period a year ago. Sales for the fourth quarter increased 12.4% to $725,387,000 compared to $645,116,000 last year.
Net income for the full year was $147,618,000 or $1.42 per diluted share, compared with $142,836,000 or $1.35 per diluted share last year. Sales for the year increased 11.2% to $2,713,950,000 compared to $2,440,692,000 during fiscal 2004.
Commenting on this year’s results, William L. Mansfield, President and Chief Executive Officer, said “We are pleased to report record sales and earnings in 2005, a year in which we faced very difficult market conditions. We had strong performances in all of our businesses in the fourth quarter. We began the year with unprecedented raw material cost pressures and rising raw material costs remain our biggest challenge today. Nevertheless, we have made steady progress throughout the year in restoring margins while continuing to invest in future growth. Last quarter we announced a plan to rationalize our manufacturing capacity in order to increase productivity and improve service to our customers. Based on further development of the plan and our progress in completing its first phase, we now expect that this initiative will generate net charges to earnings of $0.05 to $0.06 per share in 2006 and annual savings of $0.10 to $0.12 per share starting in 2007. We believe that this and other strategic initiatives will position us for stronger growth and improved returns on capital.”
Note: Valspar will host a conference call on Monday, November 21st at 10:00 AM CST. The call can be heard live over the Internet at Valspar’s website athttp://www.valspar.com under Investor Relations. Those unable to participate during the live broadcast can access an archive of the call on the Valspar website. A taped replay of the call can also be accessed by dialing 1-800-475-6701 in the U.S. or 320-365-3844 outside the U.S. beginning at 1:30 PM, using access code 802942.
For further information, contact Lori A. Walker, Vice President, Treasurer and Controller at Valspar / 612-375-7350.
This press release contains certain “forward-looking” statements. These forward-looking statements are based on management’s expectations and beliefs concerning future events. Forward-looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of the Company that could cause actual results to differ materially from such statements. These uncertainties and other factors include, but are not limited to, dependence of internal earnings growth on economic conditions and growth in the domestic and international coatings industry; risks related to any future acquisitions, including risks of adverse changes in the results of acquired businesses and the assumption of unforeseen liabilities; risks of disruptions in business resulting from the integration process and higher interest costs resulting from further borrowing for any such acquisitions; our reliance on the efforts of vendors, government agencies, utilities and other third parties to achieve adequate compliance and avoid disruption of our business; risks of disruptions in business resulting from the Company’s relationships with customers and suppliers; unusual weather conditions adversely affecting sales; changes in raw materials pricing and availability; delays in passing along cost increases to customers; changes in governmental regulation, including more stringent environmental, health and safety regulations; the nature, cost and outcome of pending and future litigation and other legal proceedings; the outbreak of war and other significant national and international events; and other risks and uncertainties. The foregoing list is not exhaustive, and the Company disclaims any obligation to subsequently revise any forward-looking statements to reflect events or circumstances after the date of such statements.
THE VALSPAR CORPORATION
COMPARATIVE CONSOLIDATED EARNINGS
For the Quarters Ended October 28, 2005 and October 29, 2004
| Fourth Quarter | | Year-To-Date |
|---|
| (Dollars in thousands, except per share amounts) | (Unaudited) | | (Unaudited) |
|---|
|
| 2005 | | 2004 | | 2005 | | 2004 |
|---|
|
| Net Sales | | | $ | 725,387 | | $ | 645,116 | | $ | 2,713,950 | | $ | 2,440,692 | |
| Cost of Sales | | | | 500,168 | | | 449,778 | | | 1,910,085 | | | 1,676,272 | |
| Operating Expenses | | | | 136,979 | | | 122,442 | | | 533,002 | | | 494,623 | |
|
| Income From Operations | | | | 88,240 | | | 72,896 | | | 270,863 | | | 269,797 | |
| Interest Expense | | | | 11,527 | | | 10,155 | | | 44,522 | | | 41,399 | |
| Other (Income)/ Expense, Net | | | | 788 | | | (653 | ) | | 621 | | | (139 | ) |
|
| Income Before Income Taxes | | | | 75,925 | | | 63,394 | | | 225,720 | | | 228,537 | |
| Income Taxes | | | | 24,959 | | | 22,947 | | | 78,102 | | | 85,701 | |
|
| Net Income | | | $ | 50,966 | | $ | 40,447 | | $ | 147,618 | | $ | 142,836 | |
|
| Net Income per Common Share-basic | | | $ | 0.51 | | $ | 0.39 | | $ | 1.45 | | $ | 1.39 | |
| Net Income per Common Share-diluted | | | $ | 0.50 | | $ | 0.38 | | $ | 1.42 | | $ | 1.35 | |
|
| Average Number of Shares O/S-basic | | | | 100,875,379 | | | 102,743,206 | | | 101,900,764 | | | 102,404,358 | |
| Average Number of Shares O/S-diluted | | | | 102,918,203 | | | 105,375,028 | | | 104,149,564 | | | 105,418,228 | |
|
| |
| |
THE VALSPAR CORPORATION
CONSOLIDATED BALANCE SHEETS |
| |
| (Dollars in thousands) | October 28,
2005 | | October 29,
2004 |
|
| Assets | | | | | | | | |
| Current Assets: | | |
| Cash and Cash Equivalents | | | $ | 52,845 | | $ | 54,143 | |
| Accounts Receivable, Net | | | | 462,396 | | | 411,635 | |
| Inventories | | | | 230,640 | | | 210,554 | |
| Other | | | | 119,323 | | | 125,983 | |
|
| Total Current Assets | | | | 865,204 | | | 802,315 | |
| Goodwill, Net | | | | 1,064,931 | | | 996,562 | |
| Other Assets, Net | | | | 403,206 | | | 406,950 | |
| Property, Plant & Equipment, Net | | | | 427,822 | | | 428,431 | |
|
| Total Assets | | | $ | 2,761,163 | | $ | 2,634,258 | |
|
| |
| Liabilities and Stockholders’ Equity | | |
| Current Liabilities: | | |
| Notes Payable to Banks | | | $ | 29,281 | | $ | 168,208 | |
| Trade Accounts Payable | | | | 260,070 | | | 234,446 | |
| Income Taxes | | | | 58,120 | | | 45,254 | |
| Accrued Liabilities | | | | 278,160 | | | 270,303 | |
|
| Total Current Liabilities | | | | 625,631 | | | 718,211 | |
| Long Term Debt | | | | 706,415 | | | 549,073 | |
| Deferred Liabilities | | | | 368,025 | | | 366,611 | |
| Stockholders’ Equity | | | | 1,061,092 | | | 1,000,363 | |
|
| Total Liabilities and Stockholders’ Equity | | | $ | 2,761,163 | | $ | 2,634,258 | |
|
